When a longstanding client tried to withhold the last name of the hedge fund executive his job candidate was about to meet, recruiter Kyle Ramkissoon of New York's IJC Partners thought he'd heard it all. "You guys act like the Pentagon," he told a contact there.
Not every hedge fund acts as though its mere existence is classified information. But divulging even the most basic pieces of information to job candidates is clearly verboten for some. That, along with hedge funds' regulatory freedoms and tendency to attract mavericks, adds an extra layer of risk and complexity when professionals seek to check out a prospective employer. Many such ventures are "here today and gone tomorrow," observes Sandy Gross, founder and managing partner of search firm Pinetum Partners, which serves hedge funds, investment banks and securities firms.
The Good News
Still, hedge funds nearly always have an Internet "footprint," observes Richard Lipstein, a managing director and financial services recruiter at Boyden Global Executive Search, headquartered in New York. You will, however, have to do plenty of digging and cold calling, particularly if you're approaching the hedge-fund search without a recruiter's help. Lipstein's number one piece of advice: "Google." After that: "Be fearless."
Beyond researching the name of the firm itself and its current staff, you'll often need to locate people who have worked there in the past. "Figure out who is a connecting person" to the partner you'd like to know about, and pick that person's brains, says Lipstein.
Some of the best tools for this pursuit are Web sites like Jigsaw.com and Naymz, as well as social networks like Plaxo.
You'll also want to use industry sites like Hedgefund.net and Hedgeco.net. To get around paying for expensive subscription-based independent publications like Alpha and Absolute Return, you can pull up the free teasers most publications offer online, then do turn to search engines with what you've discovered. Get the headline or first sentence that references the company in question and Google that phrase, advises Lipstein.
Gross suggests seeking information from prime brokers, those financial services companies that provide a plethora of services to hedge funds and other investment firms.
What to Ask
You'll want to learn something about fund partners' professional lineage, investment philosophy, and infrastructure to support future growth, what sorts of risk management systems they have, and where the capital is coming from. Says Gross: "I always advise asking about the culture, who taught the founders the business, how were they mentored, do they have a track record of success, a business plan in place, and what the firm has in place to support the investment side of the business, i.e. technology, human resources and legal staff."
Of course, on a first interview you don't want to come on like a steamroller by asking a ton of sticky questions. Some are best presented first to former employees or others who have worked with the folks you're researching. Others can be saved for your second or third interview. If you work with a search firm, your recruiter should be able to answer some of the tough queries.
Other questions to ask when the time is right:
- Who is building the capital: High net worth individuals? Pension funds and endowments? Friends of the business?
- What are the contingency plans?
There must always be a "Plan B," Gross explains. For example, a firm with a single strategy, such as exclusively fixed-income, needs to consider how to protect its downside when that strategy is out of favor.
One situation that would make Gross wary is a new venture that mixes different kinds of professionals - buy-side and sell-side veterans, say, or partners who never worked successfully together before but were childhood friends. Not knowing how these talents will ultimately mesh presents a major risk.
If after following all the rules you still can't get a read on the person or firm you're interviewing with, don't panic. A firm with less than $10 or $15 million in capital and a staff of just four or five people won't be on many peoples' radar screen, notes Gross. And if the person you're set to meet is invisible in Internet searches, it could just mean your initial contact isn't senior enough to merit a Web presence. It's no reason to assume the organization isn't solid.