"Almost everyone I knew in hedge funds has disappeared"
I'm back, After a two year involuntary career hiatus when I feared I'd never work in a bank again, I've finally rejoined the sell-side. I'm here to serve my clients. Except, that over the two years I was out of action, most of my clients seem to have disappeared.
Bloomberg communicated the bad news. I had intermittent terminal access during my two years away and now that I'm back and have a terminal again, the first thing I did was too look up my old clients - most of whom worked in hedge funds. Worked being the operative word. - Almost all of them have disappeared.
Initially, I couldn't believe it. As you'll probably know, Bloomberg has a traffic light system which shows whether its users are away, idle, or offline. Some of the more vain people switch this feature off so that their status remains black and no one ever knows whether they're there or not. When someone loses access to Bloomberg, this sacred light disappears for good.
What shocked me what that not only had many of my contacts' lights gone out, but entire funds had gone dark too. It was like a ghost town - for them, and for me. My contact list had become meaningless, and all those people who spent years building careers in banking before moving to the buy-side had lost their jobs. Gone.
I tried to find out what happened. A pattern soon emerged. Whenever I asked why people had disappeared, I was told, "bad performance," or "unable to raise more funds," or, "they were short and things kept rising." I even spoke to a few and their explanations were similar.
This leaves me in a precarious position. My old clients are no longer in a position to be clients - the most I can do is to introduce them to recruiters and to hope they find jobs and remember me in future. In the meantime, being a hedge fund salesman is a thankless task when most hedge funds barely survive a few years and your client list is in constant churn.
It's clearly worse though if you actually work for one of these funds. Unless you're employed by a hedge fund that's very well-diversified, you should probably not sleep easy at night: your job could disappear at any moment. And even if you do work for a well-diversified fund, the chances are that it's a very tight ship and that you'll be chopped quickly if you lose money - irrespective of how well you've done in the past.
For this reason, I'd warn anyone about going into hedge funds now. I'd also caution against going into hedge fund sales. If you want an easy life where you won't be struck by Bloomberg death, long only funds are the better place to be (although here you risk being cannibalized by passive products, but this is another story).
Graham Clarkson is the pseudonym of a hedge fund salesman at a U.S. bank.
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