The hedge fund industry is a cut-throat business. You're either making money, or you're not. And if you're not making money, then you're either out, or on your way out.
Even when you're not shown the door, the industry wears on you. P&L fluctuates by the minute. Some days you're up millions of dollars, some days, you're down millions. Everybody I know (including myself), has wondered, "What do you do after leaving the buy side?"
The answer is not always very clear.
You can become a CFO
Frankly, this is the best option. When you're an analyst or portfolio manager in a hedge fund you already interact with the C-suite on a regular basis. You've met tons of CFOs, both good and bad, so all you have to do is mimic the good ones. As an added benefit, you can continue making millions of dollars.
The only problem? You have zero operational experience. The number of teams you've managed? Zero. Financial reports and budgets you've put together? Zero. Number of years in a leadership
position at a company? You guessed it, zero.
Being on the buy side is like being a movie critic. You have an opinion on what's good and what's bad. Unfortunately, I don't know of many movie critics that have transitioned directly to becoming movie directors.
You can yourself a job in investor relations
Once you come to realize you're not qualified to be a CFO, this is what you'll probably go for. However, don't know many people that willingly choose IR over the buy side.
Frankly, IR sounds like a pretty boring job, since you're just the mouthpiece for the company. Also, I would expect your comp to decline significantly. The positive is you have experience with investors and the market, so you can add value immediately. Hopefully, the stint in IR leads to more operational experience so you can become CFO one day.
I have friends in IR right now, and the quality of the IR role really depends on the company. For some, you're reiterating what the CEO/CFO said. For others, you can actually shape the message and add value.
Back to the sell-side
MiFID II! You might take this if you're desperate, but given the gloomy outlook for sell side research, you probably won't.
Slide into corporate strategy
This is a good potential fit. On the buy side, you're looking at companies from a competitive standpoint and ways it can increase scale or capabilities. Helping a company fill these gaps sounds like a logical
choice. As an added benefit, you can opine on how you think the street will react to a deal.
This is realistically your best bet. However, it could be challenging telling your family and friends that all your hard work, being at the top of your class, at whatever prestigious university you attended, has led
you to become a professional gambler.
But if you think about it, this makes the most sense. On the buy side, your job is to look for an edge. What is being mis-priced? Which companies are being truthful and which companies are BS? How can I take advantage of people with less information or experience? This is exactly what professional gamblers do.
I'm not ready to leave the buy side just yet, but when I do, you'll find me in Vegas doing what I do best - making money.
Margin of Saving was created by an analyst at a multi-billion dollar hedge fund to help others learn how to invest and save.
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