Hedge Fund Articles
Get insights on hedge fund career topics: job search, networking, interview preparation, and investment pitch.
The typical hedge fund career path begins 1 – 2 years post-college. Unlike large banks or asset management firms with comprehensive training programs, hedge funds are small, nimble operations with few resources to teach someone analytical finance from the ground up. Getting into a hedge fund straight out of college is difficult.
If you are preparing for hedge fund interviews, I know the level of exhaustion and stress that you are going through. There are many technical questions to prepare for. Developing and presenting an investment pitch is time-consuming. On top of that, there’s a constant self-doubt of whether you are on the right track with your pitch. But first things first. Before you start your investment pitch, here’s a critical question for you to answer: what’s your investment style?
Let’s face it. When it comes to learning how to invest, most college and business school textbooks just aren’t cutting it. We need to build our own collection of the best investing books to hone the craft.
Academic classes teach you how to put together an income statement or how to run multi-variable regressions in Stata. Those are important skills to have, but they don’t give you the full picture on how to invest. I know, because I’ve taken a lot of them.
Pokemon Go’s popularity exploded like a firestorm. The mobile hit leapfrogged Twitter in active users in just days after launch, and Nintendo’s stock price has risen 57% since. Expectations of further monetizing Nintendo characters are high. But let’s think about the reverse – could Nintendo be a prime example of how to short stocks?
Are the lofty expectations for Nintendo realistic, or is there irrational exuberance?
Pokemon Go is certainly not the first mobile game with high expectations, and it won’t be the last either. In 2013, a Japanese game developer called Gungho Entertainment released Dungeons and Dragons, wich monopolized mobile usage among Japanese teenagers. Gungho’s stock skyrocketed 2100% in just 5 months.
But as the game waned, Gungho’s stock price has dropped 80% since. And before Dungeons and Dragons, there was Farmville. A similar story played out with its developer Zynga.
Each case is different. Whether history would repeat itself in Pokemon Go is up for debate. But irrational exuberance is certainly one of the central themes in developing a short stock pitch.
Good advice on how to short a stock is notoriously difficult to find. There are a plethora of volumes written on finding undervalued investments to go long. But what would make a good short stock idea? Is identifying unrealistic hype simply enough?
Today we continue the conversation with our investment industry veteran, who began telling us the story of investment banking to the buy side. In Part 2 here, we’ll talk about what it’s like to work at a mutual fund vs. hedge fund. Working at a mutual fund vs. hedge fund has a lot of similarities on the surface. After all, it’s all about investing!
However, as we dig deeper into the comparison, we’ll see that there’s are significant differences in the lifestyle, nature of work, compensation structure, and career trajectory. Some of the answers might surprise you.
Without further ado, let’s get right down to it and continue our conversation. If you haven’t read the first half of the conversation, I recommend you start with Part 1 here.