It used to be the case that if you began your career in the investment banking division (IBD) of a major U.S. bank, you probably had two main exit options and one potential escape route: you could (preferably) get a job in private equity, or you could move into corporate development. If both those failed, you could always become a strategy consultant.
Times have changed. These days, IBD analysts have a new calling: they are also feted by the world's biggest multi-strategy hedge funds.
If you've been paying attention, this will come as no surprise.
Jonathan Jones, the then-head of investment talent development at Point72 Asset Management (now at DE Shaw), wrote an article for us over two years ago, urging IBD analysts to ditch their private equity aspirations and pivot to hedge funds instead.
"Hedge funds can offer a deeper sense of ownership, early responsibility, and a path to full discretion on investment decisions [than private equity]," said Jones, adding that private equity jobs are bureaucratic and political by comparison (all about "managing the administration of a deal process.") In hedge funds, Jones said, "there’s no one else to take the credit and no one else to take the blame."
Some junior bankers have learned this lesson. Denis Kopanev, a former Morgan Stanley M&A analyst, has modelled what the ultimate new IBD exit strategy looks like. Kopanev spent exactly two years as an M&A analyst at Morgan Stanley in London before leaving in August 2014 to become an infrastructure private equity analyst at the CPP Investment Board, the Canadian fund that was hiring heavily at the time.
Kopanev spent three years in private equity before preempting Jones' advice. In January 2018, he moved to Citadel's equity long short fund in London and two years later he's just jumped again to Millennium.
As we reported last week, once you get into a multi-strat fund like Citadel, Millennium, ExodusPoint, or Point72, you can bounce from one to another as have an incestuous thing about hiring each other's staff.
If you work in IBD, it's a career path worth considering. - Particularly as the big hedge funds ramp-up hiring, and PE funds try to train-up their own staff instead of relying on bankers.
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