Toad Capital
@rich_toad
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🏆Career advisor to public equity investors | 🐐 Profiling investors, founders and operators | Not investment advice.
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Why You Should Almost NEVER Work for a Start-up Hedge Fund
As someone who got a front-row seat view of the horrors of working at a start-up hedge fund, I want to share with you the 7 reasons why you should NOT work for a subscale start-up hedge fund.
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My takeaways from Philippe Laffont's (Coatue Management) interview with David Rubinstein (Carlyle Group)
AI Overhyped?
If everyone is talking about it, it must be priced in, right? No. Laffont has always emphasized focusing on tech stocks with high valuations as a starting point
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A (Bad) Day In the Life of An Equity Research Associate
This was a day during peak earnings season.
6:00am – Wake up, brush teeth, shower, make coffee.
6:30am – Attempt to read Wall Street Journal, but fail. Instead I watch last night’s NBA highlights for an hour.
7:30am –
My notes on Coatue’s EMW 2024 keynote
Phillippe Laffont on public tech investing
As a public market investor, looking at the past is important because tech waves tend to repeat themselves.
Phillippe discussed the rise of $2-3 trillion market cap companies: the S&P 500 has a
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Why elite hedge funds are obsessed with IB/PE-type candidates
Many of you ask why elite single-manager hedge funds (SMs) are so enamored with talent from an elite 2+2 (IB+PE) background. Here are my thoughts:
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You get sell-side research reports every day from your salespeople, but do you have any idea how much time is wasted in coming up with "creative" titles?
These were the nominees for my Research Note Title Competition earlier this year 👇Comment if I missed any.
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A simple 2x2 matrix on risk-taking in sell-side equity research
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5 misconceptions you should not have about hedge funds
1. “Hedge funds don’t even beat indices”
2. “The buy-side has great work-life balance”
3. “Our holding period is 3-5 years”
4. “We don’t care about macro/quarters”
5. “We invest under (this style)”
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Daniel Sundheim is the billionaire founder of D1 Capital.
UG: Economics, UPenn Wharton
Sundheim began his career in merchant banking at Bear Stearns. In his spare time outside of working hundred-hour weeks, Sundheim won four monthly best investing idea awards under the alias
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10 Delusions You Must Ditch to Break Into the Buy-Side
I want to lay out all the issues aspiring investors exhibit, so you can be self-aware and stand out from the crowd in the hopefully upcoming surge in job openings.
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From the jungles of Wall Street to the top of the hedge fund game, meet the Tiger Cubs—proteges of Julian Robertson who are redefining the world of finance. 🐯📈
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I watched Brett Caughran and Andrew Carr of
@FundamentEdge
interviewing Andrew Hoffman, the retired VP of Investor Relations for TransUnion. I learned a lot; here are my takeaways:
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My notes on Coatue’s EMW 2024 keynote
Phillippe Laffont on public tech investing
As a public market investor, looking at the past is important because tech waves tend to repeat themselves.
Phillippe discussed the rise of $2-3 trillion market cap companies: the S&P 500 has a
My takeaways from Philippe Laffont's (Coatue Management) interview with David Rubinstein (Carlyle Group)
AI Overhyped?
If everyone is talking about it, it must be priced in, right? No. Laffont has always emphasized focusing on tech stocks with high valuations as a starting point
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281
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Investing podcasts I endorse and consume regularly:
@InvestLikeBest
Invest Like The Best (with Patrick O'Shaughnessy)
@patrick_oshag
Business Breakdown
@AcquiredFM
Acquired Podcast (with Ben and David)
@JRogrow
The JRo Show (must listen for those who aspire to long-only
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Bobby Jain got Paul Enright to quit Twitter
Key hires:
- Paul Enright (ex-Viking) will be chairman of fundamental equities, coaching and mentoring PMs
- Townie Wells (ex-Ashler) as CIO for Americas fundamental equities
- Sam Kellie-Smith (ex-MS), head of Asia
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5 quickest path to hedge fund land (and stop asking "what are my chances? I am from (big 4/private wealth/boutique consulting, etc.)"
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I clearly see the thesis of the merger now: in-flight sports betting $SAVE $ULCC
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Why an MBA won’t fast-track your way into a hedge fund
1. MBA is not a fair competition
2. Most programs don't have investment teachings
3. Most programs don't have a critical mass of quality classmates gunning for public equity
4. Most funds don't recruit on-campus
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Notable investors who majored in Philosophy:
Carl Icahn, Princeton
Peter Thiel, Stanford
Boaz Weinstein, University of Michigan
Peter Lynch, Boston College
Bill Miller, John Hopkins University, PhD
Reid Hoffman, University of Oxford, Masters, Marshall Scholar
George Soros,
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Why some specialty distributors are great businesses
Why Do We Need Distributors?
Distributors are fascinating entities that primarily rely on capital turnover to create shareholder value, rather than pricing power1.
Distributors solve a critical problem in the value chain.
My takeaways from Philippe Laffont's (Coatue Management) interview with David Rubinstein (Carlyle Group)
AI Overhyped?
If everyone is talking about it, it must be priced in, right? No. Laffont has always emphasized focusing on tech stocks with high valuations as a starting point
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Career Advice for Junior Buy-side Research Analysts: Write down everything
It’s a style thing but I always write down what I want to say when I am pitching a stock or preparing for a call with management. Being more prepared calms me down. For pitches, it helps convince your PM
Career Advice for Junior Buy-side Research Analysts: Establish a good research process
It’s good to establish and refine your investment process. I didn’t value the need for a structured investment process until I was forced into a high-idea velocity work environment. To survive,
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Career Advice for Junior Buy-side Research Analysts: Establish a good research process
It’s good to establish and refine your investment process. I didn’t value the need for a structured investment process until I was forced into a high-idea velocity work environment. To survive,
Career Advice for Junior Buy-side Research Analysts
Develop your process
Regardless of your investment style, most research analysts need to be good at two things: Assessing what a business is worth and how stocks move. How much time you spend on these two things depends on what
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Diamond Hill Capital Management - a deep dive
In the heart of Columbus, Ohio, lies Diamond Hill Capital Management, a mutual fund company with over two decades of history, rooted in the philosophy of long-term value investing.
The story began with Ric Dillon, Diamond Hill’s
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@mprkhrst
I don't know what a manifold is and don't know who is Riemann, but that's why he is GOAT
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Technical training
The technical skills gained in investment banking and private equity closely match what a junior L/S analyst is expected to have. Thankfully, programs like Point72 Academy and
@FundamentEdge
are challenging this status quo, which is great because it's
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@Billbrowder
Market share gain, but respect lost. They seem to have made their choice (and will pay the price.)
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@ChipsAhoyCap
From client perspective of yours, you don't like it. But on the sell-side, there are so much crap they have to deal with that have nothing to do with adding value to clients.
Do some of them prefer to give you a clean model and thought-provoking, money-making notes, 100% yes.
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@unusual_whales
I asked the SEC not to disclose my purchase of 1 share of something, but they denied the request.
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@NewsPolitics
@EndWokeness
You never know. There might be an "Equilibrium and Negotiated Paradox" factory somewhere that hires.
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Career Advice for Junior Buy-side Research Analysts
Establish a good research process
It’s good to establish and refine your investment process. I didn’t value the need for a structured investment process until I was forced into a high-idea velocity work environment. To survive,
Career Advice for Junior Buy-side Research Analysts
Develop your process
Regardless of your investment style, most research analysts need to be good at two things: Assessing what a business is worth and how stocks move. How much time you spend on these two things depends on what
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7 Reasons Why You Should NOT Work for a Start-up Hedge Fund
#8
(Not a typo) Exceptions: When Stars Align
Of course, there are always exceptions to everything. If you are younger, already have buy-side experience, and want to take a leap of faith in a start-up fund that fits
7 Reasons Why You Should NOT Work for a Start-up Hedge Fund
#7
Zero Stability
This is the least important point because a hedge fund as a concept is not about stability. Even the biggest hedge funds blow up.
But the point here is start-up hedge funds are just 100x more
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@HighyieldHarry
Probably just off to some mandatory “volunteering” event, where recruiters will be providing surveillance of their attendance and behavior
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@QCompounding
I am trying to imagine what it is like when Carl Icahn “trying to be a nice guy”
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Leon Black is the billionaire founder of Apollo Global Management, a leading private investment firm.
Black was born in 1951 in New York City.
UG: AB in Philosophy and History, Dartmouth College
MBA: Harvard Business School
In 1975, his father committed suicide by jumping
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Career Advice for Junior Buy-side Research Analysts
Don’t be an ass
To sell-siders who made to buy-side, you should understand better than most that what it’s like to serve the buy-side clients. Now that you have become the client, you should remember to treat your counterparty
Career Advice for Junior Buy-side Research Analysts
Networking relentlessly
It’s a small industry. By third-level connection, you probably know 95% of all the stock investors out there. Buy-side jobs are mostly filled through referrals. Build a brand so that your next job
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Buying a House: How Commissions Used to Work and How They Work Now
Source: WSJ
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10 delusions of someone who wants to pursue public equity investing
#1
The grass is greener
Every day, thousands of people in finance want to explore another path in finance. Most seem completely oblivious to the downsides of their new destination. The "grass is greener"
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10 delusions of an equity investing aspirant
#10
Action over theory
You must love reading, and it’s good for you. But you can’t hide behind someone else’s opinion for the rest of your career.
Your PM hires you for your opinion, not what Howard Marks or some random hedge fund
10 delusions of an equity investing aspirant
#9
Be open to relocate
You need to be open-minded about relocation.
If you are asking questions like “Any good funds in Charleston, South Carolina, or Orange County, CA?” My friend, you lost the battle before the war even began.
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Career Advice for Junior Buy-side Research Analysts: Don't drop balls (esp on big positions)
You will have “coverage” responsibilities on a group of stocks. Be on top of news flows and always have a view on whether that piece of information is material to the stock thesis, keep
Career Advice for Junior Buy-side Research Analysts: Write down everything
It’s a style thing but I always write down what I want to say when I am pitching a stock or preparing for a call with management. Being more prepared calms me down. For pitches, it helps convince your PM
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RIP to the man who solved the market
This is Jim Simons.
84-year-old maths genius & the world’s greatest hedge fund manager.
Net Worth : $28.1 BILLIONS
The secret to his success isn’t
- Waking up at 5am
- Cold Showers
- Meditating every day
- Eating only vegetarian foods
Instead He :
- Smokes 60 cigarettes a
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5 Reasons Why You Don't Get High Finance Jobs
1. You don't know what you want
2. You are not liked
3. Your expectation is too high ("Tiger Cub-or-nothing")
4. You love getting badges
5. You don't go direct (ie. networking)
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5 similarities between hedge fund investors and pro athletes
1. Hard to get in
2. You need to know how to play before getting a seat
3. The job doesn't end after getting a seat
4. You will need to constantly improve your game
5. There are only few true greats
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2. Complete Disorganization
Hedge funders start new funds because they are presumably great investors. But a hedge fund start-up is also a business, just like any other start-up. For these founders who have analyzed hundreds if not thousands of different businesses, ironically
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Hedge Funds Embrace AI for Research
Hedge funds are now deploying generative AI for various research tasks. Chatbots are taking on time-consuming chores, from summarizing Wall Street economists' views to generating charts and extracting statements from monetary officials. With
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Why AI cannot kill sell-side equity research
JPMorgan Chase recently unveiled a new chatbot “research analyst”. This development has sparked numerous inquiries about its potential impact on the future of the Wall Street equity research (“sell-side”) profession.
Outline
- Why
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BREAKING NEWS: Tiger Cub hedge funder David Goel of $11 billion AUM Matrix Capital Management is shutting down and returning client cash. Decision by his health problems.
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Economics of drug dealing
What if I told you that the world of drug dealing operates more like a Fortune 500 company than a chaotic underworld? In Narconomics, Tom Wainwright reveals the surprising ways cartels use business strategies to thrive in a high-risk market. Buckle up as
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1. Subpar Pay
Yes, I get it. You want to work in finance for the potential of making more money than your peers working in corporate jobs. So I will headline the $$$ first. At a $100 million AUM fund, you will get a below-market salary and be offered a bonus that is a fixed % of
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10 delusions of someone who wants to pursue public equity investing
#4
Do … your … f**king … work
Nothing irritates me more than candidates who expect information to come to them. If the Tiger Cub analysts are putting in 80+ hour weeks to create value for their clients, I
10 delusions of someone who wants to pursue public equity investing
#3
Compensation and trend surfing are bad moves
We pursue a finance career because we want to make a lot of money. Nothing wrong with that. Otherwise, I would have joined Teach for America.
However, you must
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How to Generate Stock Ideas Quickly
Building the coverage
My preferred and, admittedly, the most labor-intensive method involves building sector coverage. You can begin with a small subspace.
For instance, you might decide to cover the semiconductor equipment sector, including
How to Generate Stock Ideas Quickly
Magazines, Newspaper, and Book
You should actively read The Wall Street Journal (and the Financial Times for my European readers) – not just for the facts, but also to understand the implications for the direction of the world and how a news
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Career Advice for Junior Buy-side Research Analysts
Don't drop balls (on big positions)
You will have “coverage” responsibilities on a group of stocks. Be on top of news flows and always have a view on whether that piece of information is material to the stock thesis, keep
Career Advice for Junior Buy-side Research Analysts
Write down everything
It’s a style thing but I always write down what I want to say when I am pitching a stock or preparing for a call with management. Being more prepared calms me down. For pitches, it helps convince your PM
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@Burrito69S
@BNONews
Yea it would be nice if they spent that rocket money on their people instead.
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My commentary on the recent tragic death of an IB associate
The recent passing of a Bank of America investment banking associate brings to light the harsh realities of a profession known for its long hours and high-intensity demands. May he rest in peace, and may his memory
Why you shouldn't ask to work remotely as a junior buy-side analyst
#4
CIO’s concerns
Every founder wants to see productivity out of their employees. Your PM does too.
I doubt any sensible PM would be open to hiring fully remote junior analysts because they hired you with the
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3. Unrealistic Expectations for Juniors
Start-up funds are anxious to build a track record as soon as possible, so the expectation for the juniors to ramp is unreasonably high, despite the lack of mentoring and subpar pay.
When speed is the goal, the only you can do to build a
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@capital_fjb
1. This is what happens when they supervisory analyst themselves
2. Gotta get Arsenije a phone number
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“Hedge funds don’t even beat indices”
Many often criticize hedge funds for not beating the S&P 500 in a given year. This misunderstanding is widespread, even among the press.
However, hedge funds are absolute return vehicles, unlike mutual funds. Hedge funds’ objective is to
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Career Advice for Junior Buy-side Research Analysts
Focus on increasing your value
Unless you have been analyzing stocks since you were 10 years old and can become an idea generator right away, most of you don’t add much value when you start on the buy side.
For the investment
Why MBA is not your magic bullet to the buy-side
#4
Must get into best buy-side programs for the search channel
One of the biggest values of the MBA is the school should create a platform for you to market yourself in front of hiring firms without the need to build your own
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Energy and Basic Materials book list:
- Oil 101 by Morgan Downey
- The Prize: The Epic Quest for Oil, Money & Power by Daniel Yergin
- Clean Disruption of Energy and Transportation: How Silicon Valley Will Make Oil, Nuclear, Natural Gas, Coal, Electric Utilities and Conventional
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20 pieces of advice to help you stand out
#1
Life is unfair. Accept it.
Life is unfair. Get used to it. We didn’t have the same starting line. I wasn’t born in a target hospital, went to a target kindergarten, ran a bulge bracket lemonade stand, or attended the right boarding
My commentary on the recent tragic death of an IB associate
The recent passing of a Bank of America investment banking associate brings to light the harsh realities of a profession known for its long hours and high-intensity demands. May he rest in peace, and may his memory
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Notable global macro investors
Lineage: Brevan Howard
Alan Howard, Brevan Howard
Chris Rokos, Rokos Capital
Lineage: Commodities Corporation
Paul Tudor Jones, Tudor Investments
Bruce Kovner, Caxton Associates
Louis Bacon, Moore Capital
Greg Coffey, Kirkoswald Capital (Co-CIO of
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Equity research job board just went live - all U.S. buy-side and sell-side research job openings in one place.
To sign up:
Use the code "NEWRICH" to get 50% off a 1-month Access (offer expires Jan 16, EOD)
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