Scenario: Interview with a growing hedge fund. It’s small and doesn’t have to file with the SEC. You can’t find anything on the fund regarding AUM, past performance, etc. Is it alright to ask the following questions: 1. How big are you in terms of AUM? 2. What is your track recored? Thanks
I think that would show interest. (May be IHIHM can shed some light from his imaginary HF employer?)
EMHdenied Wrote: ------------------------------------------------------- > Scenario: Interview with a growing hedge fund. > It’s small and doesn’t have to file with the SEC. > You can’t find anything on the fund regarding AUM, > past performance, etc. Is it alright to ask the > following questions: > > 1. How big are you in terms of AUM? > 2. What is your track recored? > > Thanks Yeah I wouldn’t take the job unless they gave me that info!
I agree with Karen here. I would not accept a job at a HF unless I had those details (audited) and a whole lot more.
Make sure you ask if they are GIPS compliant! (ok done with Ethics jokes for the day)
If they can’t or won’t tell you that, you should not work there.
Also I would ask for a run down of their investment strategy (or strategies) and the background of the principals (in case they have worked for prior firms that you can research)
And who the investors are. Try to find a standard due diligence qnr online. This should help with the kinds of things that an outside investor would be looking at. And since you are investing your time and career, these are the same kinds of things you should be looking at.
#1 Gunner Wrote: ------------------------------------------------------- > And who the investors are. > > Try to find a standard due diligence qnr online. > This should help with the kinds of things that an > outside investor would be looking at. And since > you are investing your time and career, these are > the same kinds of things you should be looking at. I would put money on the fact that they won’t tell you who the investors are - but they may give you a % holding of the largest investor as their redemption could close the fund if it is too big… Agree with stromey though - ask about the investment strategies and if they are likely to open any side pockets/LPs/smaller funds with specific strategies such as litigation trades/equity only etc Also might be good to note their HWMs or Hurdle rates as some funds have quite high hurdle rates that will significantly impact their incentive fees.
High watermarks are definitely important. Depending on stage the fund is in they may not be willing to disclose AUM butunderstanding of strategy is definitely important. As far as investors go, they will not tell their investors but should be able to give you an idea as to percentage that is institutional vs individual clients and may be able to tell you a percentage of AUM that belongs to employees of the fund. Important that management and employees have skin in the game.
If you’re currently unemployed, then take the job, it’s better than sitting at home doing nothing. But if you’re employed, don’t bother asking, they all lie about AUM, strategy, performance,… By the way if you mention the word “audited” in your interview they’ll kick you out 
While you definitely want to ask basic info about the fund during the interview, I’d be careful about turning it into a due diligence session. You want to spend the interview time telling them why you’d be a good hire for them, not as a company information session. Let loose with the questions after you get the offer.
If it’s a small fund I would be more focused on their ability to raise money as opposed to what current AUM is. I would find a fund with $25MM and visibility towards raising $100MM much more attractive than a fund with $75MM and no marketing effort at all.
Of course in this market almost any fund that doesn’t have a proven track record is having trouble raising capital. I worked for a start up fund that was well capitalized and had a “name” principal out of another large fund expecting that people would be knocking down the door to invest with him. During the time I was there they ddin’t get a commitment from a single outside investor despite plenty of meetings.
I disagree on the cautious approach. The interview is a two-way process. You need to perform your own due diligence considering the lack of available information. While I wouldn’t ask for an audited track record and the DOB and SS of the principals, at minimum you should cover: Strategy Founder and Principal Bio’s Infrastructure (with an emphasis on controls and also a decent marketing effort) AUM and Lock-ups (longer lock-ups preferable) Historical Performance (you need the summarized version not the monthly audited track record - can imply whether or not anyone’s getting a Christmas bonus) Composition of Investor Base (high reliance on FoF is a poor signal) Answer the question “do they eat their own cooking” How much of the fund is internal $ (if I was conducting DD I would ask how much of their liquid net worth is in the fund)
I’m with ValueAddict. If you don’t ask these questions, you seem cheap and desperate. The moment you get in the interview, say something like “I’ve been trying to find info on this fund, but it’s hard to come by. Can you tell me about the fund?” Then run down ValueAddict’s list. Ask for whatever literature they can give you. To ValueAddict’s list, I would add: Number of investors (1 is really bad, etc) An understanding of fund valuations (if they trade all liquid securities, this is easy - not so easy if they trade illiquid crap and there are some traps here for employees) An understanding of risk of the fund
sailor Wrote: ------------------------------------------------------- > Of course in this market almost any fund that > doesn’t have a proven track record is having > trouble raising capital. I worked for a start up > fund that was well capitalized and had a “name” > principal out of another large fund expecting that > people would be knocking down the door to invest > with him. During the time I was there they ddin’t > get a commitment from a single outside investor > despite plenty of meetings. Were the initials of the fund HPC?