Posts Tagged ‘alternative investments’

Hedge Your Bets at the Track

Friday, May 16th, 2008

Tomorrow is the second race in the famous Triple Crown and as the winner of The Kentucky Derby; Big Brown is a favorite to win the Preakness Stakes. Whether Big Brown wins the race and goes on to win the Triple Crown -which would be the first time in 30 years-I am sure some in the racing world are wondering what will happen to the horse racing business after this year.  The reason being-Big Brown is owned by a new type of horse owner-a Hedge Fund.

My guess would be International Equine Acquisitions Holdings, will report a strong return to their investors especially if Big Brown goes on to win the Triple Crown.  Although even with just the Derby win under his belt I guess his stud fee will help this firm’s performance for many years. 

I think a bigger more interesting question should be asked: Will the success of this strategy and its uncorrelated returns to any traditional financial market lead to other copy cat funds being formed?  If I was a betting man I would bet big on the answer being yes.  And if this occurs then is the horse racing business in for an explosion to the upside on cost as we have seen happen in the commodities universe specifically with oil and natural gas?

Will Hedge Funds and their large pools of money start attending these horse auctions with the hope of walking out with the next Big Brown? If Hedge Funds do start to attend these auctions then you can expect the prices at these auctions to break new records and for many more horses to be bought, for the funds will most likely try to spread their risk out over numerous horses. 

These new record breaking prices will most likely trickle down into others cost and revenue producing areas of horse racing such as stud fees, sponsorships and race winnings.  As the race purses, sponsorships and stud fees increase in value more investors will try to get into the strategy and I would presume more people in the general public would be interested in watching the races both in person and on TV.

If the strategies are proven to work and the returns can be spread out over a long time period especially with stud fees and sponsorships then I would expect some institutional investors to invest in this strategy in the next 3 years or so, perhaps thru their emerging manager platforms.  Once this occurs people presently involved in horse racing may be in for a very pleasant surprise.

As you watch the Preakness Stakes tomorrow; I ask you to remember you may not only be watching a historical race in regards to the Triple Crown but you may be watching the horse, Big Brown who is responsible for changing the horse racing business for ever.   

 

How to find a Private Equity or Hedge Fund Internship.

Monday, May 5th, 2008

I am just finishing my sophomore year and had not really given much thought yet to internships. What do you think is the best way to find an internship that would help me to find a job when I graduate?” Michael,  Comment to posting on 5/2/08

First I suggest you concentrate your search within the immediate proximity of your school. This opens the possibility for a summer internship to become a full year internship which is always viewed positively in the eyes of future recruiters and/or employers.

 

Secondly, start making a list of the Hedge Fund and Private Equity Firms that you can approach for internships.  You may want to broaden your list to include investment banks and traditional investment management firms to approach. If you do not get an internship at a Hedge Fund or Private Equity Firm, these alternates will at least start you on the right track for interning and relative investment experience.

 

In order to identify funds in your school’s proximity I suggest using the internet and your school’s alumni center.  The alumni center can be an extremely valuable tool for your search since most firms in the alternative investment space do not actively recruit interns. Therefore if you want an internship with these funds you must be the proactive part of the equation.  Having the school connection or something else in common can be a very strong selling point for you.

 

Once you have identified a couple of funds send your resume to the firm’s Managing Partner and then following up with a phone call in about four business days.  Your goal for this call is to make sure they have received your resume and to express to them (the decision makers) why they should talk with you.  Be prepared for this call: know your resume, know as much about the fund as possible, have an investment idea or two ready and know what is happening in the market.

 

As you prepare for an internship in this space I would suggest you start reading the Wall Street Journal and Financial Times everyday. Firms want to know you are passionate about investing and this action can help express this passion.  Believe it or not something as simple as reading these papers and having the knowledge of what is going on in the market places you into a smaller more select group of candidates.

 

Also make sure you do have one to two investment ideas ready to go and more importantly the reasons you like the ideas. Your reasons should be concise and to the point. You need to get across your main points in less then 1 minute. Monitor these ideas as if they were presently in your portfolio and know on a daily basis if anything has changed your investment hypothesis.  I know many candidates who actually have a short one page write up which they give to prospective funds.  This write-up allows the fund to see the candidates writing style, presentation and thought process.

 

If you are applying for an internship with a large fund that has its own recruiting infrastructure in place, remember a firm’s recruiter can be your biggest cheerleader during the interviewing process–always be kind and follow their instructions. Do not try to go around the recruiter as this will be detrimental in most cases.

Please understand that if you are applying to a large fund your competition will often be stiffer than with smaller funds. For this reason a smaller fund or lesser known fund can be a great source of an internship.

If you are not successful in obtaining an internship with a Private Equity firm or Hedge Fund then look into internships with either a traditional investment management firm or investment bank. Any type of internship within the financial services field will be beneficial to you in the long run.

 

Next Monday Student Blog: What to get out of your internship?

Welcome to Private Equity Jobs!

Thursday, May 1st, 2008

I want to personally welcome everyone to PrivateEquityJobs.com’s new blog. Our hope with this blog is to provide another tool to help educate industry professionals and passionate students about the private equity and hedge fund industries. Furthermore we hope to provide qualified knowledge in regards to the career paths and potential employment opportunities within these specific investment funds and the alternative investment space as a whole.

My hope is that with the help of our community we can become an interactive center of knowledge focused on careers and potential careers within the alternative investment space. I have spent the last 10+ years of my professional life working as an Executive Recruiter and Consultant to Private Equity firm and Hedge Funds.

This area of investing changes quickly and the employment opportunities in the space change on a regular basis as well. To fully understand the changes in the employment landscape you must understand the bigger picture of the alternative investment space; I intend for this blog to provide the solid understanding of the industry that you will need to be successful.

As the blog grows you will see that we have invited guest bloggers to write about certain subjects and provide for us another perspective on issues. We will try to make this blog as interactive as possible and ask that individuals with questions address those questions through our comment section at the bottom of each blog. I will do my best to answer each question either in the comment section or sometimes as another blog entry.

Thank you for your interest in our blog and PrivateEquityJobs.com, I look forward to hearing from our readers and building a dialogue with the community.

Simms Browning Founder & CEO PrivateEquityJobs.com