Brett Caughran @FundamentEdge:
HEDGE FUNDS: THE SUMMER INTERN
As a hedge fund PM, the concept of having a summer intern is really seductive. I've got a team in place, sprinting as fast as we can to research stocks & generate ideas, yet it feels like I can never fully complete my "to do" list. I've got a list
Brett Caughran @FundamentEdge:
of projects that just never bubble to the top...to look at this new sector, deep dive on this new theme.
I wish I had another set of hands to help! Additionally, ALL PMs think they they are going to perform well and grow AUM, so getting a "free look" on talent for
Brett Caughran @FundamentEdge:
10-12 weeks in the summer helps me plan my analyst team hiring process out 12 months and makes me more comfortable with the hire than that person who just came cold through the interview process.
Sounds like a no-brainer, right?
Brett Caughran @FundamentEdge:
It's a little more complicated than that. I've heard some horror stories from full time hedge fund analysts ("I've talked to my PM a total of 2 hours in my first 3 months") but I've really heard some horror stories from hedge fund summer interns
Brett Caughran @FundamentEdge:
("I spoke with my PM twice all summer, he was traveling the entire summer, so we never met in person...I didn't get the return offer and I had no idea why").
It can becomes torturous & unfair for the intern, and the PM has these high expectations that become hard to meet.
Brett Caughran @FundamentEdge:
Let's examine why this happens.
The intern starts June 1st. Excitement! Intern is SUPER PUMPED to be there, PM is SUPER PUMPED to have them. Maybe a fancy lunch, meet the team, HIGH expectations for a great summer.
PM talks to intern, "oh yeah I'm on the road at the Goldman
Brett Caughran @FundamentEdge:
healthcare conference next week...take a look at this stock and we'll catch up when I'm back".
PM travels, 100% focused on the markets/portfolio & conference, and truth be told, kind of forgets the intern exists (I know from experience...)
PM returns to office, catches up with
Brett Caughran @FundamentEdge:
intern, stressed after the travel and wanting to carve out time to go through portfolio & digest learnings. PM also looks at calendar and says "oh crap, we have to start getting the portfolio ready for earnings".
PM has a rushed meeting with intern, who shows some REALLY BAD
Brett Caughran @FundamentEdge:
analysis on the stock (90%+ of the time), because why should the analysis be good? The PM expected the intern to know what to do, gave no guidance, and the intern is GREEN with no investment experience.
So in the PM's mind, this is happening "crap i'm in a bit of a drawdown,
Brett Caughran @FundamentEdge:
earning season is approaching, this intern doesn't get it, and is going to be a time suck all summer, I just don't have the time to train this person". So neglect sets in. PM doesn't give feedback on the work, maybe ignores the intern completely, maybe assigns some other busy
Brett Caughran @FundamentEdge:
work. Fast forward a week, fourth of July. PM takes a long weekend in the Hamptons to blow off some steam. Last thing on PM's mind is the intern. Maybe works remotely all week.
Comes back 2nd week in July, it's 100% focus ahead of prints. "I have to nail this earnings cycle to
Brett Caughran @FundamentEdge:
get out of this drawdown". Hunker down, sit with the core team, figure out a game plan = further ignore the intern.
Enter earnings season. Mid July to early August. As a PM, I'm up at 5am every morning, reading PR's, updating models, taking to my core team. SCRAMBLING. Working
Brett Caughran @FundamentEdge:
late. Playing connect the dots on all of the data we are receiving. Calendar full of IR calls and sell-side analyst calls. LAST THING I have time for is a slow lunch (with the naïve, green intern who didn't do a good job on the first project WHICH BY THE WAY WAS MY FAULT!)
Brett Caughran @FundamentEdge:
So modest neglect in June turns to complete neglect in July during earnings.
Earnings season finally abates in early August. And, oh yeah, I have a 6 day vacation planned in the August doldrums (other than Holidays, really the only time markets get a bit quiet).
Intern, who
Brett Caughran @FundamentEdge:
might feel a bit annoyed at this point, knocks on door.
"Hey Brett, next week is my last week, just wanted to check in". Oh CRAP. This is where the flood of guilt starts to enter. I've really given this intern a bad experience all summer, and I feel really AWFUL.
Brett Caughran @FundamentEdge:
I didn't give the intern any substantive work, certainly nothing that helped our process. The intern just spun wheels all summer, and probably didn't learn anything. And worse, i'm really not sure if i want to hire this person? I didn't carve the time in my calendar
Brett Caughran @FundamentEdge:
to chat, to teach, to evaluate. I was sprinting all summer (and/or working remotely from really nice locations) and the summer flew by. I feel awful. But as a PM often, it is inevitable you will drop some balls - and too often it's the summer intern.
Brett Caughran @FundamentEdge:
Sound hypothetical? It's not. This was almost my exact experience the first time I had a summer intern on my team. I felt, and still feel, really guilty and awful about it.
I had a second shot, though, 5 years later. I was FAR from perfect as an intern manager, still pulled into
Brett Caughran @FundamentEdge:
all of these traps, but less so. But the intense guilt of being a crappy intern manager the first time (and still being not great the second time) has let me to think a LOT about better ways, better structures to put guard rails around this process, both from the PM side and
Brett Caughran @FundamentEdge:
the intern side.
I'll follow up soon with pitfalls of hedge fund internships, and my best advice & frameworks on avoiding those pitfalls.
And also working on a teaser for an Intern Academy that I am developing for June 2023 to give interns some up front structure training