The number of poker players taking hedge fund jobs is increasing, reports Fins.com. More and more funds are looking for fast-thinking card players who can quickly analyze intricate situations and make cold, hard, calculated bets. The type of skills shown by top poker players mirror those needed in hedge fund trading jobs: namely, rational approaches toward risk and a good memory.
A good example would be superstar gas trader John Arnold, who’s made billions trading energy futures for his Houston-based Centaurus Energy fund, and was profiled recently by CNN’s Money. He is described as having the “brain of an economist… and the iron stomach of a riverboat gambler.”
Arnold began his career as an energy trader at Enron, but escaped before the firm imploded. A few years later he reportedly earned $1 billion betting that natural gas prices would fall – betting against the now famous wager at Amaranth Advisors LLC. In 2008, he foresaw the collapse of the commodities boom and doubled his firm’s money.
“He’s like a poker player who can see everyone else’s cards,” one longtime associate is quoted as saying in the article. Arnold focuses on a “virtual” type of natural gas trade known as a “swap.” No physical natural gas trades hands. But if big energy producers such as Chesapeake Energy or BP are worried that prices are going to fall below a certain threshold, they often enter into a contract with a firm such as Arnold’s Centaurus to pay an agreed amount of cash in the event of a price drop. However, if prices move the other way, Centaurus wins.
Arnold showed great aptitude for numbers early in life, able to easily grasp economic concepts and do complex math in his head. His early experiences at Enron gave him unique insight into the energy needs of gas customers around the country. He was handling contracts totaling more than $1 billion a day on Enron’s natural gas trading desk, when he was only in his mid-twenties. Today, his Centaurus fund, founded in 2002 with a few colleagues from Enron, has 70 employees.
Investor relations professionals at hedge funds often migrate into the job from previous experience in client services or marketing at other financial organizations, or capital introduction at prime brokerages. Experience at an investment consultancy may also give you the skills needed to work in this role at a hedge fund. You would have a familiarity with pension fund and other institutional investors, and have started developing a broad network of contacts of potential investors. This would all be valuable to a hedge fund firm.
More junior investor relations staff will respond to client questions about the fund and general market and economic conditions. He would perhaps work on the firm’s quarterly newsletter or other client-facing communications, meet with existing investors to interest them in other funds, and arrange for members of the firm to appear at industry conferences and other speaking engagements to help promote the funds.
As an investor relations professional, you will wear many hats, and be involved in all aspects of the sales and client service activities of the fund. Investor relations is one area where someone with no previous hedge fund job experience can break into the business. Though you should have outstanding interpersonal skills and a solid understanding of hedge fund investment strategies.
References:
www.forbes.com
Getting a Job in Hedge Funds By Adam Zoia, Aaron Finkel, John Wiley and Sons, 2008
www.hedgeworld.com
While you may be e-mailing your resume these days instead using paper and envelopes, a cover letter can still be one the most effective ways to differentiate yourself from other candidates.
But as you can expect, hedge fund managers and principals are extremely busy, so you have only a few seconds to capture their attention. It’s best to follow a simple, 3-step format that gets into the heart of your message in a hurry.
The first paragraph should simply introduce yourself and explain why you are writing. Mention the specific position and why you are interested in it. However, if you had any personal contact with the person you are writing to, or were referred to them by a third party, be sure to mention the person’s name. This paragraph should be no longer than two sentences.
Your second paragraph is where, in the most concise and powerful way possible, you highlight your unique qualifications and experience. This is where you pull out 2-3 key points from your resume and put them front and center.
The key here is relevance. As with your resume, your cover letter should focus on the specific skills or experience that you’ve acquired that relate to investing and hedge fund jobs. This could include proof of your passion or long-term interest investing, a successful investment track record, your particular investment philosophy, awards or recognitions. This paragraph should be no longer than 5 sentences; you may want to split it into two paragraphs if it’s too long.
Next time, we’ll look at how to close your hedge fund job cover letter, and some other tips to make it more compelling.
