Hedge Fund Manager Jay Petscheck's Career Lessons
As the founder of Corsair Capital, Jay Petschek's story is interesting for us since this hedge funds were nowhere near his intended career path and now his fund boasts an AUM of US$3.4 billion (as of May 2022).
He graduated with an Applied Math major from Harvard given his knack for numbers and went on to M.I.T. Sloan to pursue a Master's in Management (finance).
He later joined the Banker’s Trust Company and when the bank shifted its focus to wholesale, offering leveraged buyout financing, Petschek found himself drawn to the equity investment side rather than lending. He spent hours in the bank’s library absorbing everything he could. Since this was before the internet made its dramatic appearance, so to obtain particular financial information, you had to be a shareholder or actually write directly to a company. But for him, the bank’s library contained microfiche versions of all the data he needed.
He switched to a brokerage firm, Ladenburg Thalmann & Co, to continue his journey in equity investments (corporate finance and research). He got exposure to investment banking and convertible bond arbitrage. He started investing personal funds into his and Ladenburg's research ideas.
His brush with hedge funds started with Kingdon Capital who relocated their offices near Petschek's and through their interactions he gained more insights into the industry. It eventually led to his "exit path" of starting his own company, Corsair Capital with a starting capital of about US$7.7 million after requests from friends and family to purchase stocks on their behalf.
However, even with an annual growth rate of about 16%, Corsair struggled to find investors. A decade later, Corsair’s worth grew to about US$70 million but it got noticed for breaking even despite the market drop of 2002.
As a value-oriented hedge fund, Petschek did miss the technology stock boom, deeming that stocks like Amazon were already fully-priced. The lesson here is that you'll have some hits and misses as a portfolio manager but you need to learn and move on!
🎯 To navigate modern financial markets, Petschek keeps an eye out for companies going through mergers or restructuring. He also sees a lot of potential in SPACs but is cautious as he predicts they'll not perform as well as projected.
Through all his experiences and observations Petschek believes that with stocks, what matters most is where it is anticipated to go, not where it’s already been. Thus far, he has ensured that Corsair doesn't put all its eggs in one basket to navigate financial climate.
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