M&A analysts quit investment banks for hedge funds rarely. And when they do, they've traditionally joined event driven funds that make use of their deal experience. Not so Arjun Bali, a former M&A analyst at Morgan Stanley.
In a move that's likely to be of interest to frustrated M&A analysts everywhere, Bali just quit Morgan Stanley after one year and nine months to join UBS O'Connor's long short equity fund.
Bali didn't immediately respond to a request to comment. His new role at UBS O'Connor will be as an analyst on the firm's technology and media telecoms (TMT) fund - a move which probably leverages knowledge of the TMT sector he gained in IBD at Morgan Stanley, but will be far more markets-focused than M&A.
Hedge funds are a lot less inclined to hire from investment banks than they used to be. However, Barry Seath, founder of hedge fund specialist Mirage Recruitment, says some funds deliberately set up to hire people from banks' M&A teams: "Funds like the fact that people have started their careers in M&A," he says. "M&A analysts get a very good fundamental training in valuation and modelling which they can utilise in an investment role."
Bali isn't the only Morgan Stanley M&A analyst to leave for a hedge fund this year. Alireza Berry-Noubar, another 2nd year analyst from Morgan Stanley's IBD team, just left for the special situations team at Visium Asset Management. Former Morgan Stanley M&A analyst Kyle Streitburger left the bank for hedge fund Och Ziff three years ago - via Blackstone's real estate fund, an M&A-to PE-to hedge fund transition which Seath says is also quite common.
The departures are likely to have left Morgan Stanley with gaps to fill. The bank is currently advertising for a utilities analyst, a communications and media analyst and a real estate analyst in London.
Seath says there are plenty of M&A analysts who want to move to hedge funds: "People want to make the move to a smaller and more meritocratic environment where what they say will actually impact investment decisions."
Hedge funds are fussy employers though, and hedge fund roles are comparatively few. M&A analysts who want to make the move must demonstrate market awareness and an ability to succeed in an investment environment, says Seath. "It helps to have run your own trading account, or to write up investment case studies in your spare time," he says. This is tough when you're an IBD analyst working 80 hour weeks, but Seath says analysts who move across manage to do it.