What do hedge fund analysts do?
Hedge funds are investments that use pooled funds and employ a number of strategies or stock tips to earn an active return, or alpha, for their investors. A hedge fund analyst is tasked with providing guidance to a portfolio manager on how to best structure the hedge fund's investment portfolio.
Identify Potentially Attractive Investments
A hedge fund analyst continually stays up to date on a wide variety of financial news, macroeconomic trends, and market forecasts. To accomplish this, a hedge fund analyst is required to spend time reading about these items and hold meetings or calls with experts, both internal and external, who provide insight into these types of market forces.
Provide Detailed Research on the Company
Once a specific stock/bond is identified, the hedge fund analyst begins their research, which will help lead to an investment recommendation with intraday tips for the portfolio manager. This research entails gaining an understanding of the company's current and future standing within the industry in which it competes; exploring the potential market and economic factors that could affect the company in the future; assessing risks to the actual valuation, and identifying potential company-specific risks of which the market is currently unaware.
Deliver a Recommendation to the Portfolio Manager
Once the hedge fund analyst completes their detailed research analysis, an opinion is formed on the best course of action regarding the company's stock/bond. A brief, yet thorough recommendation is crafted and then presented to the portfolio manager that outlines the best course of action and any major findings from the research used to come to this conclusion.