When most people hear “hedge fund,” they conjure up an image of imposing skyscrapers filled with singularly analytical (and often none too sympathetic) corporate financiers. But for junior Noah Dry, a two-month position at Magnetar Capital in Evanston, Ill., decimated those stereotypes, even if he did enjoy the building’s upper-story views of Lake Michigan.
Magnetar Capital was founded in 2005 and currently boasts over $220 billion in all assets under management. The company’s creative approach to investments allowed it to emerge profitably after the 2008 financial crisis, and its recent involvement with AI computing companies such as CoreWeave has made it a household name.
“People think accounting is super rigid, but it’s a game as much as a financial instrument,” Dry described. “In the investment space, people want to make the most amount of money possible by spending the least amount of money [and] alternative credit is like, if there’s a way to make money, we’re doing it!”
As part of the company’s summer internship program, Dry spent his summer working as an alternative credit and fixed income analyst — one of eight college students who formed that summer’s specialty group.
“I was trading credit default swaps,” Dry explained. “It’s very comparable to insurance, but you’re not trading the bond itself. [In a] hedge fund, you trade derivatives: the underlying equation is the bond or the loan and the derivative is the credit risk. In a credit default swap, you can trade around that risk.”
Magnetar’s summer interns were tasked with analyzing hypothetical investment opportunities in which they would optimize company gain and limit risk. In practice, this meant conducting preliminary research by combing through 10K forms, e-reports and other company documents to identify areas of probable loss.
“I worked with two large projects throughout the summer where we were given an [example] industry and told to make a trade. For the first one, my group was looking at consumer durable appliances; so think along the lines of washing machines, ovens, AC units, that sort of thing,” Dry said.
Each project culminated in a presentation, during which groups justified their investment strategy to the company and described future investment directions.
“Our first presentation was very freaky because we ended up presenting in front of about 150 people, including every single partner and every intern across every group, but it went really well,” Dry said. “That was definitely the scariest but also the most rewarding moment of the summer. We were done by like 10:30 a.m., and that was a fantastic day.”
Although interns kept largely to traditional office hours, often working 8 a.m. to 5 p.m., there was no shortage of cooperation and community around the firm in which they would learn and grow. With their own private floor of the Magnetar building, students were encouraged to interact and intermingle during projects, consistent with the firm’s innovative attitudes.
“I made some super close friends. We’d be hanging out [before work], working together and then hanging out together again after work,” Dry explained. “You’re spending two months with the same people.”
Over the summer, Dry’s appreciation of the finance realm grew to include the diverse perspectives and abilities that make a modern hedge fund. Magnetar Capital revealed an alternative to the strict and unimaginative corporations that are often typecast as hedge funds.
“When you think of a hedge fund, everyone’s image is a hyper-competitive, cut-throat environment run by extremely mathematically-minded individuals where you are viewed as an asset rather than an individual,” Dry said. “Magnetar has a legitimate workplace culture where you can talk to anyone, grab coffee […] there was no fear factor involved in socializing around the office. They also put on a bunch of events for us: they gave us Cubs tickets, they organized cocktail hours; they really wanted us to have fun.”
An all-in-all productive sophomore summer, Dry’s experience at Magnetar Capital was the ideal introduction to the world of finance in which he hopes to work. The experience provided an optimal balance of independence and instruction, not to mention effort and enjoyment, and Dry is eager to return.
“It was a great environment to work in from both a technical and a fun perspective,” Dry said. “I cannot imagine there’s a single firm in this world that operates like this one.”
