Shamil Shah - DSAM Partners

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I am currently interning at DSAM Partners, a primarily discretionary hedge fund, which has recently started using systematic techniques to test trading signals. I am based in the London office, working as a Quantitative Analyst. I’ve just finished my second year at Jesus College, studying Natural Sciences (Physics). What does a typical day look like?

The day at a hedge fund starts early, before the European markets open – I arrive at work at about 7am. The first thing I do is compose an email to the Portfolio Management Team detailing key upcoming events for stocks in our portfolio, important since Earnings Season is well under way. After preparing breakfast from the well-stocked kitchen, I work on my main project. This involves programming in Python to back-test systematic trading rules on historical stock price data, analysing results, attempting to explain the patterns observed and suggesting strategies on how to use the trading rules to maximise returns. It helps to read relevant academic economic literature to understand the results I obtain. While I am primarily working on quantitative analysis, I have the opportunity here to experience other roles in the hedge fund. I attend fundamental analyst meetings, often involving an analyst from the sell side (investment banks such as JP Morgan and Goldman Sachs) summarising their evaluation of a stock or industry. I usually leave the office around 5:30pm. How did you hear about this internship?

I actually heard about this internship a couple of years ago, from my school. DSAM were looking for further maths students to intern with them. The application process involved a CV screening and a mathematics and problem solving based interview. I have worked at DSAM for short periods over the past couple of summers, taking on trading and technical analysis projects, and am now back on a longer internship. Do you need any particular skills for the placement?

Programming and mathematical skills are essential for working in quantitative analysis. While I had experience of coding in other languages (C++ and MATLAB, through the Natural Sciences course), I was able to pick up Python on the job, by reading existing code (and extensive use of Stack Overflow!). I am now comfortable coding in Python, giving me the independence to develop my own ideas. Good communication, both verbal and written, is important. I need to be able to effectively discuss my ideas with other analysts and concisely report my findings. Other soft skills are less important for quantitative analysts, but are useful for fundamental analysts who interact with analysts from the sell side and others from the world of business and finance. What was the highlight of your week/internship so far?

Attending the Best Ideas Dinner, an event run by a large broker for young buy side and sell side peers to present ideas and enjoy a meal together, was definitely a highlight. As the only intern present at the event, it was a fantastic opportunity to network with people from investment banks and hedge funds throughout the capital. The dinner involved us each pitching an investment idea. Preparing the stock pitch was very different from my quantitative analysis work and was a great way to learn more about the process of fundamental analysis. What have you learnt from your internship?

This has been a brilliant opportunity to develop my understanding of how the markets work, from a quantitative perspective. I have learnt the process that quantitative analysts and traders go through, from designing trading rules, to data cleaning and analysis. Important points I have taken away include how to avoid over-fitting data, a huge pitfall in this field. I have also learnt a new coding language, a skill that is extremely useful in this industry and many others. What advice would you give to someone else looking to gain experience in this sector?

The ability to code is a prerequisite to working in quantitative analysis; learning a language would be extremely useful (Python and R are commonly used in this field). I also recommend giving Robert Carver’s book ‘Systematic Trading’ a read – it gives practical advice on how to trade effectively using quantitative techniques. Ask lots of questions to people in the industry; I am lucky enough to be surrounded by some extremely experienced people here, having previously worked in investment banks or other funds.