Even at small hedge funds there are plenty of politics to play. As one would suspect, it is a lot easier to work on an idea and get it into the book, if the source of the idea is the PM.
This scenario happens often, and raises a dilemma. Most PM’s do not like to be challenged, and when they are, the analyst often loses, and just takes a notch down in the PM’s eyes. Unfortunately, this is basic human psychology. But every analyst also knows they need to get as many names into the portfolio if they want to get paid. Some analysts call this situation a lose lose: If the name works, the response is “that was my idea, why should I pay you,” and if it doesn’t work the PM says, “well you did the work on it.” In the end, your goal as an analyst is to work hard, and be right more often than you are wrong. If you do this, hopefully your PM will see this and reward you for it.
The flip side is working on an idea that you generate yourself. These ideas are much harder to get into the portfolio, and come with more pressure, but if they work, they lead to bigger bonuses. While these ideas are harder to get into the portfolio and come with more stress, you have to work on them if you ever want to gain respect. Just cross your fingers on the first couple because if they don’t work, you will spend a lot of time in the dog house and it is very difficult to get out.
Just think about going to Vegas and sitting at a black jack table. If the dealer deals himself blackjack for the first three hands, wouldn’t you be hesitant to play the fourth hand. Again, this is logical human nature. Nobody said life was fair.