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World’s most exclusive hedge-fund is run by Harvard undergrads

It’s one of the most exclusive hedge funds in the world — and even harder to get into than Harvard. 

In fact, you have to first be accepted to Harvard to even apply to Black Diamond Capital Investors, a student-run money-management firm at the school. (Not to be confused with billionaire Stephen Deckoff’s Black Diamond Capital Management.)

“It’s honestly very similar to the recruiting process that you would go through for a bank or hedge fund or private equity fund,” one current member, a senior, told The Post.

Founded in 2012, the little-known fund gives the Ivy League undergrads — who are encouraged to invest their own dough — a chance to invest money and train alongside fellow future financial titans. 

Black Diamond’s members have impressive instincts, with the fund outperforming the S&P 500 “by an average of 7% annually over the past five years,” according to its website, though the returns could not be independently verified. 

Jameson Cohen, director of member affairs, said the group manages around $300,000 at any given time.

Just because you get into Harvard doesn’t mean you’ll automatically get into Black Diamond, though.

The senior told The Post that the admission rate is between 5-10%.

Applicants to Black Diamond must first be referred by current members.
Getty Images

According to Cohen, a sophomore, applicants must be referred to the organization by current members and undergo two rigorous interview rounds.

The recruitment effort is not unlike other clubs at Harvard, from the comedy rag Lampoon to infamous a capella groups such as the Opportunes — which has counted actress Rashida Jones among its ranks — except Black Diamond Capital’s process is closer to a dry run for a post-grad career.

The first interview tests students’ technical skills while also focusing on behavioral questions. 

One former member, who graduated in 2022, told The Post they got questions like, “How do you value a bridge?”

There’s no clear answer — the point is to see how you think through to a reply.

Logo for Black Diamond Capital Investors
Students who want to join Black Diamond have to be ready to debate an investment memo, going up against two other interviewees and several interviewers.

“They’re sort of trying to see whether you think like an investor, whether you have the necessary technicals to move forward to the second round,” Cohen said. 

If a student moves forward to the second interview, they must put together a stock pitch, including a cash-flow analysis and an investment memo that gets thrown to the lions: “You’ll debate that memo … with two other interviewees and several interviewers,” Cohen explained.

While many members take their money out once they graduate, some leave it in the fund for future students to invest, according to the 2022 grad.

Membership numbers fluctuate each semester, but Cohen says there are around 30 students in the club now. 

Pile of $50 and $100 bills
Student investors pitch their proposals to the group each week. Pitches gaining less than 50% of the group’s vote are killed.

“People apply multiple years, multiple semesters,” the senior said.

Once past the velvet ropes, there are poker nights throughout the year.

But “most of [the club] is about actually putting together sound investment ideas,” the senior added.

The club lifts lingo from Wall Street firms, assigning roles such as “analyst,” “portfolio manager,” and ‘‘investment committee.”

Each week, they all convene for teams to pitch the entire club on their stock picks.

Jameson Cohen
Cohen said the group is managing around $300,000 of investments at any given time.
Anthony Tulliani for NY Post

“They present it to the whole committee, everyone asks questions, and then we vote on it,” the senior said.

“The amount of the portfolio that gets placed in that investment is related to the proportion of votes that are received.”

For example, the 2022 graduate said, “a position that gets through with 51% of [investment committee] is going to probably be sized relatively smaller compared to a position that won over 90% of the investment committee.”

The group will pass on an investment pitch if less than half of the membership votes are against it, according to the current member. 

New York City headquarters of Blackstone
Former Black Diamond investors are now at blue-chip firms like Blackstone — which gives students a leg up in the financial job market come graduation.

“We actually like to keep a healthy cash position in case there’s opportunistic investments we wanted to make,” the recent grad said.

But, for many, the main draw is Black Diamond’s alumni network, with members comfortably situated at blue-chip firms like Apollo, Evercore and Blackstone.

Upon joining the undergraduate hedge fund, new members are thrown into a group chat with close to the entire membership dating back to its founding.

And, of course, that can lead to jobs.

“Many of those people have gone on to work at some of the most desired firms,” Cohen said, “so they’re often able to let you know about deadlines or if there’s going to be someone on campus interviewing at some point soon.”

This story originally appeared on NYPost

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