Hedge fund headhunter: "There is a feeding frenzy for talent"
While banks are a lot less enthusiastic about hiring people in 2023, the same cannot be said for the big multistrategy hedge funds. They're still recruiting wildly, and are paying very generously in the process.
Illana Weinstein should know. Heralded as one of the 'most powerful women in hedge funds' by the Wall Street Journal in 2019, Weinstein is one of the top hedge fund headhunters in the US. She reportedly has the ear of everyone from Steve Cohen at Point72 to senior people at Citadel.
Always busy (even after having a cesarean section, when she was taking client calls from the hospital), Weinstein has been busier than ever. There's a "feeding frenzy for talent," she told Barry Ritholtz on a recent Bloomberg Radio podcast. The big multistrategy hedge funds (eg. Citadel, Millennium, Point 72, Balyasny, Schonfeld, Exoduspoint and others), have notched up years of excellent returns and are keen to add people to manage growing assets under management. Regulatory filings suggest that top firms now employ over 5,500 investment staff alone.
While the appetite for staff is bigger than ever, particularly at multistrategy firms, Weinstein said finding the right people is incredibly hard. “The bar is exceptionally high,” she told Ritholtz. “There are so few people that can meet that challenge.” This helps explain why top portfolio managers are reportedly now being hired on packages as high as $50m.
What does it take to get a job with a multistrategy fund? The table stakes are "good intellectual horsepower, work ethic, training, and a history of results," said Weinstein. However, these are only a 'necessary and not a sufficient' condition of getting hired. "The other things we’re really looking for under the hood are insatiable curiosity, self awareness, a growth mindset, coupled with an intense desire to improve and learn, and passion.”
Weinstein stressed that jobs with similar job titles may be different at different funds. For example, a portfolio manager (PM) can be several different things. It might be someone who only manages a small amount of capital "with training wheels," or it might be someone running a large amount of assets and a big team. Equally, an analyst might almost be like a PM, managing a lot of assets of their own. For the most part, though, she said analysts are about: "Idea generation, creativity, independent research, and asking the right questions.” Portfolio managers are about: “Risk management, portfolio construction, hedging, sizing, the ability to build and mange a team.”
If you want an investment role at a top hedge fund, Weinstein said it will help if you come with a record of your own performance. Even better will be, "a spreadsheet showing what you have achieved and what you might have achieved if you had been allowed to do the things you wanted to have done."
While some recruiters have cautioned against joining multistrategy hedge funds due to their propensity to churn through staff, Weinstein is firmly in the multistrategy camp. Multistrategy funds have had stronger performance and developed better infrastructure than single managers, she said. They've also had better performance. "At a single strategy fund, the ultimate arbiter is the founder...Many are underwater in a very extreme way. At multi-strategy funds, it's different. They are now more institutionalized and better able to survive ups and downs."
If you're an employee, it helps that multistrategy funds are less likely to engage in the unpopular practice of 'netting' whereby a performant hedge fund manager gets his or her pay because of a loss-making colleague. Multistrats are also more likely to have 'pass through fees,' which allow them to hit-up investors for the costs of expenses like bonuses, research and travel on top of standard performance and management fees. This is why strong performers like working for them, says rival hedge fund headhunter Andy White at Upward Trend: "The model at multistrategy hedge funds is that they get rid of the lowest performers and reinvest in the top performers," he says. "The best people love it there."
Which are the best multistrategy funds to work for? Weinstein doesn't say. However, she does say that you need to be careful of places that have external investment too quickly and are struggling to deploy their funds. You're better off looking for employers that pace themselves, she says, pointing to Citadel (closed to outside investors) or Balyasny, which built its infrastructure and risk management before allowing AUM to balloon.
"The best funds are super-disciplined about how they grow," she said. "It’s super important – you will dilute returns without getting the talent piece right in keeping pace to AUM growth."
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