Hedge your bets - move back to banking

6 October 2006

2 minute read

Hedge funds are past their prime - now's the time to revert to banking.

Two big names have quit the wild and wacky world of hedge fund management and returned to the investment banking fold.

Stu Hendel retreated to alma mater Morgan Stanley this week. And Albert Saporta, founder of Alternative Investment Management & Research in Geneva, sold out to ABN AMRO.

Hendel declined to comment on the impetus for his return. But Saporta put out a press release saying his move is a taste of things to come. Why? Apparently banks have a competitive advantage (he declined to expound further).

Dermott Coleman, director of event driven fund Sisu Capital, tells us it's not as desperate as all that. "If your strategy is largely dependent on quantitative edge [as Saporta's apparently was], or sheer weight of capital, big investment banks may be able to do it better. But when it comes to qualitative, research-driven investing, hedge funds like Sisu have the advantage."

A banking refugee, Coleman says he would "categorically 100% never go back."

Coleman emphasizes the lifestyle upsides. But David Durham, head of search firm Durham Consulting, maintains the appeal is still financial: "I know three people who set up a hedge fund two years ago that is now running in excess of $1bn."

Durham points those three have each made around $23m (12m) in equity value alone: "How are you possibly going to do that in a bank?"

AUTHORAnonymous

Insider Comment

Si
Simon
6 October 2006
Whether or not proprietary trading desks offer a more stable career than hedge funds depends on the phase of the cycle.
From a risk perspective, banks would probably prefer to concentrate on the client driven areas of their business! Look at Deutsche Bank - it made €400m on equity prop trading in the first quarter and lost €100m in the second quarter.
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