The hedge funds that keep on hiring from investment banks

This time last year, BlueMountain Capital Management was a hedge fund happy to sail under the radar. Then it emerged that it was one of the firms on the other side of the “London Whale” trade, and earlier this year it hired Jes Stanley, the former head of investment banking at J.P. Morgan, as managing partner and was suddenly thrust into the limelight.

Away from the headlines, though, it’s been one of a handful of hedge funds quietly bulking up and taking advantage of the fall-out from investment banks to secure new staff. Over the past six months it’s been taking on traders and unveiled plans to open a new office in Tokyo, according to an investor letter seen by HFMWeek, after a surge in assets under management by $3bn to $15bn this year.

It’s also been bolstering its London office, and largely poaching from investment banks to do so. In the past three months it’s hired David Williams, who was formerly director of European convertible bond trading at Bank of America Merrill Lynch; Tom Eardley, who worked in the EU distressed debt and leveraged loan trading team at Barclays as a credit trader; Yunus Olcer from Goldman Sachs as a research analyst; Ed Sent, who was previously a partner at Owl Creek Asset Management, as an analyst; and Chung Fu.

Similarly, BlueCrest Capital Management has also been embarking on a recruitment spree – it’s bolstered headcount by 33% over the past 12 months and added 15 people since June as it looks to enter the fixed income market – again it’s been fishing from investment banks.

It’s already raided Nomura’s prop trading team and appears to now be targeting Credit Suisse. So far this month, it’s taken on Graham Ewen as a quantitative trader – a seven-year veteran of Credit Suisse; Chandan Ghosh, a former prop trader at the Swiss bank, as a portfolio manager; Tegjit Johar, also a trader at the Swiss bank, and Sid Gowda have also joined. It’s taken on Simon Gee, formerly a managing director at Goldman Sachs, and Daniel Escobar, formerly of Arrowgrass Capital, to bolster its credit derivatives trading team.

We’ve also pointed out previously that Millennium Capital Partners – notorious for employing a ‘sink-or-swim’ approach to its traders – has been recruiting prop traders from investment banks.

The message from hedge fund headhunters is that the firms hiring investment banks’ traders are still being incredibly selective. However, a better bet may be alternative investment firms and sovereign wealth funds are more likely to target ex-City and Wall Street traders as they build out their “hedge fund stables” – this is arguably a safer option than working for a hedge fund directly.