Hedge fund profits tumble, but it bolsters headcount and is still hiring
It’s a received wisdom in investment banking that when revenues at the firm start to look a little wobbly, employees should expect some imminent headcount cuts. At Winton Capital, the computer-driven hedge fund founded by David Harding, the opposite appears true.
Winton filed its 2012 accounts on Companies House yesterday, and revealed a steep fall in pre-tax profits for the year of £78.8m, compared to £221.3m for 2011. However, headcount was 262, up from 218 in the prior year, or an increase of nearly 17%.
Winton said that it “maintained its long-term strategy of investing for growth” and has continued to hire staff in both its research and operations division. The hedge fund doesn’t employ portfolio managers, but rather legions of quantitative researchers who develop its computer-driven investment strategies. It now has 106 people in this division, compared to 97 in 2011, and opened a new research office in Zurich in 2012. The hedge fund said that it was “committed to increasing the size and quality of its research teams”.
Like its smaller counterpart in Cambridge, Cantab Capital Partners, which has also been increasing headcount, Oxford-based Winton looks to quantitative PhDs coming out of the local university to staff up its research department. However, despite an increase in employees in this area, the largest rise was in its operations division, which hired 30 new staff in 2012 to take headcount to 127. It has plans to move into a new London headquarters at the end of 2013 and said that its Oxford office would remain predominantly a “research campus”.
In August, the hedge fund announced that it had overhauled its flagship fund, Evolution, with a greater focus on equities, in an attempt to revive its fortunes. Winton is one of the world’s largest hedge funds, with assets under management of $26bn at the end of 2012, an 8% decline on the previous year.
The slide in profits is at least reflected in the amount that Winton is paying its staff. It set aside £69.8m for compensation last year, or £262.5k on average per head, compared to £78.4m in 2011, which amounts to an mean payout of £359.6k.
Similarly, its highest paid director, which is probably Harding, received £8.4m last year, nearly half the £16m he received in 2011. Overall director pay has remained relatively consistent at £19.5m in 2012 compared to £21.3m in the previous year.