How Point72 is hiring the next generation of hedge fund managers

Point72 Asset Management, the family office that oversees the enormous wealth of legendary hedge fund manager Steve Cohen, doesn't love the traditional resume format and is facing a shortage of talent as it looks to expand in both the U.S. and its new London office.

Jonathan Jones, the head of investment talent development at Point72 Asset Management, would like to see some new ideas.

“There’s no question that technology continues to play an increasingly influential role in talent identification, recruitment and moving someone from that job to this job, but that whole process is ripe for disruption,” he said at a panel by HFM in New York. “My outlook for the evolution of technology is that the traditional resume due for a quiet and dignified death in favor of something more modern and evolved, although no one has broken out and accomplished that yet.”

Point72 can subject candidates – particularly senior ones – to 10 interviews before extending an offer. Jones says that four or five interviews are more common "one right after the other", but they can be stretched across a longer time period in order to allow people to meet who they need to at the firm and "warm up to the opportunity".

Junior candidates are expected to produce a case study, he added. “We have them do the work, produce the write-up and submit it to us – we have them present it to us and talk about it, and we ask them questions and present them with real-time feedback, and typically they respond well to it," he said.

Point72 is notoriously stringent about who it takes on, only hiring 2-4% of people who apply. Its recent London hires have initially focused on hiring back people who previously worked for SAC Capital Advisors before its closure. Juniors often have to go the extra mile to impress, said Jones.

“Recently, a candidate had gone through the exercise, and we told him that we felt his work fell a little bit short,” he said. “He took feedback, woke up at 4am the next morning and created a whole new case study from scratch – we didn’t ask him to do it, but we were impressed by it, and we’re getting ready to make him an offer.”

The need to train your own in hedge funds

Steven Cohen has spoken about the dearth of talent available to hedge funds now, saying he was "blown away" by the lack of people available at the moment. Point72's Academy is an attempt to address the reduced pipeline of juniors coming out of investment banks right now, and is indicative of a broader trend of hedge funds hiring graduates and training them up.

“Point72 is ahead of the game with the Academy, because investment banking analyst classes have gotten smaller and that will continue,” said Sahar Abdulahad, director of hedge fund consulting at Credit Suisse Prime Services.

“There’s currently an imbalance of talent across the industry, where demand is skewing a bit more junior, whereas available talent skewing a bit more senior,” she said. “Firms start screening candidates and realize that they need a bit more experience, particularly when it comes to investment analysts.”

Point72 Academy members get training in financial modeling, investment analysis, research methods, information synthesis and communication strategies. Those that successfully make it through are likely to get promoted to research analyst.

Point72 hired the first Academy cohort in 2015, and that group is currently beginning permanent placements with various portfolio teams at the firm. The second cohort is starting later this summer, plus the firm hired 18 summer interns, which will form the basis of its 2017 Academy class. The family office has global ambitions for the program.

“The coming cycle will expand the Academy program globally – we reopened our London office and we want to expand in Asia,” Jones said. “We perceived something of a secular decline among the talent in investment banking programs, and we didn’t want to be beholden to another firm in another industry to attract talent.

“If we can hire people as talented as the investment banks hire and put them through training that his as effective as what they get at an investment bank, then we win,” he said. “It’s an increasingly important part of the talent pipeline to create the conditions under which portfolio managers will be successful, put top talent in their hands and helping them building their teams effectively.

Kids these days

When asked about what financial services firms need to do to increase their appeal for talented millennials, Jones conceded that there is one area in particular where his firm needs to improve.

“A candidate had been in to interview for the Academy recently, then went on Glassdoor to write a review and took us to task for the quality and selection of the snacks in our pantry,” Jones said. “It’s good to hear that people are focused on the most important factors.”

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