Big hedge fund increases profits by 330%, cuts staff

If an investment bank posted a 332.5% increase in profits, you’d expect it to bump up pay and indulge in some celebratory expansion. But things don’t work that way on the buy-side.

A case in point is Blue Mountain Capital Management, which has just released its 2016 accounts for its UK operation on Companies House. Its profits surged from £4m in 2015, to £17.3m last year – a 332.5% increase. And yet, it reduced the number of staff it employs by 11%.

Blue Mountain's accounts suggest it had 42 people in the UK at the end of last year, down from 47 a year earlier. The $22bn hedge fund only breaks out front office employees in its London operation, so those five missing staff were all front line investment professionals. The UK's Financial Conduct Authority (FCA) register offers an alternative perspective on the departures: it suggests two registered employees out of 30 disappeared in 2016 and that departures have continued this year, with a further seven exiting since January. As we reported, Peter Greatrex, its head of private investments, left in January.

The good news is that, for 2016 at least, the remaining staff were paid more. Blue Mountain's compensation costs were largely in line with 2015, at £16.6m. Average pay per head in 2016 was £395.6k, up from £353.2k the previous year. Blue Mountain also said that it paid an additional £1.1m to ‘key management’ last year, down from £1.7m in 2015..

Blue Mountain’s shrinkage contrasts other large U.S. hedge funds in London. Balyasny Asset Management increased its UK revenues by 117% last year. In response it doubled headcount and increased average compensation to £624k.

Contact: pclarke@efinancialcareers.com

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