Morning Coffee: The hard reality of life in a top hedge fund. Guess who's getting paid at Credit Suisse?
It’s hard out there for a hedge fund manager. When the times are good, you’ll make a mint, but job security isn’t great by any means. Here today and, if your investment strategy goes south, gone tomorrow…
A case in point is billionaire hedge fund manager Ken Griffin, founder of $27bn Citadel, who often pounces on other firms’ distress to snap up top talent. The flip side of that coin: Griffin can be unforgiving when it comes to people working in his own business.
Just how unforgiving is shown by Griffin's treatment of portfolio managers at Aptigon Capital, an equities unit which is partly comprised staff Griffin had "saved" from Visium Asset Management, a hedge fund that closed in 2016.
Bloomberg reports that just five of the 20 managers, analysts and traders originally hired from Visium now work for Griffin. That's an 80% lay off rate. Only one of Visium's portfolio managers is still employed at Aptigon.
Nor is it just the ex-Visium staff. After Aptigon failed to make money last year or this year to date, Bloomberg says Griffin just fired 12 of the fund's 22 portfolio managers - 54% of the total. The layoffs were part of 21 redundancies which affected 15% of the fund's workforce as a whole.
The moral of the story seems to be that you may not want to work for a top hedge fund, or at least not if you happen to be a fallible portfolio manager. If you're infallible, or comparatively so, you'll be fine. Bloomberg said Griffin meant the layoffs to be a signal to the best traders that the firm’s resources would be focused on them.
A Citadel spokesman acknowledged the “changes” but said, “we will continue to recruit leading talent to the [Aptigon Capital] team.”
“The best talent is talent you go out and find,” Griffin said at a conference in May 2016 before taking on the Visium group. “The talent you want to hire is the talent you want to pull from someone else.”
Just because you're pulled, don't presume you'll stay that way.
Separately, who gets the biggest bonuses at Credit Suisse? If you guessed investment bankers, then you’d be wrong.
Credit Suisse plans to increase bonus payments for its wealth managers at more than twice the bank average as growth outpaces other businesses. The Zurich-based bank’s main wealth management business, led by Iqbal Khan, is seeing a 7% increase in the bonus pool from last year compared with a gain of about 3% across the rest of the bank, according to Bloomberg.
As part of a restructuring plan to focus on managing money for ultra-high-net-worth individuals, the bank is reducing its reliance on trading businesses that came under pressure because of higher regulatory costs and competition from hard-charging U.S. peers.
The U.S. Department of Treasury and the Internal Revenue Service issued guidance seeking to close a loophole that hedge-fund managers had been trying to exploit to avoid paying higher taxes on carried-interest profits. (Bloomberg)
RBS CFO Ewen Stevenson signaled further job cuts as Britain’s biggest government-owned bank accelerates its investment in technology. (Bloomberg)
BNP Paribas has undertaken a big reshuffle of its global markets business. (Reuters)
J.P. Morgan, Bank of America Merrill Lynch and Citigroup are leading the biggest buyout since the financial crisis, a $13.5bn-equivalent loan and bond financing backing private equity firm Blackstone Group’s acquisition of Thomson Reuters’ Financial and Risk (F&R) unit. (Reuters)
Brian Gu, J.P. Morgan’s chairman of Asia Pacific investment banking, joins Alibaba-backed Xiaopeng Motors at a time of growth for the company and the electric car industry. (WSJ)
Morgan Stanley is creating a 66-person team called Morgan Stanley Family Office Resources to help financial advisers who work with some of the bank’s wealthiest clients. (Bloomberg)
“We're raising $250m [via an ICO], finishing up some acquisitions, and building an ecosystem that we intend to challenge Wall Street with.” (Business Insider)
UBS analysts say that the S&P 500's decline in February seems reasonable, because two of the market's secret weapons – share buybacks and mergers and acquisitions – saw an uptick at exactly the right time. (Business Insider)
Money management has some similarities to running a nuclear power station – and an accident is already unfolding in slow motion, according to Alliance Bernstein. (Business Insider)
At Lazard, Matt Carey helped advise the Treasury Department on General Motors Co. after its bankruptcy – recently he started digital retirement plan provider Blueprint, which got seed funding of $2.75m from Green Visor Capital and NextView Ventures. (Bloomberg)
Whitney Tilson closed his hedge fund, Kase Capital Management, in September due to poor returns, then started a new business called Kase Learning to educate others on investing. (Bloomberg)
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