Morning Coffee: How to set up a hedge fund if you're not Greg Coffey or Michael Gelband. BoA's top female traders are heading for Paris
Who doesn’t dream of setting up their own hedge fund? For sell siders, it’s a dream of being the client and having people forced to respect you for a change. On the buy side, it's the dream of a fund of your own best ideas, without any of the rubbish that your boss puts in there, and no agonizing meetings about “tracking error versus the benchmark”. And, of course, there's the possibility of getting very, very rich.
But most people in the market are just about savvy enough to suspect that it’s probably more complicated than that. And it is. While it's fun in the good times, the hedge fund industry can be absolutely brutal when performance is not there. And even the strongest track record has a tendency to disappear. Just ask all the quant funds (start-ups and veterans alike) for whom 2018YTD has been a half-year to forget.
One person who has seen both triumph and disaster in the hedge fund space is Whitney Tilson, who had some great calls and a high media profile with Kase Capital, but who eventually had to shut the fund he founded after eight years of lagging returns. He's now giving seminars on “How to Launch and Build an Investment Fund”, which combine nuts-and-bolts advice on picking a prime broker, writing investor letters and budgeting for your business with dark hints about how tough it is to raise money from high net-worth investors. The price is $2k, which almost seems like it’s either far too much or far too little, but if it convinces you not to quit a good market job and watch your savings eaten up by compliance costs, it's probably cheap at the price.
If you've got the will to win and the track record to match it, though, there are people prepared to support you. Paamco Prisma, with backing from the Employees Retirement System of Texas, are launching a “seeding platform” which aims to reach $3bn of investments in start-up alternative managers. The aim is to profit from the tendency of funds to do best in their early years, and for small and nimble fledgling managers to outperform big name launches like the Coffey and Gelband funds seen so far this year. They are also aiming to make money by taking a stake in the management company of the funds they seed. This means you’ll be giving away some of your upside, but in an institutional alternatives market which is increasingly concentrating and in which small that funds are finding it hard to attract attention, it might be your only alternative to suddenly discovering a lot of rich relatives.
Separately, Bank of America’s decision to move some of its top fixed income traders from London to Paris is obviously a Brexit story, but it’s not just a Brexit story. It's almost as interesting that two of the three senior bankers who are making the move are women. Sanaz Zaimi, retains her role as global head of FICC and gains geographical responsibilities, while Vanessa Holtz becomes head of EU FICC trading and Othmane Kabbaj head of EU FICC sales. All three of the London-to-Paris movers seem to have picked up additional responsibilities, which looks like it is going to send a strong signal as to where the seat of power is going to be from now on. It's pretty proverbial that you don’t necessarily want to be too physically distant from the pen that writes down the bonus list...
If you're looking for an entertainingly cynical glossary of fintech-speak, the FT comment section comes up trumps. (twitter)
The legendary investor and hedge fund pioneer Paul Tudor Jones was interviewed by Lloyd Blankfein for a video on Goldman Sachs' website, with plenty of war stories and tales from his youth. (FNLondon)
Mark Johnson, the HSBC FX Trader on trial for market rigging, saw his bail doubled after a slightly bad-tempered hearing in which the judge asked whether “treatment for an irregular heartbeat” and “knee operation due to injury sustained while playing rugby” were entirely consistent with each other as medical grounds. (Bloomberg)
Morgan Stanley has hired Phil Allison from KCG Holdings, to step up its efforts to gain share in electronic bond trading (Bloomberg).
MS has also hired artificial intelligence professor and SAC alumnus Michael Kearns. (Bloomberg)
Asia dominates the list of most expensive cities for expats, with Zurich in third place. (Bloomberg)
Corporate access jobs may be in danger in the US market too as, post MiFID, global investors discover how cheap it is to just pick up the phone for themselves. (FNLondon)
Passed over for the top job? Here's some coping strategies for people who went nearly all the way up the corporate ladder but stopped at the last rung (Financial Times)
David Solomon of Goldman Sachs and Dan Schulman of PayPal chat in a wide-ranging podcast covering Shakespeare, management and what you can learn from being a DJ. (TheStreet)
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