Morning Coffee: Point 72 - the caring, nurturing multistrategy hedge fund. Goldman Sachs CEO and fossil fuels
When Niall Hession, head of trading for Europe at Point72 was interviewed for the hedge fund's blog earlier this month and was asked why he'd worked for the fund for five years, he said it was the culture. "The analysts in particular have heard about our high analyst retention rate and the amount of support that the analysts get in building their career and being set up for success," said Hession. "Turnover is low here – many of our PMs started here as analysts."
In a world where some multistrategy hedge funds have a reputation for churning staff, this matters: big hedge funds are never cuddly, but Point72 is trying hard to have a more gentle approach to its people.
This is because it's more invested in them. While other funds hunt for their analysts and portfolio managers (PMs) on the open market, Point72 grows its own. "You build champions. You don't buy them," Jon Weiner, head of LaunchPoint, Point72's incubator for top long/short equity analysts, declared to Business Insider.
Getting into this incubator isn't easy. There are 21 people in total on the program, which runs over two or three years. Thousands of people presumably apply. Point72 has a 10-month academy bootcamp too, but it's the incubator that's most comprehensive. Its graduates make up 50% of Point72's 100 long/short managers; 75% of those who've graduated since 2012 are still at the firm.
While other hedge funds are harsh with portfolio managers who make losses, Harry Schwefel, Point72's co-chief investment officer, says the members of the academy are given two to three years to learn and make mistakes before they're given a lot of money to run: "We're not subjecting them to binary outcomes with drawdowns in those early years because they're figuring it out."
During those two to three years, the PMs in training receive tuition from Point72 founder Steve Cohen and other members of the fund. They're asked to pitch Cohen with their ideas, which he critiques, giving "his own view on things he's seen work and things that haven't worked." They're also given access to Point72's PMs, who speak frankly about their own struggles with their teams. Weiner says this PMs often "go to a place of vulnerability" and share some of the challenges. "The hope is really that our new PMs can learn from them, and hopefully avoid them, but if they encounter them, they realize, 'hey, this is not just unique to me.'"
Separately, Goldman Sachs CEO David Solomon is doubling down on elements of his alleged summer conversation with students at Hamilton College, in which he didn't seem overly eager to move Goldman Sachs away from fossil fuels.
“Traditional energy companies are hugely important to the global economy, they are hugely important to Goldman Sachs,” Solomon told the American Energy Security Summit in Oklahoma City yesterday. “We are all going to continue to finance traditional companies for a long time.” Solomon added that, without secure energy at an appropriate price, “society won’t function.”
It's not clear how this will play with the climate or with Goldman's intake of juniors. The firm didn't seem to ask this year's interns about climate change in its annual intern survey, but it asked last year's; 39% of them said climate change was the biggest issue facing the world over the next decade.
Goldman Sachs will be at the British Labour Party's conference in Liverpool next month. (Bloomberg)
Ex-Goldman Sachs associate Stefanos Kasselakis was elected leader of the left wing Greek Syriza party. (Financial Times)
Goldman Sachs' latest intern survey says its interns are more into Oppenheimer than Barbie, that 62% of them plan to stay in their job for up to five years and that nearly 90% of them plan to get married. (Fortune)
Jane Fraser is deploying transportation metaphors: “Get on board. We have incredibly high ambitions for this bank and, the train, it’s gonna move fast. So lean in, help us win with clients, help us deliver the changes, or get off the train.” (Financial Times)
Three of the four big four accountancy firms are cutting jobs and EY has focused its UK cuts entirely on its financial services practice, saying it plans to reduce the practice’s 2,300 staff by 5%. (Financial Times)
Beware the zombie private equity firms which can't sell their assets and can't raise new funds and are operating from offices on out of town trading estates, eking out a living. (Bloomberg)
The Italian government modified its windfall tax on banks: they can avoid paying if they set aside additional capital reserves. (Bloomberg)
Citi Securities is planning a new office in Frankfurt. (Bloomberg)
Staff at the German Bundesbank are unhappy with Boston Consulting's efforts to cut their headcount by 5%. “It’s all buzzwords,” said one. “The senior partners at BCG have experience and knowledge of central banking, but the junior consultants don’t, so the staff have to explain everything to them and that’s very annoying,” said another. (Financial Times)
Ex-UBS chairman Axel Weber is joining fintech firm Raisin. (Financial News)
African populations have almost no Neanderthal DNA, while those from European or Asian backgrounds have 1% to 2%. Denisovan DNA is barely detectable in most parts of the world but makes up 4% to 6% of the DNA of people in Melanesia, which extends from New Guinea to the Fiji Islands. (Bloomberg)
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