Before becoming the CEO and managing partner of Sunrise Capital Partners, a San Diego-based hedge fund, Jason Gerlach worked as an attorney for a decade. He worked with clients in the alternative asset management space, and eventually the lure of joining a buy-side firm was too tempting to pass up.
“I spent about 10 years practicing law, and I’ve always been really interested in the businesses that my clients were running – I’ve always been entrepreneurial, and I couldn’t wait to get my hands on all sides of a business,” Gerlach said.
“I’d never go back to practicing law – if I can help it.”
Gerlach believes there’s much to be said for joining a hedge fund in California, instead of being clustered around Greenwich, Connecticut. As of September 2016, there were 949 California-based private capital fund managers, which includes private equity, venture capital and real estate closed-end fund managers, according to Preqin. That same report found that California hedge funds and private equity firms oversaw a combined $732bn.
The warm, sunny climate and proximity to the beach are recruitment draws, he says. “People say, ‘I’m a trader, or I’m in ops, sales or compliance, and I want to come out to California,’” Gerlach said. “We’re pretty much the only game in San Diego when it comes to hedge funds, so that’s a unique edge in recruiting and hiring.”
A quantitative macro manager, Sunrise Capital manages hundreds of millions of dollars with a small team of 10 in the San Diego headquarters, seven of which are on the investment side, plus a couple of reps in Japan, where the hedge fund has several large investors.
“At the moment there are only two roles that we’re looking to fill, but we’re always opportunistically looking for talent,” Gerlach said. “Technology is our friend, and the beauty of this business is that we could triple or quadruple our AUM and we’d probably only need to hire three or four more folks.”
“One of the industry developments in the industry is being able to do more with less, which is a blessing for managers but also a curse, because it makes it even harder for folks to get jobs at hedge funds,” he said. “Looking back to 10 years ago, hedge funds would have had more staff, but now some in-house jobs have been replaced by technology or outsourcing
Sunrise is looking to hire a really good investment associate who can help to enhance the firm’s current investment strategies, build new ones and implement them while overcoming challenges such as liquidity and execution time.
“We like folks with good trading and investment background, plus some quant skills and computer programming knowledge,” Gerlach said.
“We want people who are facile in several different languages and can quickly come up to speed in a particular language – we typically hire people who know at least one or two,” Gerlach said. “A successful candidate once told me in an interview, I don’t know XYZ but I do know ABC and it’s pretty similar, so I can probably get up to speed in 200 hours.’”
“We give them assignments – ‘Please write a program that does such and such in this language,’ and it’s either ‘Yes, this is some good tight code’ or ‘This code is all over the place and maybe they’re not the best fit for this position.’”
On the investment side, Sunrise Capital likes to hire people with some experience – but not too much. The firm also hires recent graduates.
“We accept resumes from people who have worked at hedge funds, big banks and even the mutual fund side – you name it,” Gerlach said. “If someone worked at a great hedge fund, then I’ll give it a look, but it’s not a prerequisite – there are really great thinkers about trading and the markets who have never worked at a hedge fund.
While most quant hedge funds are falling all over themselves to hire PhDs, Sunrise takes a more cautious approach.
“Sometimes PhDs are incredibly smart and talented in the narrow thing they’ve focused on, but they can be very obtuse, and many aren’t market watchers,” Gerlach said. “They may be dialed into a specific phenomenon or area of expertise, but they do not have a lot of market sense or a broad market understanding, so we’ve generally shied away from them.
“We look for good communicators who can think on their feet, collaborate and who can share, communicate and defend their ideas,” he said. “We want people who are willing to be criticized and look at the other side of the issue, because markets are ruthless, and it’s a take-no-prisoners, unforgiving business – you can be wrong a lot, but how do you respond?
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