Point72 Asset Management has big plans for its London operation, but right now it’s something of a ghost town.
Its plush office in St James’ Square is typical of a Mayfair hedge fund. It has modern art in the foyer – Homage to Dan van Golden by Richard Aldridge among others – a high-tech coffee machine, screens stacked up for traders and rolling TV news. But only a handful of people are working there.
It's the sort of set-up that excites Will Tovey, who has just started as head of the London office. Tovey’s last job was as head of equity distribution at Barclays, a role he took in 2009 when the bank decided to build an equities business from the bottom up.
“When I first started, we had a handful of people, no computers and no trading floor. We built a bulge bracket equities franchise from scratch and hired over 250 people during my time there,” he says.
Tovey started his finance career in 1995 as a graduate trainee at Mercury Asset Management – later acquired by Merrill Lynch and then BlackRock – after graduating in Economics from the University of Warwick. He moved to UBS in 2000 and, after leading its mid-cap equity team, eventually made it to managing director before his move to Barclays.
Currently, Point72 has around 12 people in its London office. Over the next 12-18 months, the office will be “fully-established” and could house 50-60 people, Tovey tells us.
Point72 only takes on 2-4% of the people who apply, according to recent comments from CEO Steve Cohen at an industry conference, who also said he was “blown away” by the lack of talent on the market currently.
Tovey is more optimistic and, having formally started his role earlier this week, is ready to expand the UK operation. We spoke to him about his career and the build out at the Point72 office in London.
I wasn’t out looking for a job in a hedge fund, so it wasn’t a conscious choice to move across to the buy-side. My move to Point72 is more about this specific opportunity – it’s a clean sheet of paper, and a chance to build a new business. That’s a rare opportunity these days. If it hadn’t come along, I’d still be happy at Barclays.
The sell-side has some challenges that are both structural and cyclical that will continue for some time and the industry generally still has a lot of change to go through. I don’t think people are queuing to leave. The sell-side still has a very important role to play, but there is some over-capacity and that still has to come out. The best people, the best products and the best capabilities on the sell-side are being valued increasingly highly by the buy-side.
In 2009, after nine years at UBS and during a period when every investment bank was going through turmoil, Barclays approached me to help build their European equities business from scratch. I was one of the first through the door – we had a few people, no trading floor and no computers. It was unheard in that era to be given the chance to build a bulge bracket equities business from the ground up. After 15 years in the industry, that was the most stimulating part of my career to date.
We are talking to a wide variety of individuals with different capabilities and a number of people are at various stages of the recruitment process. I’ve been in the London market for over 20 years. I know a lot of people and we continue to be helped by investment banks and search firms in finding the best talent in the market. In the next three to six months you will see a significant acceleration in the hiring process.
This is a business where success depends on the quality of the talent we can attract. Our returns, as a Family Office, are organic -- we grow by our own work, not by asset-gathering. That places a high premium on attracting top talent.
It’s the first phase of recruitment as a lot of people didn’t want to leave SAC. They’re also known and trusted entities and that’s important. It’s not an agenda of ours to go out and hire people who used to work for SAC, but there are some great people who wanted to come back.
We don’t have a target for 2016 particularly, but over the next one-two years, I’d say our fully-established office would be 50-70 people. This would be split 50-50 between investment roles and support positions.
It’s extensive and senior management are very involved. Investment staff and senior employees will meet Doug Haynes [president] and Perry Boyle [head of equities] and maybe even Steve Cohen. We have a hiring committee and the only person who can veto a new recruit is the head of compliance.
There can be up to ten interviews. The process to hire me took months and I met with the same people more than once. Interviews will take place in London, but also in the U.S. because it’s where most of the senior management are.
The management team. It’s not Steve, or Doug or any one individual – everyone has to say yes. We need universal buy-in and the expectations for senior level hires are very high.
For me, the key is not to try too hard. Show honesty, integrity and know your weaknesses. The best people I’ve worked with have a security in what they do and this confidence means I have confidence in them. Insecurity can breed bad behaviour and lead to inappropriate decision-making.
The background checks are extensive, and if people don’t have the character traits we’re looking for or can prove over a sustained period of time that they can work within a team, it will be found out during that process.
Doug always asks how people are improving, but I ask two different types of questions, some that test how people think on their feet – how many TVs are there in China?, for example – where there’s no right answer but I want to see how they react and think. I also want to see tangible examples of problems people have faced and how they have fixed them. Also, I want to know what drives them outside of work. I’m not a hard interviewer, I’m a bit of a softy really.
We offer them extensive training and ensure they have the right support and infrastructure they need to progress. The average tenure of our portfolio managers is 7.5 years – people come here and they stay. 80% of our PMs were developed from analyst level.
There will be some macro strategies, and Cubist, our systematic trading arm, continues to expand its activities London, hiring senior talent, but the core strategy of the business is long-short equity.
There’s a big advantage in being focused on driving towards one thing. A lot of big banks for many years have been working across strategies and that complexity doesn’t help them. Equities is the DNA of the business and we continue to believe the opportunities in European equity markets are significant and we have the fundamental analysis and intellectual property to give us a competitive advantage.