The chances of making billions at a hedge fund these days are decidedly slim. But maybe, just maybe, the future buy-side billionaires will have been discovered at one of the many hackathons hedge funds are currently using to uncover people who probably wouldn't have worked on the buy-side otherwise.
Quant hedge funds are it, and there are not enough PhDs to go around, so hedge funds are coming up with more innovative methods to uncover coding talent. These days, they're also the hedge funds that pay. In the latest hedge fund rich list by Institutional Investor, the bosses of quant hedge funds are beginning to dominate. Top of the list for the second year running was James Simons, who heads up quant fund manager Renaissance Technologies. He made $1.6bn last year. But David Siegel and John Overdeck, co-founders of Two Sigma, were third and fourth, with $750m each and David Shaw, head of D.E. Shaw was 9th with $415m.
This was the worst year for hedge fund compensation since 2005, say the rankings, which are based on a combination of personal fund stakes, management and performance fees. Most traditional funds had a pretty dismal year, but it's the "missed management fees, over missed incentive fees" that were likely to have impacted earnings, Robert Lee, Texas Tech University’s deputy chief investment officer, told Institutional Investor.
OK, so four out of 10 might not be dominating the rich list, but let's not forget that tradtional hedge funds are getting more quanty. Citadel, whose chief exec Ken Griffin made $600m last year, has been launching 18 “datathon” competitions globally and has just hired a top quant from UBS and a new head of its quant division James Yeh. Ray Dalio, who came in second with $1.4bn last year, also has a quantitative bent.
Separately, Financial News has unmasked Jes Staley's latest nemesis - the prankster who sent a series of emails to the Barclays CEO pretending to be the bank's chairman John Mcfarlane, using the email john.mcfarlane.barclays@gmail. Well, sort of. He's a 38-year-old web designer from Manchester who requested to keep his identity a secret. His main problem with Barclays was that he believes he was awarded £15,200 in loans through an electronic app without proper checks that he's now struggling to pay back. He has obsessive-compulsive and delusional disorder as well as a gambling problem and was previously denied a loan of £500 by Barclays, and believes that Staley should step in.
“There was no real malice behind it. I don’t think Jes is a horrible person - far from it. I just think he needed a little bit of a shake-up in terms of looking after the needs of vulnerable customers,” he said.
Jean-Francois "JF" Astier is the new head of the global capital markets at Barclays. He's named his new leadership team (Business Insider)
Andy Lipsky and David Wah are the new head of capital markets at Credit Suisse in the U.S. (Reuters)
Kerwin Clayton and Rohit Chatterji are the new heads of Asia M&A at J.P. Morgan (Reuters)
Tips from Google's finance manager: "Also, if you have an interest in finance or tech, it’s very important to get comfortable with querying data and using tools like SQL. It’s easier to hit the ground running and make an impact right away when you already know how to access information." (Google)
Banks need to invest in artificial intelligence, but their DNA is "all wrong" (Quartz)
"Break up the banks? That ain’t going to happen." (Bloomberg)
Steve Cohen's unconventional search for talent goes on - he's just hired Daniel Gwak and Sri Chandrasekar, who worked on CIA-based VC firm In-Q-Tel, to run a big data and machine learning focused investment firm in Palo Alto (Business Insider)
Jamie Dimon gets a grilling over Trump during J.P. Morgan's annual meeting (Financial Times)
Using AI to uncover ISIS (Motherboard)