As the biggest hedge fund startup ever, ExodusPoint Capital Management has some very deep pockets. The fund, led by former Millennium Management star trader Michael Gelband, is leveraging part of its $8 billion in startup capital to poach droves of big-name portfolio managers.
At least a dozen PMs have been hired to work in ExodusPoint's East 55th Street office within the last two months – and the firm is likely far from done with its recruiting efforts. Gelband’s initial plan was to build around 30 fixed income and equities teams within its New York headquarters and at its smaller London location. Additional offices in Asia are also said to be in the plans.
The lion’s share of recent hires come from well-established rival funds in New York. Recent additions include former Tudor Investment Corp. portfolio trader Gustavo Figueiredo Pereira; former Pine River Capital PM David Sun; and Geoffrey Sherry, who came over from Caxton Associates after six years as a partner at now-defunct credit fund Lucidus Capital.
ExodusPoint has even turned to investment banks to fill some of its PM seats. Walton Kingsbery, a former executive director at Nomura, and Hari Manappattil, ex-director of algo trading at Cantor Fitzgerald, both joined in May as portfolio managers. The fund has also filled its coffers with several former employees of Hutchin Hill Capital, which closed its doors at the end of 2017 after three years of poor performance. Several quants and a good deal of ExodusPoint’s tech talent has come over from defunct hedge fund Hutchin Hill.
Still, the biggest poaching target has, rather unsurprisingly, been Millennium Management, which helped delay the official launch of Gelband’s new fund for roughly a year over a now-settled legal dispute related to hiring. Soon after quitting Millennium following a spat with founder Izzy Englander, Gelband poached his former firm’s global head of risk, its global business manager for fixed income and its head of risk technology – not to mention Hyung Soon Lee, Gelband’s fellow co-founder who was in charge of equities at Millennium.
At least 10 other former Millennium employees now work at ExodusPoint, giving some credence to rumors that the name of the fund may have been a subtle departing jab by Gelband aimed at his old employer. He could have just named it PoachedPoint.
A dream gig on paper?
Portfolio managers have plenty of reasons to want to make the jump to ExodusPoint, beyond its record-setting asset total. With most funds reining in standard fees, ExodusPoint is passing all its costs down to investors, from commissions to bonuses to office furniture, according to Bloomberg. And yes, investors are on the hook for recruiting costs as well, giving the fund plenty of leeway to maneuver as many rivals struggle, both in terms of performance and fundraising. PMs at ExodusPoint are also likely to prefer the fund's expected "eat what you kill" compensation structure, where teams get paid out according to the performance of their own portfolio, as at Millennium.
For the third consecutive year, more hedge funds closed than opened in 2017. Meanwhile, former star trader Greg Coffey hasn’t had near the fortune of Gelband when it comes to fundraising. Coffey is reportedly struggling to hit his $2 billion investment goal. Yet ExodusPoint just raised $8 billion from the likes of Blackstone and BlackRock despite its aggressive fee structure and a delayed launch date.
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