The dust has largely settled from the buy-side’s annual post-bonus hiring spree, where hedge funds and private equity firms take their pick of the best talent investment banks have to offer. However, there’s still one niche industry that’s continuing to hire – event-driven hedge funds – and they’re doing it organically.
As has been noted previously, M&A activity is back. Much of the growth in the first quarter was in the U.S., but now even Europe is catching firm. April’s deal volume reached nearly $420 billion, the most since July 2007. All the cross-border mergers and acquisitions have apparently been a boon to event-driven hedge funds, which typically butter their bread on the price inefficiencies that are born from big deals.
As of last month, event-driven funds have been the best performing strategies in the industry, which actually had its worst first quarter in nearly a decade, at least from a returns standpoint. Sensing their opportunity, event-driven funds are now hiring, according to a new report in the Financial Times.
The targets are focused in Europe, but many of the buyers and hedge funds that are following the activity are in the U.S. New York’s Fortress Investment Group, for example, just poached an entire firm, Centaurus Capital, which will now operate in Fortress’ New York, London and Hong Kong offices. U.S. investor Elliot Management is also opening up a new shop in London after outgrowing its old space, according to the Times. Others are following suit.
Despite the rotten performance in Q1, where the average fund returned just 1.23%, hedge funds continue to see record inflows of cash. The industry is on pace to attract as much as $171 billion in new investments in 2014, which could push total industry assets to a record $3 trillion by the end of the year.
While performances have waned recently, the attraction is still there, both from an investor and employee point of view. Hedge fund employees report being happier in their jobs than investment bankers, private equity pros and technology executives – and it’s not even close.
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Here’s a list of interview questions that have been asked of entry-level investment banking candidates at Royal Bank of Canada, which is one of the many firms that are hiring junior bankers as they retool their ranks.
Earnings at Barclays fell 5% in the first quarter, driven mainly by a miserable period for its investment bank, which booked a 28% decline in profit. Fixed income was the main culprit. Stay tuned tomorrow for what’s likely to be massive changes at Barclays, with U.S. operations being one of the prime targets. Oh, and yet another former Lehman banker left New York.
UBS beat expectations for the first quarter. The real headliner, though, may be headcount. The Swiss bank actually added employees during Q1 while still cutting costs. “We are not in shrink mode,” Chief Executive Sergio Ermotti said.
Credit Suisse is on the verge of inking a $1 billion settlement with the U.S. over tax evasion abetting claims. No word yet on if criminal charges will accompany the fine.
The latest list of the highest-paid hedge fund managers is out, and it offers few surprises. The list was yet again topped by David Tepper, founder of Appaloosa Management, who took home $3.5 billion in 2013. Steven Cohen finished second, which is a little absurd considering the federal sanctions his firm faced.
Speaking of Cohen, the former SAC Capital founder just took out a loan from Goldman Sachs after Deutsche Bank cut off his credit line. Why he needs the money no one knows.
Buzz Around the Office
If you’re not happy in your current job, take solace that you didn’t go the tech rout and wind up at Amazon. Whether true or not, these employee reviews are brutal.
Quote of the Day: “What we desperately need is a macro doctor to prescribe central bank Viagra because otherwise it’s going to continue to be somewhat dull,” – Paul Tudor Jones on macroeconomic investing