Morning Coffee: The huge new $20bn hedge fund still struggling to find people. Why aren't there enough nerds?
For the past two years Steve Cohen has been lying relatively low. Yes, he has a desk smack bang in the middle of the trading floor of his $11bn family office Point72 Asset Management, which houses around 1,000 employees, and has building a sizeable new presence in London and Asia, but this was a quiet time.
But Cohen's hiatus from managing external capital was only really every likely to last until 2018. He was restricted by a civil settlement from supervising a registered fund until then, and Point72 has hinted that it was open to the idea of managing external capital for some time. The WSJ suggests Cohen is coming back big - he has plans launch a hedge fund with $20bn in AUM. This is larger than the $16bn SAC managed at its peak, although the $11bn currently overseen by Point72 is included in the new $20bn target.
As a reminder, SAC pleaded guilty to insider trading in 2013 and was forced pay out $1.8bn in fines. Although Cohen was under investigation, he was never charged and the Securities and Exchange Commission's push to have him barred for life from the industry didn't come to fruition. Instead, over the past two years, Cohen has employed over 1,000 people to manage his own personal fortune, and been making a push to open and grow new offices in Asia and the UK (following the closure of SAC's London office in 2013), as well as its Stamford, Connecticut HQ. He's also reinvented himself as a kind of "head coach" passing on pearls of wisdom to portfolio managers.
If nothing else, Cohen's firm at least engenders loyalty - the average tenure of portfolio managers is 7.5 years, and former senior staff at SAC in London's operation who never wanted to leave in the first place came back when it reopened its UK office in January 2015. Cohen's firm has started hiring in graduates directly to address what he views as a shortage of talent in the industry, and has started to embrace the quant revolution by deploying algorithms that mimic his best portfolio managers' trades, teaching all new recruits programming and data science techniques and offering unlimited holiday to lure scarce quant talent across.
Maybe he's all set for the big day, but there's one area where Point72 is likely to make concessions in order to hit the $20bn target, according to WSJ - fees. In its glory days, SAC would charge 3% annual management fee and a 50% cut of all trading profits. Now, this is likely fluctuate and the high rates will only apply when the firm registers a "banner stretch of investment gains".
Separately, ever wonder why so many firms are struggling to hire technologists? Well, in an extensive blog, Dan Wang has attempted to shed some light into why the number of computer science graduates has remained low over the past ten years, despite a massive untick in demand and status for programmers. As Wang points out, a lot of developers feel they don't need a computer science degree to get a top job anyway - MOOCs, bootcamps and self-teaching tends to get a lot of people in. Or maybe a lot of students still wander into degrees without thinking of the appeal of their skills after graduation, perhaps CS university degrees are too theoretical for the real world, or (whisper it), tech just still isn't cool.
Deutsche Bank has just made a major fintech investment banker hire with Tommaso Zanobini joining from Jefferies (Business Insider)
And named Jeffrey Mensch as a new managing director in M&A. He's an expert in tax structuring. (Business Wire)
Alex Gardega, the sculptor of Wall Street's "Charging Bull" really hates the new addition of "Fearless Girl". He's just installed a "Pissing Pug" next to it (Market Watch)
HFT pioneers are leaving to "see what other fun is out there" (Financial Times)
AI pretenders fear: Google is launching an AI VC fund run by engineers (Axiom)
"I was rejected well over 100 times in a four month span" (Wall Street Oasis)
Your brain prefers an hour of work and then 15 minutes break (WE Forum)
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