1
00:00:00,040 --> 00:00:01,760
Speaker 1: We're going to talk about hedge funds. We're gonna bring

2
00:00:01,760 --> 00:00:05,680
Speaker 1: in Alana Weinstein IDW Group CEO and founder, because for

3
00:00:05,800 --> 00:00:08,440
Speaker 1: all the love the market makers are getting, the hedge

4
00:00:08,440 --> 00:00:12,160
Speaker 1: funds don't seem to be feeling as much love. What

5
00:00:12,280 --> 00:00:15,200
Speaker 1: are we seeing from the multistrats in terms of performance?

6
00:00:15,520 --> 00:00:18,400
Speaker 1: After we seemingly saw a little bit of a rebound

7
00:00:18,960 --> 00:00:21,080
Speaker 1: coming into May, are they still feeling it?

8
00:00:21,160 --> 00:00:24,759
Speaker 2: Okay? So what's beautiful about the multistrats is they're not

9
00:00:25,040 --> 00:00:28,120
Speaker 2: as tethered. They are not tethered, I should say, to

10
00:00:28,200 --> 00:00:30,960
Speaker 2: the market in terms of whether the market is up

11
00:00:31,080 --> 00:00:34,239
Speaker 2: or bound or rebounding. That's for another category, which we'll

12
00:00:34,280 --> 00:00:38,560
Speaker 2: get to. They are exceptional at managing volatility and putting

13
00:00:38,640 --> 00:00:41,480
Speaker 2: up consistent performance. And what I would chine a light

14
00:00:41,560 --> 00:00:44,639
Speaker 2: on right now, Shanali, is we have lived through one

15
00:00:44,680 --> 00:00:47,600
Speaker 2: of the most volatile periods in recent memory, as we know,

16
00:00:47,880 --> 00:00:50,600
Speaker 2: over the last several months. And the fact that the

17
00:00:50,800 --> 00:00:54,440
Speaker 2: multi managers have navigated this as effectively as they have,

18
00:00:54,600 --> 00:00:58,000
Speaker 2: They've stayed in largely positive territory during the duration of

19
00:00:58,000 --> 00:01:00,920
Speaker 2: this period, I think shines a light on the fact

20
00:01:01,080 --> 00:01:03,400
Speaker 2: that the best ones I'll say it like this have

21
00:01:03,600 --> 00:01:04,720
Speaker 2: money bowled.

22
00:01:04,319 --> 00:01:07,640
Speaker 1: The industry fascinating. So if you look at their ability

23
00:01:07,680 --> 00:01:09,720
Speaker 1: to draw in talent, how does it compare to the

24
00:01:09,760 --> 00:01:12,920
Speaker 1: rest Because you are seeing i mean, there's no other

25
00:01:12,920 --> 00:01:15,440
Speaker 1: way to put it, crazy pay packages. You've been seeing

26
00:01:15,640 --> 00:01:18,520
Speaker 1: seeing teams lifted out for one hundred million dollars. You're

27
00:01:18,560 --> 00:01:20,520
Speaker 1: looking at Ken Griffin trying to put a four year

28
00:01:20,560 --> 00:01:23,440
Speaker 1: non compete on in Florida. I mean, what does that

29
00:01:23,520 --> 00:01:25,400
Speaker 1: talent war look like for the multistrats?

30
00:01:25,400 --> 00:01:28,160
Speaker 2: Okay? So, and that is the Multistrats are the biggest

31
00:01:28,200 --> 00:01:32,240
Speaker 2: acquisitors of talent right by virtue of their name multi well,

32
00:01:32,319 --> 00:01:36,000
Speaker 2: multi managers is really the you know, euphemism that I'm

33
00:01:36,040 --> 00:01:41,039
Speaker 2: referring to. They need multiple managers to manage capital. First off,

34
00:01:41,760 --> 00:01:46,960
Speaker 2: let me provide some perspective on these pay packages. It's

35
00:01:47,000 --> 00:01:49,440
Speaker 2: not like someone who's getting an one hundred million dollar

36
00:01:49,560 --> 00:01:53,240
Speaker 2: check and walking across the street and able to cash that. Okay.

37
00:01:53,360 --> 00:01:56,400
Speaker 2: Part of it is a hefty guarantee for sure to

38
00:01:56,480 --> 00:01:58,600
Speaker 2: pay that person for the period they're sitting out.

39
00:01:58,960 --> 00:01:59,960
Speaker 1: Part of it is deferred.

40
00:02:00,280 --> 00:02:02,720
Speaker 2: Part of it is a wallet so that they can

41
00:02:02,800 --> 00:02:05,960
Speaker 2: hire a cracker jack team, and a lot of it

42
00:02:06,080 --> 00:02:08,480
Speaker 2: also is on the come where they're getting. If you

43
00:02:08,520 --> 00:02:11,799
Speaker 2: normally get a twenty percent PAYOUTTIONALI, I'm going to give

44
00:02:11,800 --> 00:02:14,440
Speaker 2: you a thirty percent payout up to two hundred million.

45
00:02:14,720 --> 00:02:16,760
Speaker 2: That's an extra twenty million, but you got to make

46
00:02:16,800 --> 00:02:19,720
Speaker 2: that two hundred million. The bottom line of all of

47
00:02:19,760 --> 00:02:22,000
Speaker 2: this is you don't want to be beholden too what

48
00:02:22,120 --> 00:02:25,040
Speaker 2: I'll call the auction. So if you're a multi manager

49
00:02:25,080 --> 00:02:27,600
Speaker 2: and you lose someone, which you inevitably will because this

50
00:02:27,680 --> 00:02:30,160
Speaker 2: is a merry go round, someone leaves Peter to go

51
00:02:30,200 --> 00:02:33,040
Speaker 2: to Paul, or you know what, there's a lot of

52
00:02:33,240 --> 00:02:36,200
Speaker 2: capacity for this strategy right now, let me take a

53
00:02:36,240 --> 00:02:39,080
Speaker 2: crack AT's starting my own fund. How are you going

54
00:02:39,120 --> 00:02:41,320
Speaker 2: to replace that person? Do you always want to be

55
00:02:41,320 --> 00:02:44,840
Speaker 2: in a bidding war? No, because then you're beholden to

56
00:02:45,480 --> 00:02:51,160
Speaker 2: paying I would actually say maybe overpaying for air quotes talent.

57
00:02:51,400 --> 00:02:55,080
Speaker 2: These people are not necessarily as talented or remains to

58
00:02:55,120 --> 00:02:58,160
Speaker 2: be seen as the headline numbers would suggest. That's a

59
00:02:58,200 --> 00:03:00,560
Speaker 2: lot of money for the multi manager to have to

60
00:03:00,600 --> 00:03:04,520
Speaker 2: recoup on their investment TVD on whether they will much

61
00:03:04,600 --> 00:03:08,519
Speaker 2: smarter to grow talent in house and the best ones

62
00:03:09,240 --> 00:03:13,200
Speaker 2: like point seventy two and Citadel are a factory for

63
00:03:13,280 --> 00:03:14,919
Speaker 2: what I like to call alpha makers.

64
00:03:15,000 --> 00:03:16,680
Speaker 3: That's what I was actually going to ask about. So

65
00:03:16,800 --> 00:03:19,120
Speaker 3: I don't obviously know as much about this industryationality, but

66
00:03:19,919 --> 00:03:22,639
Speaker 3: it would seem to me that a lot of these

67
00:03:22,639 --> 00:03:25,760
Speaker 3: people learn on the job. So can you foster a

68
00:03:25,840 --> 00:03:28,440
Speaker 3: sense of loyalty? Does Steve Cohen do that? Does Ken

69
00:03:28,480 --> 00:03:31,480
Speaker 3: Griffin do that? When you build them up from the

70
00:03:31,520 --> 00:03:36,000
Speaker 3: bottom up, it doesn't help obviously IDW. If they make

71
00:03:36,120 --> 00:03:37,680
Speaker 3: these well, it does.

72
00:03:37,560 --> 00:03:41,000
Speaker 2: Help IDW because the reality is if there is a culture,

73
00:03:41,360 --> 00:03:44,160
Speaker 2: and that's very hard, it's not. They don't all they're

74
00:03:44,200 --> 00:03:46,760
Speaker 2: not all created equal in terms of their ability to

75
00:03:46,880 --> 00:03:50,720
Speaker 2: train and develop and mentor and make you Matt the

76
00:03:50,760 --> 00:03:53,640
Speaker 2: best version of yourself that you can be at each

77
00:03:53,680 --> 00:03:57,120
Speaker 2: point along the experience curve and also give you a pathway.

78
00:03:57,440 --> 00:03:59,440
Speaker 2: It's not just about coming in as an analyst and

79
00:03:59,480 --> 00:04:01,280
Speaker 2: being a good AT or coming in as a PM

80
00:04:01,320 --> 00:04:04,800
Speaker 2: and being a good PM. At Citadel, you can you

81
00:04:04,840 --> 00:04:08,560
Speaker 2: can go very successfully as at point seventy two, from

82
00:04:08,680 --> 00:04:12,800
Speaker 2: analyst to PM to running a business. How exciting is

83
00:04:12,840 --> 00:04:15,680
Speaker 2: that you could be a business headed Citadel. Steve just

84
00:04:16,360 --> 00:04:19,680
Speaker 2: created a new fund around one of his PMS turion. Right,

85
00:04:19,760 --> 00:04:24,000
Speaker 2: So that's a pathway where now you have, in that example,

86
00:04:24,080 --> 00:04:27,320
Speaker 2: point seventy two with you to raise capital. They raised

87
00:04:27,360 --> 00:04:29,360
Speaker 2: a billion and a half out of the gate, and

88
00:04:29,960 --> 00:04:33,279
Speaker 2: the PM has all of the incredible resources available to

89
00:04:33,320 --> 00:04:36,400
Speaker 2: him at point seventy two. That's not all multi managers

90
00:04:36,440 --> 00:04:39,960
Speaker 2: created equal, and that's what creates stickiness and durability and.

91
00:04:39,920 --> 00:04:42,040
Speaker 1: Then the ability to build out a team under that.

92
00:04:42,120 --> 00:04:44,400
Speaker 1: Perhaps you know, one question I have is where we're

93
00:04:44,440 --> 00:04:47,520
Speaker 1: not seeing as much success. It looks like the long

94
00:04:47,640 --> 00:04:50,120
Speaker 1: short business this year, for all of the volatility in

95
00:04:50,160 --> 00:04:53,480
Speaker 1: the market, has not played out quite as well. And

96
00:04:53,520 --> 00:04:57,000
Speaker 1: that comes after some really tough years and resources. Yeah,

97
00:04:57,120 --> 00:04:59,080
Speaker 1: so well said, what's going on?

98
00:04:59,240 --> 00:05:03,000
Speaker 2: Okay, so you know, like you'll see the returns in

99
00:05:03,040 --> 00:05:08,440
Speaker 2: May breaking news, Really not. They're going they're gonna be

100
00:05:08,440 --> 00:05:11,240
Speaker 2: better than they were in April. So is the market.

101
00:05:11,520 --> 00:05:15,360
Speaker 2: The problem with this is one the swings of volatility. Okay,

102
00:05:15,360 --> 00:05:17,200
Speaker 2: I'm not gonna name names, but there are so many

103
00:05:17,200 --> 00:05:20,240
Speaker 2: examples of funds that were down and like the mid

104
00:05:20,279 --> 00:05:23,680
Speaker 2: teens in April and now we're up mid single digits.

105
00:05:23,800 --> 00:05:26,719
Speaker 2: Think about that as an LP and think of how

106
00:05:26,720 --> 00:05:29,360
Speaker 2: nervous that might make you about what's gonna happen next month.

107
00:05:29,680 --> 00:05:33,080
Speaker 2: And as an LP, what I'm thinking about is how

108
00:05:33,160 --> 00:05:38,320
Speaker 2: much alpha am I getting net of fees relative to

109
00:05:38,320 --> 00:05:42,240
Speaker 2: the underlying beta exposure. That's like very complicated. I don't

110
00:05:42,279 --> 00:05:44,760
Speaker 2: want to think about that. I want alpha and I

111
00:05:44,800 --> 00:05:47,840
Speaker 2: have the multi managers in order to access that, or

112
00:05:47,880 --> 00:05:50,320
Speaker 2: I want beta and I can pay nothing for that. Right,

113
00:05:50,360 --> 00:05:53,480
Speaker 2: buying an ETF for the SMP where the long short

114
00:05:53,480 --> 00:05:57,440
Speaker 2: funds will raise money is not in their hedge fund product.

115
00:05:58,720 --> 00:06:01,960
Speaker 2: You heard it here, fir s. They are not raising capital.

116
00:06:02,000 --> 00:06:03,840
Speaker 2: I don't care what they tell you. In their hedge

117
00:06:03,839 --> 00:06:08,000
Speaker 2: fund product. Where they are raising capital is long only

118
00:06:08,000 --> 00:06:10,839
Speaker 2: because there is appetite for the alpha component of a

119
00:06:10,839 --> 00:06:12,200
Speaker 2: beta product. Can I just ask.

120
00:06:12,160 --> 00:06:14,240
Speaker 3: Quickly, I have a curveball question for you, all right,

121
00:06:14,320 --> 00:06:19,919
Speaker 3: let's hear it. Traditionally, Harvard has been a feeder university

122
00:06:20,080 --> 00:06:24,000
Speaker 3: for these masters of the universe. Right, do you see

123
00:06:24,000 --> 00:06:25,600
Speaker 3: that continuing after this?

124
00:06:27,400 --> 00:06:29,920
Speaker 2: Well, my son goes to Harvard's I don't know how

125
00:06:29,960 --> 00:06:31,480
Speaker 2: I'm supposed to answer that question.

126
00:06:31,720 --> 00:06:36,560
Speaker 3: You as Harvard, But who else can provide the best

127
00:06:36,600 --> 00:06:39,160
Speaker 3: financial minds in the world.

128
00:06:40,120 --> 00:06:42,320
Speaker 2: Well, I mean, there's a lot of good schools out there.

129
00:06:42,360 --> 00:06:45,960
Speaker 2: I wouldn't say Harvard has a walk on that. What

130
00:06:46,000 --> 00:06:48,240
Speaker 2: I will tell you is it pertains to talent. And

131
00:06:48,240 --> 00:06:51,480
Speaker 2: I've seen this up close. Literally. I visited my son

132
00:06:51,520 --> 00:06:53,359
Speaker 2: a few weeks before the end of the year and

133
00:06:53,360 --> 00:06:55,599
Speaker 2: I was hanging out with him and his friends who

134
00:06:55,640 --> 00:07:01,560
Speaker 2: are finishing their sophomore year. Matt and the aggressiveness by

135
00:07:01,640 --> 00:07:04,760
Speaker 2: the top hedge funds, namely the multi managers in locking

136
00:07:04,839 --> 00:07:09,960
Speaker 2: up these kids now now for their junior summer, and

137
00:07:10,040 --> 00:07:13,040
Speaker 2: the pay packages talent the talent wear has gone way

138
00:07:13,080 --> 00:07:16,120
Speaker 2: downstream as we've seen or and you guys alluded to

139
00:07:16,160 --> 00:07:20,040
Speaker 2: it as well earlier, are huge even for kids so

140
00:07:20,080 --> 00:07:21,200
Speaker 2: that they have first steps.

141
00:07:22,240 --> 00:07:23,040
Speaker 1: We got to leave it there.

142
00:07:23,040 --> 00:07:23,760
Speaker 2: Whish we had more time.

143
00:07:23,800 --> 00:07:26,080
Speaker 1: That is a lot of winsteam of the IDW group place.

144
00:07:26,760 --> 00:07:28,800
Speaker 3: We need to continue that conversation right