Speaker 1: We're going to talk about hedge funds. We're gonna bring
Speaker 1: in Alana Weinstein IDW Group CEO and founder, because for
Speaker 1: all the love the market makers are getting, the hedge
Speaker 1: funds don't seem to be feeling as much love. What
Speaker 1: are we seeing from the multistrats in terms of performance?
Speaker 1: After we seemingly saw a little bit of a rebound
Speaker 1: coming into May, are they still feeling it?
Speaker 2: Okay? So what's beautiful about the multistrats is they're not
Speaker 2: as tethered. They are not tethered, I should say, to
Speaker 2: the market in terms of whether the market is up
Speaker 2: or bound or rebounding. That's for another category, which we'll
Speaker 2: get to. They are exceptional at managing volatility and putting
Speaker 2: up consistent performance. And what I would chine a light
Speaker 2: on right now, Shanali, is we have lived through one
Speaker 2: of the most volatile periods in recent memory, as we know,
Speaker 2: over the last several months. And the fact that the
Speaker 2: multi managers have navigated this as effectively as they have,
Speaker 2: They've stayed in largely positive territory during the duration of
Speaker 2: this period, I think shines a light on the fact
Speaker 2: that the best ones I'll say it like this have
Speaker 2: money bowled.
Speaker 1: The industry fascinating. So if you look at their ability
Speaker 1: to draw in talent, how does it compare to the
Speaker 1: rest Because you are seeing i mean, there's no other
Speaker 1: way to put it, crazy pay packages. You've been seeing
Speaker 1: seeing teams lifted out for one hundred million dollars. You're
Speaker 1: looking at Ken Griffin trying to put a four year
Speaker 1: non compete on in Florida. I mean, what does that
Speaker 1: talent war look like for the multistrats?
Speaker 2: Okay? So, and that is the Multistrats are the biggest
Speaker 2: acquisitors of talent right by virtue of their name multi well,
Speaker 2: multi managers is really the you know, euphemism that I'm
Speaker 2: referring to. They need multiple managers to manage capital. First off,
Speaker 2: let me provide some perspective on these pay packages. It's
Speaker 2: not like someone who's getting an one hundred million dollar
Speaker 2: check and walking across the street and able to cash that. Okay.
Speaker 2: Part of it is a hefty guarantee for sure to
Speaker 2: pay that person for the period they're sitting out.
Speaker 1: Part of it is deferred.
Speaker 2: Part of it is a wallet so that they can
Speaker 2: hire a cracker jack team, and a lot of it
Speaker 2: also is on the come where they're getting. If you
Speaker 2: normally get a twenty percent PAYOUTTIONALI, I'm going to give
Speaker 2: you a thirty percent payout up to two hundred million.
Speaker 2: That's an extra twenty million, but you got to make
Speaker 2: that two hundred million. The bottom line of all of
Speaker 2: this is you don't want to be beholden too what
Speaker 2: I'll call the auction. So if you're a multi manager
Speaker 2: and you lose someone, which you inevitably will because this
Speaker 2: is a merry go round, someone leaves Peter to go
Speaker 2: to Paul, or you know what, there's a lot of
Speaker 2: capacity for this strategy right now, let me take a
Speaker 2: crack AT's starting my own fund. How are you going
Speaker 2: to replace that person? Do you always want to be
Speaker 2: in a bidding war? No, because then you're beholden to
Speaker 2: paying I would actually say maybe overpaying for air quotes talent.
Speaker 2: These people are not necessarily as talented or remains to
Speaker 2: be seen as the headline numbers would suggest. That's a
Speaker 2: lot of money for the multi manager to have to
Speaker 2: recoup on their investment TVD on whether they will much
Speaker 2: smarter to grow talent in house and the best ones
Speaker 2: like point seventy two and Citadel are a factory for
Speaker 2: what I like to call alpha makers.
Speaker 3: That's what I was actually going to ask about. So
Speaker 3: I don't obviously know as much about this industryationality, but
Speaker 3: it would seem to me that a lot of these
Speaker 3: people learn on the job. So can you foster a
Speaker 3: sense of loyalty? Does Steve Cohen do that? Does Ken
Speaker 3: Griffin do that? When you build them up from the
Speaker 3: bottom up, it doesn't help obviously IDW. If they make
Speaker 3: these well, it does.
Speaker 2: Help IDW because the reality is if there is a culture,
Speaker 2: and that's very hard, it's not. They don't all they're
Speaker 2: not all created equal in terms of their ability to
Speaker 2: train and develop and mentor and make you Matt the
Speaker 2: best version of yourself that you can be at each
Speaker 2: point along the experience curve and also give you a pathway.
Speaker 2: It's not just about coming in as an analyst and
Speaker 2: being a good AT or coming in as a PM
Speaker 2: and being a good PM. At Citadel, you can you
Speaker 2: can go very successfully as at point seventy two, from
Speaker 2: analyst to PM to running a business. How exciting is
Speaker 2: that you could be a business headed Citadel. Steve just
Speaker 2: created a new fund around one of his PMS turion. Right,
Speaker 2: So that's a pathway where now you have, in that example,
Speaker 2: point seventy two with you to raise capital. They raised
Speaker 2: a billion and a half out of the gate, and
Speaker 2: the PM has all of the incredible resources available to
Speaker 2: him at point seventy two. That's not all multi managers
Speaker 2: created equal, and that's what creates stickiness and durability and.
Speaker 1: Then the ability to build out a team under that.
Speaker 1: Perhaps you know, one question I have is where we're
Speaker 1: not seeing as much success. It looks like the long
Speaker 1: short business this year, for all of the volatility in
Speaker 1: the market, has not played out quite as well. And
Speaker 1: that comes after some really tough years and resources. Yeah,
Speaker 1: so well said, what's going on?
Speaker 2: Okay, so you know, like you'll see the returns in
Speaker 2: May breaking news, Really not. They're going they're gonna be
Speaker 2: better than they were in April. So is the market.
Speaker 2: The problem with this is one the swings of volatility. Okay,
Speaker 2: I'm not gonna name names, but there are so many
Speaker 2: examples of funds that were down and like the mid
Speaker 2: teens in April and now we're up mid single digits.
Speaker 2: Think about that as an LP and think of how
Speaker 2: nervous that might make you about what's gonna happen next month.
Speaker 2: And as an LP, what I'm thinking about is how
Speaker 2: much alpha am I getting net of fees relative to
Speaker 2: the underlying beta exposure. That's like very complicated. I don't
Speaker 2: want to think about that. I want alpha and I
Speaker 2: have the multi managers in order to access that, or
Speaker 2: I want beta and I can pay nothing for that. Right,
Speaker 2: buying an ETF for the SMP where the long short
Speaker 2: funds will raise money is not in their hedge fund product.
Speaker 2: You heard it here, fir s. They are not raising capital.
Speaker 2: I don't care what they tell you. In their hedge
Speaker 2: fund product. Where they are raising capital is long only
Speaker 2: because there is appetite for the alpha component of a
Speaker 2: beta product. Can I just ask.
Speaker 3: Quickly, I have a curveball question for you, all right,
Speaker 3: let's hear it. Traditionally, Harvard has been a feeder university
Speaker 3: for these masters of the universe. Right, do you see
Speaker 3: that continuing after this?
Speaker 2: Well, my son goes to Harvard's I don't know how
Speaker 2: I'm supposed to answer that question.
Speaker 3: You as Harvard, But who else can provide the best
Speaker 3: financial minds in the world.
Speaker 2: Well, I mean, there's a lot of good schools out there.
Speaker 2: I wouldn't say Harvard has a walk on that. What
Speaker 2: I will tell you is it pertains to talent. And
Speaker 2: I've seen this up close. Literally. I visited my son
Speaker 2: a few weeks before the end of the year and
Speaker 2: I was hanging out with him and his friends who
Speaker 2: are finishing their sophomore year. Matt and the aggressiveness by
Speaker 2: the top hedge funds, namely the multi managers in locking
Speaker 2: up these kids now now for their junior summer, and
Speaker 2: the pay packages talent the talent wear has gone way
Speaker 2: downstream as we've seen or and you guys alluded to
Speaker 2: it as well earlier, are huge even for kids so
Speaker 2: that they have first steps.
Speaker 1: We got to leave it there.
Speaker 2: Whish we had more time.
Speaker 1: That is a lot of winsteam of the IDW group place.
Speaker 3: We need to continue that conversation right