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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is Bloomberg Markets and I'm Shinali Bassic and it's

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Speaker 2: time now for the Wall Street Beat.

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Speaker 1: Stockpicking.

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Speaker 2: Hedge funds are coming back into favor for the first

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Speaker 2: time in two years after a turnaround and performance, and

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Speaker 2: so are multi strategy managers. Some of them are really

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Speaker 2: having better times now. Schoenfeld Advisors was actually the best

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Speaker 2: performing large multi strategy hedge fund in the first quarter,

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Speaker 2: and in the quant world, multiple AQR funds saw double

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Speaker 2: digit returns so far this year. And we're going to

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Speaker 2: get a gauge of the whole industry with Alana Weinstein.

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Speaker 2: She's the founder and CEO of IDW Group, which finds

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Speaker 2: talent in the hedge fund space. And you always have

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Speaker 2: your ears so close to the ground, really curious about

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Speaker 2: what you're hearing. Now that we have all the numbers

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Speaker 2: in for the first quarter on what's working this year,

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Speaker 2: let's do a what Hot What's hot Charcter scale about that.

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Speaker 3: Multi managers continue to be an area of desire and focus. Particular,

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Speaker 3: of course goes without saying the large established managers like

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Speaker 3: Citadel and Point seventy two, but you.

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Speaker 1: Know those guys are either.

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Speaker 3: Closed or being extremely deliberate about how they take in capital.

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Speaker 1: So you mentioned Schoenfeld.

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Speaker 3: I was pleased to see they're actually leading the pack

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Speaker 3: this year. We'll see how the year shakes out, because

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Speaker 3: the last two years were tough, and I think that's

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Speaker 3: the result of the guys who were accepting capital, because

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Speaker 3: on the back of poor long short equity performance in

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Speaker 3: twenty one and twenty two, capital flowed would be an understatement,

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Speaker 3: avalanched into the multi managers that were accepting capital, and

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Speaker 3: these guys grew between three and eight x, so they

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Speaker 3: kind of I think had a challenge in absorbing that

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Speaker 3: much capital and in hiring truly great talent in a

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Speaker 3: very short time carrier to deploy it.

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Speaker 1: The other strategy that you.

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Speaker 3: Mentioned, long short equities is doing phenomenally well in precisely

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Speaker 3: the fun that had a tough time in twenty one.

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Speaker 3: In twenty two so hot. But I think be careful

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Speaker 3: you don't get burnt because as we saw, those funds

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Speaker 3: tend to employ a go big or go home strategy

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Speaker 3: when it comes to concentration nets subsector tilt, and it

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Speaker 3: will be interesting to see when the tide turns, which

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Speaker 3: inevitably it will, and we've seen stocks turn before fundamentals do,

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Speaker 3: and you know they'll need to be able to respond

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Speaker 3: to that so that they don't get caught sideways the

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Speaker 3: way that they did then, So proceed with caution on that.

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Speaker 2: Yeah, I'm really curious about that because how long does

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Speaker 2: a fund have to really be performing well before it

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Speaker 2: could start to attract top talent?

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Speaker 1: Again, how well.

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Speaker 2: Do these strategies have to do before they're really in

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Speaker 2: vogue for people to flock to those managers.

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Speaker 3: I think what talent wants is consistency of returns. It's

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Speaker 3: not a win big, lose big, but rather a fund

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Speaker 3: that can really put up the goods year.

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Speaker 1: In and year out. And there are very few funds.

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Speaker 3: That had been able to do that, and it really

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Speaker 3: goes to building an ecosystem that makes the people that

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Speaker 3: they hire. This is a really important point better by

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Speaker 3: virtue of sitting on the platform. So it's investment in systems,

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Speaker 3: risk technology and continually evolving that. It's looking at who

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Speaker 3: their top analysts in PMS are and looking across for

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Speaker 3: best practices and then using that to incorporate making people

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Speaker 3: better and moving them along the experience curves such that

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Speaker 3: they are the best version of themselves they are doing.

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Speaker 3: They are constantly taking a good hard look of how

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Speaker 3: they're winning, not resting on their laurels, and incorporating those

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Speaker 3: lessons in terms of making the firm better.

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Speaker 1: Shanali, it's everything, every aspect of what they do.

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Speaker 2: So you're talking about a lot of investment that funds

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Speaker 2: have to make in order to bring fresh people on.

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Speaker 2: And of course you are your people, right, we know

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Speaker 2: that in this world. But what are you seeing in

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Speaker 2: terms of how competitive it is out there? In this environment?

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Speaker 2: People are starting to balance back. How easy is it

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Speaker 2: for them to bring new people on?

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Speaker 1: Or hard?

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Speaker 3: Rather Again, I think it talent. I think it comes

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Speaker 3: back to two questions that talent asks the smartest people

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Speaker 3: in the industry. By the way, when we say talent,

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Speaker 3: I want to be really clear, it's often usphemistic with people.

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Speaker 3: There aren't that many truly talented people. That's been true always.

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Speaker 1: And I think the.

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Speaker 3: Best people in this industry ask themselves two questions when

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Speaker 3: they're making a move.

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Speaker 1: The first, and it may surprise you, I'm not going

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Speaker 1: to even mention compensation here.

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Speaker 3: The first is will I be better by virtue? Of

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Speaker 3: making this move developmentally, will I be the best version

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Speaker 3: of myself? And the second question is is there more

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Speaker 3: opportunity at this place that I'm going to relative to

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Speaker 3: where I'm at or is it an easier path in

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Speaker 3: order for me to achieve what I want?

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Speaker 1: I e not is not not much of a headwind.

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Speaker 3: And because at the end of the day, compensation, the

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Speaker 3: guarantee is a year or two and then you're out

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Speaker 3: and you really need and then you're on your own,

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Speaker 3: so to speak, and you need to put up the goods,

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Speaker 3: and the question becomes are you really set up for success?

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Speaker 3: How do you develop? And what are the resources the

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Speaker 3: firm has to get you there?

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Speaker 2: Well, one big kind of controversial question these days is

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Speaker 2: pastor fees? Right, It's been more of a question for investors,

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Speaker 2: and I'm wondering with or without them? How do the

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Speaker 2: top talents really view that if you don't have them,

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Speaker 2: is it worth going over.

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Speaker 1: It? Passed through fees or a double edged sword? Okay?

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Speaker 3: Part of the MEP performance we saw in a number

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Speaker 3: of these multi managers that took in so much capital

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Speaker 3: and grew.

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Speaker 1: So quickly, is.

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Speaker 3: They hired all these people that raises their expenses, which

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Speaker 3: also raises the bar for what the return has to

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Speaker 3: be right, So if you can't perform, or it's not

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Speaker 3: a sustainable ecosystem. And Talent recognizes that pass through fees

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Speaker 3: certainly help, but there are number there are more and

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Speaker 3: more funds every day that have a pass through structure.

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Speaker 3: What they're looking for is sustainability and that this is

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Speaker 3: a place that will consistently win, not sort of have

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Speaker 3: some good years and some not so good years, and

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Speaker 3: also really prioritizes development from within. It is really compelling

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Speaker 3: that Citadel can say that two thirds of its pms

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Speaker 3: started as analysts or associates. Okay, what that means is

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Speaker 3: they are manufacturing their own alpha makers. And that's how

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Speaker 3: you get out of this merry go round of everyone

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Speaker 3: hiring from everyone else, because you're developing people from within,

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Speaker 3: and when someone leaves, you have someone sitting there that

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Speaker 3: you really know what they're capable of to.

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Speaker 1: Move along a lot And we only have.

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Speaker 2: About a minute left here. What are you watching? As

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Speaker 2: we enter the second quarter? Books are on Q one.

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Speaker 1: What's next? Okay?

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Speaker 3: So in addition to multi manager performance and long short equities,

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Speaker 3: I am so excited about credit. I continue to think

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Speaker 3: it's an incredible growth story.

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Speaker 1: I was I.

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Speaker 3: Knew there was enormous activity last year, but it may

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Speaker 3: surprise you to learn one hundred and fifty billion dollars

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Speaker 3: went into credit alone and there were twenty percent more

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Speaker 3: funds in this strategy in twenty three versus twenty two.

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Speaker 3: And I think the market opportunity is only increasing as

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Speaker 3: defaults increase. We know banks haven't been able to put

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Speaker 3: risk on their balance sheet and so it's their share

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Speaker 3: for the taking.

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Speaker 1: We'll have to have you back soon to talk just

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Speaker 1: about that movement.

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Speaker 2: It's an interesting time and fixed income certainly in liquid

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Speaker 2: markets A lot of Weinstein, founder and CEO of IDW Group.

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Speaker 1: We thank you