The Current State of Hedge Fund Recruitment
- Peak Frameworks Team
- 4d
- 3 min read
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Overview
Hedge funds have increasingly organized themselves around finding talent as it has become the scarcest and most valuable input.
Large multi-strategy pod shops like Citadel, Millennium, Point72, and Balyasny compete fiercely for a relatively small pool of proven portfolio managers, driving up compensation and leaving many PMs sitting in lengthy non compete “gardening leaves".
At the same time, these platforms are investing heavily in internal training programs to manufacture their own talent pipeline rather than just poaching from the existing pool.
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The Hedge Fund Talent Arms Race
One of the recurring themes in hedge funds today is how much the industry has reoriented around talent as the scarcest input.
In a recent Bloomberg Money Stuff column, Matt Levine summarizes this dynamic at the multi-strategy pod shops including Citadel, Millennium, Point72, Balyasny, and their peers.
He highlights the following:
There are a limited number of people who can consistently generate alpha running concentrated books
The large pod shops have built sophisticated platforms to identify and hire candidates
The hedge fund labor market has gotten to be extreme from the recruitment side. It is common for a portfolio manager to cycle through two or three top pod shops in just a few years, with long non compete periods in between.
A PM can get fired and have several offers within the same week. In some cases, they even get rehired by the same firm that previously let them go.
Izzy Englander, the founder of Millennium Management, has described this as a “talent bubble,” where long non compete agreements and aggressive poaching have effectively shrunk the pool of active PMs and driven up prices.
A lot of potential alpha generators are literally sitting on the sidelines in gardening leaves at any given time.
From the PM’s perspective, this is not the worst deal in the world. Work three years out of five, spend the rest on paid vacation, and still command high salaries because seats are limited and the platforms need to stay fully staffed.
Creating Talent to Address the Labor Shortage
Many of the large multi-strategy shops have undergraduate and early career training programs to address the investing labor shortage.
These programs are designed both to create a pipeline of homegrown talent and to build some loyalty to the platform that gave people their first real seat
At Balyasny, for example, several newly minted partners are PMs who came up through the system. Point72’s Academy has already produced hundreds of analysts
Rather than endlessly outbidding each other for the same 2,000 portfolio managers, the big platforms are starting to manufacture their own.
What This Means for Candidates
For someone trying to land an investing job in the public markets, this talent arms race has a few implications:
Pod shops will still pay enormous amounts for proven PMs, and they are increasingly willing to invest in junior development to create the next cohort
If you want to end up running capital at a multi-strategy fund, getting into one of these internal programs early can be as important as lateral recruiting later on
The broader takeaway is that hedge fund competition has shifted away from who can pick the best stock at any given moment and toward finding and retaining the small number of people who can execute great trade ideas at scale.
Summary
Intense competition for this talent has created a labor market where PMs can bounce between top funds, earn extremely high pay, and spend significant time on the sidelines due to non competes.
To relieve this bottleneck, firms like Citadel, Point72, and Balyasny are have built academies and early career programs designed to grow homegrown PMs and foster loyalty to the platform.
For candidates, the constant movement of talent between seats and the buildout of these pipelines mean there are always openings somewhere in the ecosystem, making it especially worthwhile to recruit for these roles.