IDW Group CEO Ilana Weinstein Talks Hedge Funds
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It's not easy to stand out from the crowd. Simplify how you stock up to get ahead. Go to AmazonBusiness.com for support. We're going to talk about hedge funds. We're going to bring in Alana Weinstein, IDW Group CEO and founder, because for all the love the market makers are getting, the hedge funds don't seem to be feeling as much love. What are we seeing from the multistrats in terms of performance after we see

seemingly saw a little bit of a rebound coming into May are they still feeling it okay so what's beautiful about the multi strats is they're not as tethered they are not tethered I should say to the market in terms of whether the market is up or bound or rebounding that's for another category which we'll get to they are exceptional at managing volatility and putting up consistent performance and what I would shine a light on right now shanali is we have lived through one

One of the most volatile periods in recent memory, as we know, over the last several months. And the fact that the multi-managers have navigated this as effectively as they have, they've stayed in largely positive territory during the duration of this period, I think shines a light on the fact that the best ones, I'll say it like this, have money-balled the industry.

Fascinating. So if you look at their ability to draw in talent, how does it compare to the rest? Because you are seeing, I mean, there's no other way to put it, crazy pay packages. You've been seeing teams lifted out for $100 million. You're looking at Ken Griffin trying to put a four-year non-compete on in Florida. I mean, what does that talent war look like for the multistrats? Okay, so, and that is, the multistrats are the biggest acquisitors of talent, right, by virtue of their name. Multi, well, multi-managers is really the...

you know, euphemism that I'm referring to. They need multiple managers to manage capital. First off, let me provide some perspective on these pay packages. It's not like someone is getting a $100 million check and walking across the street and able to cash that. Okay, part of it is a hefty guarantee for sure to pay that person for the period they're sitting out. Part of it is deferred. Part of it is a wallet.

so that they can hire a Cracker Jack team. And a lot of it also is on the come, where they're getting, if you normally get a 20% payout, Shanali, I'm going to give you a 30% payout up to $200 million. That's an extra $20 million, but you've got to make that $200 million. The bottom line of all of this is you don't want to be beholden to what I'll call the auction.

So if you're a multi-manager and you lose someone, which you inevitably will because this is a merry-go-round, someone leaves Peter to go to Paul or, you know what, there's a lot of capacity for this strategy right now. Let me take a crack at starting my own fund. How are you going to replace that person? Do you always want to be in a bidding war? No, because then you're beholden to paying...

I would actually say maybe overpaying for air quotes talent. These people are not necessarily as talented or remains to be seen as the headline numbers would suggest. That's a lot of money for the multi-managers to have to recoup on their investment, TBD on whether they will. Much smarter to grow talent in-house. And the best ones...

like Point 72 and Citadel are a factory for what I like to call alpha makers. That's what I was actually going to ask about. So I don't obviously know as much about this industry as Shonali, but it would seem to me that a lot of these people learn on the job. So can you foster a sense of loyalty? Does Steve Cohen do that? Does Ken Griffin do that? When you build them up from the bottom up, it doesn't help, obviously, IDW if they, you know, make...

make these well it does help idw because the reality is if there is a culture and that's very hard it's not they don't all they're not all created equal in terms of their ability to train and develop and mentor and make you matt the best version of yourself that you can be at each point along the experience curve and also give you a pathway it's not just about coming in as an analyst and being a good analyst or coming in as a pm and being a good pm at citadel you can

You can go very successfully as a point 72 from analyst to PM to running a business. How exciting is that? You could be a business headed Citadel. Steve just created a new fund around one of his PMs, Turian, right? So that's a pathway where now you have in that example, point 72 with you to raise capital. They raised a billion and a half out of the gate and

the PM has all of the incredible resources available to him at point 72. That's not all multi-managers created equal and that's what creates stickiness and durability. And then the ability to build out a team under that perhaps. You know one question I have is where we're not seeing as much success. It looks like the long short business this year for all of the volatility in the market has not played out quite as well and that comes after some really tough years in recent years. Yes, so well said. So what

What's going on? OK. So you'll see the returns in May.

breaking news really not they're good they're going to be better than they were in April so is the market the problem with this is one the swings a volatility okay I'm not gonna name names but there are so many examples a funds that were down and like the mid-teens in April and now we're up mid single digits think about that is an LP and think of how nervous that might make you about what's gonna happen next month and as an LP what I'm thinking about is how much

Alpha, am I getting net of fees relative to the underlying beta exposure? That's like very complicated. I don't want to think about that. I want alpha and I have the multi-managers in order to access that or I want beta and I can pay nothing for that, right? Buying an ETF for the S&P where the long short funds will raise money is not in their hedge fund product.

You heard it here first, Shonali. They are not raising capital. I don't care what they tell you in their hedge fund product. Where they are raising capital is long only because there is appetite for the alpha component of a beta product. Can I just ask quickly? I have a curveball question for you. All right. Let's hear it. Traditionally, Harvard has been a feeder university for these masters of the universe, right? Do you see that continuing after this?

Kerfuffle? Well, my son goes to Harvard, so I don't know how I'm supposed to answer that question. You went to Harvard, right? I did. But who else can provide the best financial minds in the world?

Well, I mean, there's a lot of good schools out there. I wouldn't say Harvard has a lock on that. What I will tell you is it pertains to talent, and I've seen this up close. Literally, I visited my son a few weeks before the end of the year, and I was hanging out with him and his friends who are finishing their sophomore year, Matt, and the aggressiveness...

by the top hedge funds, namely the multi-managers, in locking up these kids now for their junior summer and the pay packages. So the talent war has gone way downstream, as we've seen, and you guys alluded to it as well earlier, are huge, even for kids, so that they have first dibs.

Alana, we got to leave it there. Wish we had more time. That is Alana Weinstein of the IDW Group. We'll have her back because we have to continue that conversation. How can you grow your business from idea to industry leader? Bring your vision to life with smart business buying tools and technology from Amazon Business. From fast, free shipping to in-depth buying insights and automated purchase approvals, they deliver everything you need to achieve your goals.

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