• Top hedge funds such as Citadel and Millennium lost money in February, people familiar said.
• Geopolitical tensions brought on by President Donald Trump led to rocky markets last month.
• Some multistrategy rivals, including Balyasny, ExodusPoint, and Verition, still made money.

Some of the biggest hedge funds could not escape unscathed from the volatility brought on by the Trump administration in February.

Managers such as Ken Griffin's Citadel and Izzy Englander's Millennium lost money during the month, which was highlighted by constantly changing trade policy proposals from US leadership and shrinking consumer confidence.

The immediate effect of the geopolitical tensions and potential for a trade war — which research from the asset manager Amundi suggests is a bigger worry for investors than inflation or the deficit — has been a pullback on US equities.

Despite a jump in the last trading day of February, stocks were broadly down last month. The S&P 500 was down by 1.4% for February, bringing the index's 2025 returns to 1.2% through the year's first two months.

Still, several multistrategy funds — which have raised billions in recent years because of their ability to handle volatility — had strong months. Balyasny, which has overhauled its equities team, was up by roughly 0.9%, Michael Gelband's ExodusPoint returned 0.7%, and Verition made 0.6% last month, people close to the firms told Business Insider.

LMR Partners, based in London, was up by 1%, a person close to the firm said, bringing its 2025 returns up to 1.8%. Cliff Asness' $3 billion Apex strategy returned 2.8%, a person close to the manager said.

More firms will be added as returns are learned. The managers below declined to comment or did not immediately return requests for comment.

• Cisu Capital, run by Mark Wills, launched its commingled fund on Monday.
• The firm began trading with an SMA with roughly $200 million from Squarepoint in August.
• The commingled fund has more than $100 million, thanks in part to a large endowment's backing.

The Elliott Management spinout Cisu Capital has started trading in its first commingled fund, seven months after it began managing money for a single outside investor.

Cisu, run by the former Elliott portfolio manager Mark Wills, began trading with capital from the hedge fund Squarepoint in August, running $200 million in a separate account. Its commingled fund raised more than $100 million, two people familiar with the firm told Business Insider, with a large endowment among the new investor base.

Cisu, based in London, declined to comment.

Wills spent more than a decade at the billionaire Paul Singer's firm, with a stop at King Street Capital before that. His new firm, which focuses on the financial services sector, has been able to do what many new launches have struggled to do: raise a commingled fund.

Commingled funds have large pools of investors and are what investors have typically signed on to when investing into a hedge fund, while separately managed accounts, or SMAs, offer a tailored investment strategy. This often allows LPs to customize risk limits, liquidity terms, and fees.

A ripple effect of the growth of big-name platforms such as Millennium has been an increase in the number of new managers being launched via SMAs. Large allocators often prefer SMAs because they give them more transparency on a manager's holdings and they can negotiate on fees.

A recent Goldman Sachs report noted that capital in SMAs grew by 27% year over year, with nearly one out of every five allocators using the structure. Allocators are using young managers' lack of scale to their advantage, pushing for new launches and emerging funds to adopt the structure if they want capital.

The Goldman report said more than half of the capital in firms with less than $500 million in assets was held in SMAs, up from 41% at the end of 2020.

Cisu is one of several launches from former Elliott investors in recent years.

For years, it was common knowledge that smaller hedge funds outperformed larger peers.

Investors focused on finding up-and-coming managers before they made it big and raised billions. Big-name institutions like Blackstone and the Teacher Retirement System of Texas seeded new funds and sought out emerging managers. While there was safety and, typically, capacity in the biggest funds, there was alpha in unknown names.

This has all changed with the yearslong industry takeover by the biggest multistrategy firms. The big four — Millennium, Citadel, Point72, and Balyasny — have in recent years outperformed peers despite their ballooning sizes, dominated the fundraising environment even though they're mostly closed to new money, and turned the talent market on its head with eye-popping offers for investors.

For the first time, scale benefits both the manager and the LP, and the result is four managers with overwhelming clout. Business Insider talked to more than a dozen fund founders, allocators, and industry experts, such as top prime brokers and recruiters, to understand how smaller platforms plan to survive the unprecedented concentration of capital and talent and where allocators are turning in this new reality.

Goldman Sachs' prime brokerage desk, using regulatory filings, estimated in July that 53 multistrategy firms employed a total of 18,600 people. More than 71% of them worked for one of the big four, leaving the 49 other funds with a combined head count smaller than Millennium's.

Fundraising — which came easy for big and small platforms alike when interest rates were lower three years ago — is now a slog for many smaller multistrategy funds, several executives told Business Insider. The shift has cramped some firms' expansion plans that commenced during the boom times following the pandemic and put pressure on a business model that thrives with scale.

Meanwhile, Point72 and Citadel have returned capital to investors, and Millennium can command a five-year lockup period for new money, a term length previously unheard of in the hedge fund world. One allocator told BI that Point72, the $39 billion firm run by the billionaire New York Mets owner Steve Cohen, had a $9 billion waitlist — which is more capital than firms like Eisler and Walleye manage.

A different allocator compared the concentration of capital in the four largest firms to passive investing, in which all the assets flow to Vanguard, BlackRock, or State Street.

"For people who can't get into the top guys, they're saying they'll just invest in some other structure or asset class instead," this person said, pointing to private credit as a landing spot for some of this capital.

David vs. 4 Goliaths

The big four platforms have grown to a point where smaller rivals aren't battling another hedge fund — they're fighting with institutions.

"They're becoming more and more like investment banks to an extent," said one platform founder with less than $10 billion in total assets. Others in the industry likened Citadel in particular to pre-IPO Goldman Sachs — a comparison Ken Griffin would most likely welcome, given his laudatory comments about the firm.

A hypothetical $5 billion multistrategy manager has a much different existence than even the $21 billion firm Balyasny. One smaller platform executive hoping to grow said that, even as Citadel and Point72 returned capital to LPs, "it was a bitch last year raising money."

A February report from JPMorgan's capital advisory team said hedge funds with assets between $500 million and $5 billion had net outflows of $21.5 billion in the past two years, while firms with assets greater than $5 billion hauled in $12.2 billion in net new money.

Goldman Sachs' July report noted that allocators were starting to balk at the high costs required to run multistrategy firms. The trickle-down effect is that firms such as ExodusPoint have accepted a cash hurdle — where performance fees accrue only when returns surpass that of a Treasury bond — to appease antsy LPs. Despite the buzz around the launch of Jain Global, the firm raised billions less than it was expected to pull in.

Several smaller-platform executives said LPs were also worried about a platform unwind and what a significant market event could do to these firms, given that they operate with so much leverage.

With more capital in multistrategy funds than ever before, some market watchers have been sounding the alarm about the knock-on effects of this investing style. These funds use borrowed money to juice their bets, meaning any significant movement against their position can cause losses to accumulate quickly.

The risk-management systems of these platforms will often force their investors to shed positions quickly in the face of mounting losses, which can exacerbate a stock's decline. It's a market risk that Viking Global's chief investment officer, Justin Walsh, said he monitors closely and that the governor of the Bank of England, Andrew Bailey, raised concerns about last month.

But now that scale has become necessary for those competing directly with the four biggest firms, any slowdown in growth can be fatal, and suddenly tepid allocators could cause a domino effect, a former hedge fund allocator said.

"Without capital, you can't get a diversity of return streams," they said. "Without a diversity of return streams, the model doesn't really make sense."

'Do you have a right to exist?'

Those that can't beat the biggest players at their own game need to offer something different.

"If you're going to compete with Citadel and Millennium in their own backyard, you're already dead," one person who's building out their multistrategy offering told BI.

They added, "Do you have a right to exist — or are you on borrowed time because you raised money when all multistrats could raise money?"

Matthew Barrett, the head of manager research at Kepler Partners, who works with allocators searching for funds, said smaller platforms must offer a "derivative" of the main models the big four have perfected.

For Dymon Asia, a $3 billion multistrategy fund with offices in Asia and the Middle East, the differentiator is geography.

At SummitTX, Crestline Investors' recently rebranded multistrategy fund, "what resonates is the alignment of the whole package," the firm's chief investment officer, Caroline Cooley, said. This includes fees, liquidity, transparency of positioning, and risk so that institutional investors have a more personalized setup.

Other midsize shops focus on investment opportunities that are more niche and wouldn't move the needle at the biggest platforms.

"They need PMs to run $2 billion to $4 billion and manage seven to nine people," said Rich Schimel, who cofounded the $3 billion firm Cinctive Capital and once ran a stock-picking unit at Citadel. "There are not a lot of people out there who can do that. Not efficiently, at least."

"It's a whole different model than ours," he said.

At his firm, he said, the focus is partially on "low-hanging fruit" in mid-cap stocks that are too small for the biggest funds, for example.

The Holy Grail, though, might be finding a way to offer multistrategy returns at a fraction of the price. The pass-through fee structures nearly everyone has adopted to keep up in the war for talent have LPs on the hook for billions in employee compensation.

Several allocators said a firm able to recreate multistrategy returns without relying on dozens of human portfolio managers would have plenty of backers. While Doug Haynes' Norias Research never ended up launching, reportedly because of an inability to raise sufficient capital, hedge fund LPs said his proposed firm's algorithm-driven and less-people-intensive structure made sense.

And gross returns from a manager like this could be muted compared with high-head-count peers and still come out on top.

"If a full pass-through fee is 10%," Barrett said, "you're already running at a significant head start."

The squeeze has already begun

Consolidation in top-heavy industries snowballs, and the multistrategy space is not immune.

While the Millennium-Schonfeld tie-up was called off in 2023, the big four platforms have warped the industry by bringing independent external funds in-house and spinning off new firms backed by the mother ship.

While there's optimism around hedge funds generally, a different Goldman report from last summer said that assets in the multistrategy industry had tapered off and that outflows outpaced performance gains through the first half of 2024. The talent pool can barely handle the big four, much less additional platforms hoping to replicate their models.

"There is definitely a difference between A talent and B talent, and you see it across different platforms," said Justin Young, the director of investments at Multilateral Endowment Management Company, an allocator that manages assets for Oklahoma State University's endowment and other institutions.

Even those on the smaller end of the spectrum acknowledge there will probably be fewer platforms going forward.

"Are there too many? There could be," one founder with under $10 billion in assets said. "There could be some consolidation."

• BlackRock removed DEI mentions from its annual report amid political pressure.
• The asset manager has faced criticism from Republicans for being too "woke."
• Here's how BlackRock has tried to distance itself from the themes it once championed.

Many big American companies have been quick to respond to President Donald Trump's pushback on DEI, but none of their steps carry more symbolic weight than a retreat by BlackRock, the world's largest asset manager.

An early advocate of diversity, equity, and inclusion, BlackRock has removed all mention of the strategy from its latest annual report. The asset manager and its CEO, Larry Fink, have over the years become targets for Republicans who claim the firm is too "woke."

What was the DEI section in the asset manager's last report has now been reframed as "connectivity and inclusivity" in the Tuesday filing. Last year, it said that it believed "a diverse workforce with an inclusive and connected culture is a commercial imperative and indispensable to its success."

This year it avoided mentioning the acronym or a diverse workforce, just "diverse perspectives."

When reached for comment, a BlackRock spokesman referred to the new paragraph in its annual report that said the firm's approach to "building a connected and inclusive culture is aligned with the firm's business priorities and long-term objectives. Delivering for the firm's clients requires attracting the best people from across the world.

"BlackRock is committed to creating an environment that supports top talent and fosters diverse perspectives to avoid groupthink."

BlackRock has also removed references to a three-pillar strategy, which included phrasing around cultivating a work environment where employees felt "seen, heard, valued, and respected."

The firm left out a section that previously broke down its US employees by gender and ethnicity. In its 2023 annual review, it introduced the statistics with a line saying that "BlackRock views transparency and measurement as critical to its strategy."

Companies have been quick to respond to President Donald Trump's executive order on "radical and wasteful" DEI programs, though a few big names such as JPMorgan Chase and Costco have reaffirmed their commitment to diversity initiatives.

Through his annual investor letters, Fink promoted stakeholder capitalism and environmental, social, and governance investing, becoming the unofficial corporate poster child for the movements. In the last few years, however, Fink has had to tone down his support for ESG and defend against the idea that the firm has an ideological agenda it's forcing on the many companies it invests in through its mutual funds and ETFs.

The firm also has critics on the political left. Climate activists have previously protested outside Fink's home and BlackRock's New York headquarters, calling for a divestment from fossil fuels.

"The only agenda we have is delivering for our clients," he said in 2023 LinkedIn post, which he drafted as a response to being called the "king of the woke industrial complex" in a Republican Party presidential candidate debate.

Here is a timeline of how BlackRock built and then knocked down its reputation as a social and environmental champion:

• Hedge funds have piled into AppLovin, which helps apps monetize their offerings.
• Regulatory filings show Viking, D1, and Coatue started or grew positions in the fourth quarter.
• The stock has soared thanks to AI advances, returning more than 1,200% since the start of 2024.

Big-name managers spent the end of 2024 checking into the newest hedge fund hotel.

AppLovin, the mobile advertising platform apps use to monetize their offerings, has soared thanks to artificial intelligence advances that have pushed its advertising revenue up more than 70% year-over-year. The stock is up more than 1,200% since the start of 2024 and has not slowed down in 2025, despite some AI stocks struggling following the release of Chinese startup DeepSeek's models.

The company's stock is up nearly 50% this year, trading at more than $500 a share as of press time.

That's music to the ears of investors at funds like Viking Global, D1 Capital, Castle Hook, and others, all of which, according to regulatory filings, invested in the stock for the first time in the fourth quarter of 2024.

One prime broker who works with many of these managers told Business Insider that AppLovin is the new hedge fund hotel, a term that refers to stocks with a disproportionate amount of hedge fund ownership relative to the overall market. AppLovin is currently the largest holding in Goldman Sachs' Hedge Fund Industry ETF, which tracks top hedge fund picks.

Hedge fund hotels have been criticized as evidence of groupthink within the industry, but the smart money swarming to a name can also be a sign of an obvious winner. Nvidia, for example, was deemed a hedge fund hotel by the Financial Times in July 2023. The chipmaker's stock is up more than 200% since then.

Coatue and Lone Pine each got into AppLovin before the recent surge — in 2022's fourth quarter and 2023's first quarter, respectively, according to filings — but took different paths last quarter. Coatue, run by billionaire Philippe Laffont, added to its stake, buying more than 300,000 shares, while Lone Pine crystallized some of its gains, selling more than 1 million shares.

Still, Lone Pine owned a position worth more than $300 million in the company at the end of 2024. Similarly, Alex Sacerdote's Whale Rock sold more than 1 million shares last quarter but still held a position worth more than $500 million at the end of the year. Whale Rock first bought the stock in the first quarter of 2024.

D1, Whale Rock, and Viking declined to comment. Castle Hook, Coatue, and Lone Pine did not immediately respond to requests for comment.

While the company's market capitalization has soared to more than $170 billion, putting it ahead of names like Verizon, Caterpillar, and Uber, investors believe it still has room to grow.

Polar Capital, a $30 billion asset manager with dozens of thematic funds, wrote in its Global Technology Fund's November investor letter that AppLovin's algorithm improvements "were described as a 'step change' that management expects to see periodically going forward."

"Management also remains confident in the sustainability of 20-30% ad network growth based on the gaming business alone, while early testing in e-commerce advertising has been positive with a full launch expected in 2025," the letter continues.

Others are projecting even bigger things.

AppLovin "is such an amazing story and honestly perhaps a contender for the 8th 'MAG' stock," market commentator James van Geelen's Citrini Research posted on X last week, referring to the Magnificent 7 stocks that have been among the biggest market winners over the past two years.

• Beeneet Kothari runs Tekne Capital and made more than 22% last year thanks to Chinese bets.
• Kothari, a former PM for famed investor Stan Druckenmiller, has been investing in China since 2005.
• "You've woken up the giant at the same time as it's cheap," he said about China.

Twenty years after first investing in China, Beeneet Kothari is as bullish as he's ever been about the country's prospects.

The founder of the $1.2 billion hedge fund Tekne Capital, headquartered in New York but with a local team in China, said he's following the mantra of his old boss's former boss. Kothari was a portfolio manager for billionaire Stan Druckenmiller's Duquesne Capital. Druckenmiller worked for billionaire George Soros, who said money is made when you discount the obvious and bet on the unexpected.

To Kothari, the obvious — in light of President Donald Trump's election and his administration's aggressive trade policies toward China — would be to run from the country. But he's betting on the unexpected, and others have as well as Chinese equities have ripped to start the year thanks in part to the breakthrough from AI startup DeepSeek.

"The starting point on China is very different today than five years ago, 10 years ago," he said, and "when stocks go down 90%, it's time to start asking what can go right. That's where you are with China."

A trade war is not ideal, but any pain that Trump's proposed policies would bring to Chinese stocks is muted because so much Western capital has already left the country, he said. In the meantime, plenty of investors will be looking to get into the market thanks to DeepSeek.

Kothari predicts that "not dozens, not hundreds, but thousands of models get launched" over the next two years from DeepSeek and other companies like TikTok's parent company, ByteDance.

"It's now like you've woken up the giant. And you've woken up the giant at the same time as it's cheap," he said.

While some might be rushing into the country for the first time, Kothari has significant experience investing in China. At Duquesne, he and Druckenmiller worked with Alibaba founder Jack Ma to buy a stake in the company, which was valued at roughly $10 billion. The pair also invested in JD.com before it went public.

Tekne made more than 22% last year in part thanks to bets on Chinese companies such as GDS, a data center company, a person close to the firm told Business Insider. By comparison, Hedge Fund Research's China index was up just over 8%, and the average manager returned roughly 10% over the same period.

A pair of industries he'll be watching closely show how he believes China is at the forefront of innovative tech but also institutionalizing generally. He believes the country will lead the robotics movement because "robots are basically software plus large-scale hardware manufacturing — there's one country that excels at large-scale hardware manufacturing."

But enterprise software — a dominant industry in the US, with companies like Salesforce and Oracle ubiquitous across corporate America — is still in its infancy in China.

"The demand exists, the talent exists, now you can write software in a snap with AI. I think enterprise software is going to become a massive, massive industry," he said.

And it's a cheaper bet than anything in the US.

"If you bought a basket of Series B companies in China, and then you bought a basket of Series B companies in Silicon Valley today, I'll take that first basket because I think you got a good price," Kothari said.

• Billionaire Ken Griffin, a key GOP donor, spoke Tuesday at a conference hosted by UBS outside Miami.
• Griffin, the founder of $65 billion hedge fund Citadel, was critical of the new administration's tariffs.
• Elon Musk's DOGE has his full support, though, and he thanked Musk "from the bottom of my heart."

Ken Griffin made sure to seek out a camera before answering the question.

Griffin — the billionaire founder of hedge fund Citadel and a key GOP donor — was asked about the work of Elon Musk and his Department of Government Efficiency, which has angered members of Congress on both sides of the aisles with its pause on funding projects.

While staring at the camera filming the UBS Financial Services conference in Key Biscayne, Florida, Griffin thanked Musk "from the bottom of my heart."

"We need to take back the reins of government from the bureaucrats who only know how to spend our money," said Griffin, referring to corporate leaders who have decided to shift their focus from the private sector to government work like Musk.

While Griffin said he doesn't agree with every move Musk and the DOGE team have made, "As a taxpayer, I'm so appreciative."

"Is he breaking a lot of glass? Absolutely. But he doesn't have a lot of time," Griffin said.

Still, Griffin — who was critical of President Donald Trump before and during the Republican primaries but ended up voting for him in the 2024 general election — is not a fan of every move the new administration has made.

He told the moderator, UBS' president of the Americas, Rob Karofsky, that the "core promise they need to deliver on" is economic growth in the US to address the growing national debt and the entitlements promised to soon-to-be retirees.

Tariffs are an impediment to that growth, he said, and just the "bombastic rhetoric" has already done damage.

"It sears into the minds of CEOs and policymakers that we can't depend on the United States as a trading partner," he said, pushing companies to explore their options beyond the US.

Tariffs also limit the competition for domestic companies, allowing them to become complacent when countries like China are leading in many industries, especially as it relates to technological advancements around artificial intelligence. He hopes DeepSeek is a "wake-up call" to the US and policymakers.

"Tariffs are what you do in the death throes of a nation," he said, as it "dulls" the competitive edge companies have developed over the years to beat their peers.

It all adds up to uncertainty that has both allies and rivals wondering what the country will do. Even if tariffs eventually get sanded down or are nixed altogether, the volatility has "a permanent and adverse effect," Griffin said.

"That uncertainty, that curtails growth," he said.

• Avantyr Capital, a long-short equity fund set to launch later this year, is building out its team.
• The new fund, from former Viking Global CIO Ning Jin, has hired two people for his investment team.
• Jin told potential investors at a conference in January that the strategy can run up to $1 billion.

One of the most anticipated fund launches for 2025 is getting going.

Ning Jin, the former chief investment officer at $51 billion Viking Global Investors, has picked a name for his new firm, hired two people, and relayed to potential investors the amount of money his strategy could potentially manage.

Jin — who named his venture Avantyr Capital after the Italian word "avanti" which means forward or ahead — told possible LPs at a West Palm Beach conference that he could take on up to $1 billion in assets, two people who met with him told Business Insider.

A person close to Jin said the former Tiger Cub executive did not provide attendees of Morgan Stanley's annual Breakers conference with a fundraising target, just his strategy's capacity. Jin did not respond to requests for comment.

Jin left Viking in August 2024 after 17 years. He became co-CIO in 2017 and the sole investment head two years later.

Jin has already hired two people to join his new firm, including a former colleague from Viking, according to bios on the Bloomberg Terminal. Alex Mendez, a former analyst at Viking, is joining Avantryr after a stint as a portfolio manager at TOMS Capital Investment Management, a hedge fund run by GLG cofounder Noam Gottesman out of New York.

Sunjay Mishra, the former director of research at Jason Karp's Tourbillon Capital, has also been hired. According to his LinkedIn, Mishra has worked for an undisclosed family office since Karp closed his fund in late 2018.

Viking, which is run by billionaire Andreas Halvorsen, has become a launching pad for ambitious investors looking to run their own firms. Jin joins fellow Viking alums such as D1 founder Dan Sundheim, former Viking CIO Ben Jacobs, and one-time analyst Grant Wonders in starting his own fund in recent years.

• New consultants and podcasts have launched to help people understand how the biggest hedge funds work.
• Brett Caughran, Marc Greenberg, and Doug Garber have spent time either investing or managing PMs.
• Their new ventures aim to demystify the pod hedge fund space, which is constantly in need of talent.

The fundraisers for the biggest hedge funds in the industry — names like Citadel, Millennium, and Point72 — may not want to hear this, but what these managers do is not magic or rocket science.

The work that these funds do, especially the individual portfolio managers and their analysts, is something many could do. Or at least that's the belief of Marc Greenberg, the former director of research at Steve Cohen's Point72.

Greenberg launched a consulting firm called Greener Pastures that works with smaller funds on talent development and their research process and also writes a substack that covers the "block-and-tackle-type stuff" of investing at a multistrategy hedge fund.

It's a "false notion" that "there's this secret sauce that happens within funds," he said, saying the "lore" of the founders can make these firms seem "magical" from the outside.

The reality, he said, is the PMs "work really hard and know their companies really well." His writing is about earnings prep, how to use data, how to manage risk, and how to do fundamental research — and the success of these managers is driven by "the men and the women in the seats."

Greenberg is part of a group of former investors and executives from these multistrategy funds that are trying to make the industry more accessible to those unfamiliar with the inner workings of a Millennium or a Citadel.

Brett Caughran, a former portfolio manager for Schonfeld, Citadel, and D.E. Shaw, founded a training academy, Fundamental Edge, in 2022 with the explicit purpose of training young people in finance for jobs at multistrategy funds. Doug Garber, a former analyst at Citadel and portfolio manager at Millennium, has launched a podcast called "Pitch the PM" where he reviews stock pitches in the same way he would if he were still investing for hedge fund founders Ken Griffin or Izzy Englander.

As the hedge-fund industry has matured and more capital has concentrated among the biggest players, there's a growing demand for talent to keep it all running.

The lack of talent has led to bidding wars that rival free agency in major sports leagues, as Goldman Sachs' prime brokerage desk notes in a recent report that pass-through fees, which cover expenses like bringing on big recruits, were 4% of assets in 2024 — a jump from 3.3% the year prior. In a recent bond offering prospectus, Citadel notes that investors paid $17 billion in pass-through fees from 2021 through mid-2024.

Cohen, the owner of Major League Baseball's New York Mets, has dealt with both, doling out the largest-ever deal in sports history to outfielder Juan Soto and a guarantee of $50 million to lure Marshall Wace PM Kevin Liu to Point72.

But it's not just a shortage of top-tier talent. These funds need more young analysts to support their ever-growing ranks of PMs. What the new breed of consultants, writers, and podcasters are doing is putting the brands of the biggest funds on the radar of smart young people considering their next move — and laying out what life is like at these funds.

"There's definitely a demand for it," Garber said, and he's mentoring young investors in college and leaving grad programs now. This next generation is eager to work for some of the industry's biggest names, he said, but "they don't know the long-short process."

"The students I talk to, they want Citadel or Point72," he said.

750 students and counting

To be sure, it's not uncommon for people to leave hedge funds — which often recruit ambitious, entrepreneurial types — and start their own businesses, even if that startup isn't another investment manager. Former Point72 research head Kirk McKeown cofounded data startup Carbon Arc in 2021. One-time Citadel and Millennium comms leader Tripp Kyle and former AQR spokesperson Claudia Gray partnered to start their external agency, Northport Partners, in 2023. Elliott's former European government affairs leader, Claire Jolly, started consultancy Beaufort Strategy last year.

But those businesses and many of those who have come before them are focused on serving the needs of those already in the industry, not looking to bring a separate universe of people into hedge funds. Greenberg, Caughran, and Garber are all, in a way, speaking to the youngest in the talent pool and increasing the brand recognition of the industry's biggest managers.

It's another example of the institutionalization of the hedge fund industry, which has grown to the point where the biggest managers are recruiting straight from undergraduate programs instead of poaching talent from investment banks or private equity. Point72, Citadel, D.E. Shaw, and others have built competitive, well-paid internship programs. Millennium and UBS have a partnership in which a new grad for the hedge fund would spend a year in the bank's equity research department as an outsourced training year.

Internal training programs though are still a work in progress for many funds and talented young people can get washed out quickly, Caughran said.

"Historically, a lot of funds expected young talent to learn through osmosis," he said, and it was a struggle for him personally when he first got to the buy-side, though he started his investing career at the Tiger Cub hedge fund Maverick Capital, not a multistrategy fund. Fundamental Edge already has had 750 students take its various training courses and has other full-time instructors with buy-side experience reviewing everything from prepping for earnings to understanding factors and risk.

He also lays out what life is like at these firms, which are often more fast-paced than the managers or banks his students are typically working at.

"If you're making the career choice to go to one of these places, you should go in eyes wide open about what the trade-offs and benefits are," he said.

Firms, in general, have also become more transparent, in part to attract more people to their managers and improve their brand recognition. Cohen has spoken about investing and career growth on a company-run podcast. Griffin recently met with Cambridge University students and gave advice on what they should do after graduation.

The advent of Substacks like Greenberg's and podcasts like Garber's only increases awareness of these firms and what they're like from an insider's perspective.

"These are the conversations I am having with my former colleagues from when I worked at Citadel, at Millennium," Garber said.

• Author Jack Schwager is writing a new installment of his "Market Wizards" series with George Coyle.
• The latest book will be focused on the early years of top traders, including past subjects of Schwager's.
• This will be the sixth book in the series, and Schwager expects it to come out in the second half of 2026.

Jack Schwager is adding another installment to his popular "Market Wizards" collection, the author told Business Insider.

Schwager's sixth "Market Wizards" book will likely be published in the second half of 2026, he said. He is co-writing the latest edition with financial writer and researcher George Coyle.

The focus will be on the early parts of top traders' careers, he said, and the working title is "Market Wizards: Origins." He has just begun to do the interviews, though the subjects of the latest books are mostly set, he said.

"It will be a mix of well-known names and those who are completely unknown, but have done spectacularly well," he said.

His series, which began with 1989's "Market Wizards: Interviews with Top Traders," is an account of the winning investment strategies of big names like billionaire Paul Tudor Jones and under-the-radar day traders who have made large personal fortunes. The series has sold "well over a million copies," according to a press release from a decade ago and before the publication of the fifth book in the series.

An investor himself, Schwager has worked with different investment managers over the years, including as a partner at London-based fund-of-funds Fortune Asset Management, which was bought by Close Brothers Asset Management in 2006. Before he wrote the first of the "Market Wizards" series, he wrote "A Complete Guide to the Futures Markets" in 1984 and has since revised and updated the reference work several times.

His "Market Wizards" books are primarily interviews with the subject, and the original included 17 traders featured. This time around, he plans to do 12 interviews, including with some subjects who have been featured before.

The big difference he has found in researching and vetting potential subjects now compared with decades ago is the desire for under-the-radar stars to remain anonymous.

"Some people feel a sense of modesty that's somewhat misplaced," he said. He said he tells the individuals to "let me be the judge" of whether or not they're worthy of inclusion.

Still, he anticipates this will be the first book where some subjects remain anonymous.

"Their story is what counts," he says, and as long as he can verify the numbers via brokerage statements, he is comfortable not naming them.

"They feel they owe something, but they want to remain anonymous," he said.

• January was filled with macro tremors and market jitters, but big-name hedge funds were positive.
• Walleye and Balyasny led the way for multistrategy hedge funds.
• Firms like Schonfeld, ExodusPoint, and Millennium were positive in January.

In a rocky month filled with geopolitical tension and artificial intelligence breakthroughs, the biggest names in the $4.5 trillion hedge fund industry still made money.

Walleye, which runs $5.8 billion in its multistrategy fund, led the way with a 3.6% gain in January, a person close to the firm told Business Insider. Larger rivals like $20 billion Balyasny and $12 billion Schonfeld were also up in January, making 2.5% and 2.2%, respectively, people familiar with the managers told Business Insider.

January markets were choppy, thanks to President Donald Trump's trade and immigration policy plans and a breakthrough from Chinese artificial intelligence darling DeepSeek.

The S&P 500 finished the month up 2.7%, but there was a significant sell-off of big-name tech stocks like Nvidia in mid-January. The chipmaker is down more than 10% for the year after a blockbuster 2024, though other tech giants are up for the year, including Facebook parent Meta and Amazon.

Multistrategy funds, which have become LPs' favorite thanks to their ability to handle volatility, were mostly able to shrug off the tech sell-off and macro jitters. While ExodusPoint and Millennium didn't match the monthly returns of the market, the managers made 2% and 0.5% in January, respectively, people close to the firms said.

More firms will be added as returns are learned. The managers declined to comment.

• Fidelity's Contrafund valued its stakes in SpaceX at $2.7 billion at the end of 2024, per filings.
• The mutual fund giant first invested in Elon Musk's space company via its 2015 Series G.
• Fidelity invests in startups and large companies through dozens of mutual funds.

SpaceX's valuation is soaring — at least according to one investment giant. Fidelity, which invests in startups and large companies alike via dozens of mutual funds, is valuing its stakes in Elon Musk's Space Exploration Technologies at $2.7 billion.

Fidelity's SpaceX stakes — which include Class A and C shares in Fidelity's Contrafund, as well as Series G, H, and N shares — were revealed in a December filing report published by the investment company at the end of January.

Cumulatively, this would make SpaceX the 11th-largest holding in the $160 billion Contrafund, ahead of Visa, JPMorgan, and Broadcom. As it stands, SpaceX's Series G shares are the 23rd-largest holding in the fund.

Fidelity's Contrafund first invested in SpaceX during its 2015 Series G funding round, which valued the company at $12 billion, according to Wall Street Journal reports. An annual report said the Contrafund paid $43,239,000 on January 20, 2015, for 558,215 shares.

At the end of last December, the Contrafund valued those Series G shares at $1,032,697,750 — a whopping 2,288% return over a decade.

Given SpaceX's $12 billion valuation at the time of its Series G fundraise in 2015, the Contrafund is signaling SpaceX's valuation to be north of $286 billion — larger than Coca-Cola and Chevron.

In December, SpaceX was valued at $350 billion following a secondary share sale.

2024 was a banner year for Musk, who supported President Donald Trump's reelection and secured a leadership role in the Trump administration. Musk's social media platform, X, has also provided a lucrative source of training data for his AI startup, xAI, which raised $6 billion in Series C funding in December.

Fidelity's Contrafund increased the value of its SpaceX stake during this period: Filings indicate it valued the company's Series G shares at $541.5 million in December 2023 and increased their value by 15.5%, to $625 million, in June.

Those shares were valued at $1,032,697,750 at the end of last December, a 65% increase from June and a 91% increase year over year.

Representatives for SpaceX and Musk did not immediately respond to requests for comment.

Correction: February 3, 2025 — An earlier version of this story described outdated valuations of two companies. They have been removed.

• The biggest hedge funds are battling it out to attract and retain top talent and outperform peers.
• Business Insider has talked to elite hedge funds to get a peek into their recruiting processes.
• From internships to high-paying tech jobs, here's what we know about their hiring practices.

The war for hedge fund talent cuts across all levels and positions, with firms like Citadel, Point72, and Millennium constantly competing to gain an edge in a cutthroat industry.

These behemoth funds are now putting serious time and resources into recruiting for internship and training programs to create a steady employee pipeline. Steve Cohen's Point72 and Ken Griffin's Citadel recently opened applications for their 2026 summer internships to undergrad students.

Eye-popping pay, challenging work environments, and the promise of working with some of the best investors in the industry can make them an attractive employment option.

Internships at quant fund D.E. Shaw, for example, can pay up to $22,000. Salaries for entry-level analysts and software engineers are often in the six-figure range. Portfolio managers with winning strategies can take home millions.

Business Insider has talked to some of the biggest hedge-fund managers about how they attract talent, as well as their advice to prospective hires.

Here's everything we know about getting a job at a large hedge fund.

Internships

Years ago, the opaque and secretive world of hedge funds might not have been an obvious career choice for most college graduates. However, these investing behemoths are now investing in getting young, diverse wunderkinder, especially mathletes, familiar with their brands as soon as high school.

Internships are another talent pipeline for some of the biggest multi-strategy hedge funds, which employ armies of traders and engineers. Programs can be uber-competitive and harder to get into than many top Ivy League schools.

Citadel's summer internship program, for example, has become increasingly competitive. Last year, the hedge fund accepted around 300 interns to spend 11 weeks at Griffin's hedge fund or his market maker, working with stock-pickers, quants, engineers, and more. The firm told BI that there were more than 85,000 applicants for the programs, with an acceptance rate of roughly 0.5%.

• Here's how to land a spot at Citadel's summer internship
• Citadel's associate program is a separate internship that puts rising college seniors on track to land a full-time investing role at the $66 billion fund.
• Ken Griffin's advice to interns: Hustle during your 20s and be aggressive when asking for a promotion

We also spoke to Point72 and D.E. Shaw about what they looked for in interns and how to stand out for a potential job offer down the line.

• Here's what it takes to stand out as an intern at Steve Cohen's Point72 and land a job offer
• A D.E. Shaw internship could land a dream gig at the secretive hedge fund. Here's what it takes.

Analyst and investment training programs

In the past, hedge funds acquired investment talent from investment banks. Increasingly, however, the industry's top players are recruiting college students through intensive training programs that can lead to jobs straight out of college.

Creating a pipeline of portfolio managers has been an increasingly popular strategy for hedge funds locked in an increasingly expensive battle for top talent.

• How to get accepted into Point72's ultra-elite analyst training program, whose acceptance rate is less than 1%
• Inside Point72's PM incubator LaunchPoint, where Steve Cohen is known to grill up-and-comers who think they're ready for the big time
• Inside Balyasny's Anthem training program, where aspiring portfolio managers are handed hundreds of millions of dollars to prove they can cut it
• Behind the training programs at Balyasny, which is looking to get ahead in the war for investment talent

Tech jobs and training programs

Hedge funds have long been competing with the finance industry and top tech companies for top technologists. Engineers and algorithm developers are key to helping researchers, data scientists, and traders develop cutting-edge investment strategies and platforms. Quant shop D.E. Shaw also has a unique approach to finding talent.

• Inside Citadel's exclusive engineering program that's helped the hedge fund snap up talent from Google and Goldman Sachs
• Here's how to get a tech job at Millennium, from the programming language to know to the interview questions to prep for
• Millennium is on the hunt for engineers in Miami. A top tech exec for the $58 billion hedge fund details the firm's new training program.
• Inside Man Group's popular training program for non-tech employees that teaches them skills to automate tasks and reduce errors in their work

Other resources and advice

Here's a look at how some firms find and vet new employees, what skills and qualities they're looking for …

• Why quant giant D.E. Shaw seeks out academics, doctors, and veterans to work at the hedge fund
• Citadel portfolio manager explains how he rose in the ranks of the hedge fund and what he looks for in a new hire
• Inside the 5-hour psychological interview that can make or break your career at Citadel, Blackstone, and other finance titans

• Inside the spycraft hedge funds use to vet multimillion-dollar traders, which is edging into murky legal territory

  ... and a rundown of some of the gatekeepers to know:

• The rise of the hedge-fund talent whisperers
• The talent brokers of quant trading: The headhunters at the forefront of Wall Street's systematic-trading and data-science hiring frenzy
• Try our searchable database of more than 350 Wall Street headhunters to find your dream job in private equity, investment banking, or hedge funds

• Carlyle-backed Yipit added M Science, its CEO, and a former executive as defendants in its trade secrets lawsuit.
• M Science, owned by Jefferies, had more than a dozen salespeople use Yipit's stolen information, the new filing says.
• A statement from M Science said that its rival's claims are "absolutely meritless."

Alternative-data giant Yipit laid out how damaging rival M Science's "conspiracy" to steal its confidential information has been, according to new filings in New York federal court.

The new amended complaint, filed in the federal district court in Manhattan, says Carlyle-backed Yipit has churned dozens of customers — including investment managers such as hedge funds — as a result of the theft of its product and client information by two former employees.

M Science executives, including current CEO Michael Marrale, encouraged the theft, the complaint said. The new legal filing added Marrale, former chief revenue officer Valentin Roduit, and the Jefferies-owned company as defendants, as a recent motion from Yipit indicated it would.

The original Yipit lawsuit, from last October, rocked the alternative data industry, a growing subsector of the massive investment management space that caters primarily to hedge funds by providing them with insights gleaned from credit-card receipts, geolocation foot traffic, and web-scraping bots.

The original suit said two former Yipit employees, Alex Pinsky and Zach Emmett, brought proprietary information from their former firm to M Science. The new complaint includes screenshots of texts, Microsoft Teams messages, and Bloomberg chats between the two and others at M Science that show them discussing Yipit clients and products.

In a statement, Yipit said there's evidence that "M Science has run a documented campaign to steal Yipit's information to prop up its business." Specifically, the complaint said Marrale was aware of the information Emmett supplied on the data sources Yipit used to create its Apple product as well as advice for its sales team on how to present the product to clients. M Science has its own rival Apple data product.

In one May text chain before Emmett left Yipit, Aaron Fuchs, an M Science salesperson, messaged saying he wished Emmett would stay at Yipit longer. Emmett responded saying "maybe there's a comp plan where I am just a mole." Emmett clarified in a second message: "For mscience."

"Lol Rich Handler would pay your legal bills," Fuchs responded, referring to Jefferies CEO.

"Yipit is very well aware that the statement regarding Mr. Handler was a sophomoric wisecrack made by a junior person who has never met Mr. Handler and whom Mr. Handler does not know," a statement from M Science reads.

"The fact that Yipit added this tripe in their complaint underscores the absolutely meritless nature of their claims."

Roduit, who no longer works at M Science, did not respond to requests for comment.

More to come

The legal battle between the two well-known alternative data brands got even nastier last week when M Science filed its own complaint against Yipit, accusing its rival of many of the same practices. Yipit has not yet responded to the complaint in court but called it "a meritless smokescreen" in a statement to Business Insider last week.

As for the original lawsuit, Yipit said it believes there's more to uncover in the "conspiracy" that will implicate even more people at M Science. The new legal filing states it began to investigate Emmett "immediately" after he publicly announced he was joining M Science and found "smoking gun" text messages on his work laptop, which he returned months after he was instructed to. Yipit said it used data loss protection software Cyberhaven to recover various evidence from Emmett's laptop.

The new complaint states that "more than a dozen M Science employees solicited and/or received Yipit's information directly or indirectly from Mr. Emmett" — roughly a quarter of M Science's sales force.

"Yipit cannot know, without discovery, just how far the conspiracy to misappropriate and use its information extended. But the information M Science provided so far indicates that the scheme included many M Science employees, including Mr. Marrale and other officers at the C-suite level, and that the highest echelons of M Science leadership were either aware of this conspiracy, or (in the case of Mr. Marrale, among many others) actively participated in it," the new complaint reads.

Yipit questioned the rationale of different corporate decisions made by M Science over the past couple of years in the filing. The complaint references a BI report from 2023 on M Science's change to its pricing model that increased the cost of its reports for its biggest clients, some of whom had to pay double.

Marrale, in an interview with BI in 2023, said that the decision was driven by new data sources, improved infrastructure, and a partnership with Databricks. Yipit's complaint said the information its former salespeople provided M Science executives about its own client base — and the prices Yipit was charging them — paved the way for M Science to raise its own prices.

"These price increases could have seriously jeopardized M Science's business and driven away its customers," the complaint said.

"M Science's willingness to make such a move suggests that it obtained detailed information about the pricing strategies of its primary competitor, Yipit—on information and belief, through the illicit disclosures of its departing employees—and adjusted accordingly."

In a famous scene from "Liar's Poker," Michael Lewis' best-selling memoir about 1980s trading culture, a Salomon Brothers employee defecting for a big payday at a rival bank tells the brass begging him to stay, "You want loyalty, hire a cocker spaniel."

Decades later, the sentiment resonates more than ever at hedge funds. They've long been home to some of Wall Street's fattest paydays, but in recent years a gravitational shift toward one distinct breed of fund has changed the game, minting multimillionaire traders on an industrial scale.

Over the past half-decade, multimanagers like Millennium, Citadel, and Point72 became the darlings of the hedge-fund industry. Some $200 billion gushed into these funds and their competitors starting in 2019; assets stood at $366 billion in 2024. Head count at multimanagers — known for spreading their bets across an array of individual teams and strategies — more than doubled, while staffing stagnated in the rest of the hedge-fund space.

Some accepted more money than they could reasonably invest, and hiring went in overdrive to keep pace. The hunger for portfolio managers was voracious but not always discriminating.

Multimanager funds now regularly fork over eight-figure deals to PMs, with some coveted stars receiving packages north of $50 million. But firms often must take it on faith that PMs claiming tens or hundreds of millions in profits at their former employers are being forthright.

The dirty secret, according to conversations with nearly two dozen portfolio managers, recruiters, hedge fund execs, and business-development professionals, is that many of them aren't. When it comes to performance, traders regularly prevaricate and exaggerate; it's just a matter of degree and audacity.

With "F-you money" hanging in the balance, there's even greater incentive to embellish — and more on the line for investors.

"A large percentage of PMs fluff their numbers," a recruiting exec at one large fund told Business Insider.

While hedge funds have always tried to vet candidates, both firms and employees face a dilemma: Trader P&L, industry shorthand for "profit and loss," can't be gleaned from an AI assistant or bought from a data vendor — it's confidential, proprietary information belonging to a competitor.

Dishonesty on this opaque corner of Wall Street isn't new, but the pace of hiring and deal size is. This war for talent has driven up costs for investors, who have started to push back.

Hedge funds have responded to this pressure in varying ways, including some that are bolstering efforts to verify performance. But achieving greater levels of certainty often requires a willingness to cross ethical and legal boundaries, as well as some skill in spycraft — cultivating sources and cajoling them to provide sensitive information, sometimes via clandestine meetings or anonymously mailed documents.

While industry professionals BI talked to described practices and firsthand experiences with companies, most declined to single out firms, and they asked to remain anonymous to discuss a legally sensitive topic and protect business relationships. Their identities are known to BI.

Some believe tighter vetting is uncomfortable but necessary to protect investors' capital, but some find the descent into riskier legal territory troubling.

"You're just putting people in bad positions," a PM with experience at multimanager funds said. "It's a horrible way to start a business relationship."

Last summer, a senior headhunter who places PMs at multimanagers saw a change emerging on the hiring front lines. Before finalizing multimillion-dollar deals to hire candidates, funds were making a bold request: direct, proprietary evidence of the PM's trading performance. Some, for example, asked PMs to jump on FaceTime or Zoom while at home and pan the camera over to their computer screen to show their P&L in their company's internal system. Others were meeting candidates at coffee shops or going to their homes.

While some PMs obliged, eager for a hefty payday, others were spooked. Violating their nondisclosure agreements made them deeply uneasy, and the courtship stalled.

"Any PM showcasing P&L is violating the contract they signed at their current employer," the headhunter said. "But the only way to go and get another seat is showcasing or conveying what you've done at your firm.

"It's a big conundrum," he said.

Another senior headhunter said he also observed a change starting around the summer, with multiple funds asking candidates to bring their laptop to a café, log onto their internal system, and show their P&L to finalize a hire.

This verification step typically happens toward the end of a monthslong courtship, and several headhunters BI talked to said they'd had deals fall apart in the past year because the information a fund requested made the candidate too uncomfortable.

"It's happening more and more," the second headhunter said. "Some guys balk at it, and that's where the deal falls apart."

Hard data on the extent of such practices, much like trader performance figures, isn't available. There are more than 50 multimanager funds, some with less than $2 billion in assets and others with more than $60 billion, and management styles and hiring practices vary widely. But the industry professionals BI talked to said that generally firms were intensifying their vetting rigor and that requests for sensitive and legally protected information were becoming more common.

Perhaps the most popular and ubiquitous way of corroborating a trader's performance is by obtaining the candidate's pay history through W-2 tax records and deferred-compensation statements.

Because hedge fund payouts are formulaic — most multimanagers pay a standard percentage of a trader's profits that's typically upward of 20% — a PM's compensation is a direct indicator of their past performance.

One multimanager exec said he asked for W-2s and screenshots of P&L, describing these requests as "the same thing everyone else asks for." But many states, including the hedge fund hot spots New York, California, and Connecticut, have barred employers from asking about salary history.

A PM with experience at multimanager funds said hedge fund business-development reps had been pushing for PMs to share screenshots of not just annual returns but monthly figures. Another PM said his current firm asked for such granular detail in its vetting, including subsector exposure levels and returns, that he had to compile the stats on his own because his firm didn't track them.

A third told BI he'd shown recruiters P&L from his firm's internal systems during in-person meetings. He said due diligence ramped up as the guaranteed pay packages got larger.

"To show something in person is always better," he said.

Still, other hedge fund professionals said that they hadn't experienced such requests and that they strongly objected to the practice.

"It violates all the confidentiality agreements," another PM who's worked at multiple funds said. "I don't think reputable firms would ask you to do that."

Hedge fund portfolio managers are more like the cocker spaniel, a gundog once known as much for its hunting prowess as for its loyalty, than that Salomon Brothers trader knew. Expensive, tireless, and well trained, they're experts at sniffing out treasure that others can't see — a skill applicable to trading but also to other vocations, including job hunting.

As the market for hedge fund PMs' talents exploded and sign-on packages stretched into the tens of millions of dollars, scrutiny didn't always keep pace. And some PMs smelled an opportunity.

"It can be gamed, and it's definitely been gamed," a PM who has worked at large multimanager funds said.

One ex-BD source at a large fund recalled a candidate who filed paperwork on official letterhead that was later revealed to be fraudulent — the candidate had combined separate documents and altered information.

"Guys lie all the time. All the time," another headhunter said, adding that the funds had "all been burned 100 times."

The top performers are typically worth the cost, and the top platforms have generally shown that they know which to bet on, said John Delano, the head of research and analytics for the asset manager Commonfund's outsourced-CIO team. That doesn't eliminate the sticker shock for investors, though.

"You kind of wince a little bit when you see the big free-agent numbers" for PM hires, Delano said.

Whether it's a great hire or a bust, investors are increasingly picking up the tab because of the proliferation of pass-through fees, in which allocators cover a fund's operating costs — including ballooning PM compensation.

A September report from Goldman Sachs said more than 80% of the 53 multimanager hedge funds tracked by its prime-services team had pass-through fees, up from 63% in 2022.

Some allocators have started pushing back on expenses. They've become "more hawkish on making sure higher fees are justified," said Jon Caplis, the founder of the hedge fund research firm PivotalPath. "And they are trying to get as much transparency as possible."

The Teacher Retirement System of Texas, one of the country's largest pension funds and hedge fund investors, published an open letter in May arguing for hedge funds to implement performance hurdles that ensure they're beating the cash rate. Dozens of investors signed the letter.

"Keeping a close eye on external-manager costs and hiring practices is not new," Lulu Llano, a director at Texas Teachers focused on hedge fund investments, told BI. "It does appear to be getting more scrutiny given the recent capital flows into the space."

Llano said the pension giant had observed some multimanagers taking new measures to protect their businesses amid the hiring frenzy, including lengthening sit-out periods for departing PMs and in some cases clawing back compensation.

Other funds are opting to take a harder line before a PM ever enters the front door.

With the talent war showing no signs of a détente, hedge funds face a tricky task: boost investor capital, but also safeguard it — knowing that PMs exaggerate their exploits — but don't breach confidentiality agreements and alienate top candidates.

The pressure of solving that dilemma falls to hedge fund business-development teams, the professionals responsible for recruiting and vetting investment talent — a growing and increasingly important niche.

Allocators don't typically get in the weeds on individual PM hires, but they do meet with the BD teams and assess a fund's procedures and systems for recruitment and retention.

BD teams have a limited set of tools to vet a candidate. One common method is investigating and triangulating performance claims via industry sources — bankers or other hedge fund services providers, for instance.

For example, one multimanager PM recalled that when he moved to a large fund a few years ago, the recruiter already had accurate knowledge of his performance. He wasn't asked for additional verification.

But these inquiries have limitations, including the breadth and quality of a BD team's contacts across trading strategies.

Some firms delicately dance around the law to obtain tax records with salary history that corroborate past performance.

Funds can use tax documents, but only if a candidate volunteers them — which can require some ingenuity that "does not go in hiring manuals," an ex-BD source said. This person said they wouldn't explicitly ask for such information, especially in writing, but gently prodded candidates, wondering aloud whether there might be anything in their possession that could back up their claims and make the firm more comfortable closing the deal.

"You can lead the horse to water, but you can't be like, 'Give me your W-2,'" this person said. "People pick it up pretty quick and say, 'Oh, I can show you my tax filings.'"

Another BD rep said many candidates would bring up the W-2 on their own.

Other firms ignore the law entirely, directly asking for tax documents from candidates, according to PMs, headhunters, and hedge fund execs said other firms would directly ask for tax documents from candidates.

But some firms want additional certainty via actual P&L figures, especially for current-year performance claims, which can translate to millions in a PM's overall sign-on package.

The ex-BD source said some "detective work is required to protect investors." This person recalled a colleague visiting the home of a candidate to view performance evidence. This person has also received documents via FedEx. "It doesn't have a return address, but it has the screenshot I wanted," he said.

"It's really a slippery slope," he added. "You need information to verify it, but there's legal and ethical ramifications."

Hedge funds regularly go to war over talent defections and breaches of their proprietary information. The legal risk for any individual PM may be small but isn't entirely theoretical, and firms and their employees have become entangled in litigation over confidential-information breaches during recruitment.

Citadel, the $64 billion multimanager fund run by Ken Griffin, has vocally opposed recruiting practices that involve sharing confidential information. It sent out an email last fall warning external headhunting firms not to spread the firm's proprietary information or to share competitors' info with Citadel employees.

Citadel is not alone in its efforts to color inside the lines. One BD rep at another large multimanager fund said that asking to see a documented P&L track record was tantamount to asking for IP — "you're asking them to break the law." In quantitative trading, where firms are especially protective of IP and trader performance is more dependent on a larger system, overt attempts to solicit confidential P&L information aren't common, several sources in that world said.

One of the headhunters who noticed more aggressive vetting this summer said his clients were mixed, with some funds nonchalant about asking for proprietary information and others firmly opposed.

Whether stiffer vetting processes become prevalent has ramifications for the hiring market, and firms that accept less certainty risk ceding an advantage to their competitors. To some extent, he said, PMs expecting large payouts will have to "get comfortable with proving P&Ls."

"Otherwise," he said, "deals aren't getting done."

This headhunter was recently bemoaning yet another deal, months in the making, that looked set to fall apart. Due diligence revealed the candidate had presented their track record in a misleadingly rosy light.

"It's a colossal waste of everyone's time," he said.

Alex Morrell is a correspondent at Business Insider. He can be reached via email at [email protected], or SMS/the encrypted apps Signal and WhatsApp at (262) 573-1023.

• Point72 founder and New York Mets owner Steve Cohen spoke at iConnections' Miami conference Tuesday.
• Cohen said Chinese company DeepSeek's recent breakthroughs are good for the AI industry overall.
• "It advances the move to artificial superintelligence. And that's coming, it's coming quick," he said.

Billionaire Steve Cohen isn't worried that the US has lost any kind of AI race with China just because of DeepSeek's recent breakthroughs.

The Chinese AI startup has vaporized hundreds of billions of market value from some of the biggest names in the S&P 500 with its open-source models. Still, Cohen — whose firm, $37 billion hedge fund Point72, has a fund dedicated to AI named Turion that's expected to grow to $1.5 billion — believes "what happened with DeepSeek is actually super bullish" for the industry.

"It advances the move to artificial superintelligence. And that's coming, it's coming quick," said Cohen, speaking at the iConnections conference in Miami.

Bumps in the road for the companies on the path to superintelligence are just that, he said — bumps in the road.

"There's going to be a lot of winners here, and it's going to be episodic. It's not going to go in a straight line," he said, according to a recording of his talk obtained by Business Insider.

While he's optimistic about AI's potential, Cohen said the overall market could slow down due to President Donald Trump's immigration and trade policies.

Cohen, who has supported former New Jersey Gov. Chris Christie in the past, said Trump's focus on "unleashing America" and shedding regulations has "a lot to like." However, he believes the tariff and immigration policies proposed by the administration would slow growth this year.

"Tariffs are a tax, and that's going to slow consumer spending," he said. He thinks the economy will grow 2.5% in 2025's first half but slow in the second half to around 1.5%, and the Federal Reserve will struggle to hit its 2% inflation target thanks to unemployment remaining low due to a severe drop in immigration.

"I would expect the market to top over the next couple of months if it hasn't already topped already," he said.

Wherever the market ends up this year, though, Cohen won't be trading it, at least not for his firm's investors. While he's regarded as one of the greatest stockpickers to ever live, Cohen decided to step away from trading last year to focus on running his two companies, Point72 and Major League Baseball's New York Mets.

"I describe it as being immersed in a video game, and it's so immersive that you just forget what's going on around you," he said of trading, and without it, he's able to focus more on the people at his companies.

"I'm 68 and had this vision of being 70, still behind screens. I was like, 'That doesn't make sense,'" Cohen said.

• New releases from the Chinese AI firm DeepSeek tanked stocks like Nvidia, Tesla, and Alphabet.
• DeepSeek's open-source AI models led to a market rout of hundreds of billions of dollars.
• Hedge funds have been exiting Magnificent 7 stocks for half a year, Goldman Sachs said.

DeepSeek — the Chinese AI company that has upended the US tech industry with its open-source models — caused the US stock market to lose hundreds of billions of market value within a day.

The pain was felt by stockholders of the biggest names of the past couple of years: Nvidia, Tesla, Alphabet, and more. Those mega-cap companies and the rest of the so-called Magnificent 7 were the driving force behind the S&P 500's 23% gain in 2024 and became must-haves for many hedge funds.

However, it appears many of those hedge funds started to crystallize some of their gains before the recent sell-off.

A Goldman Sachs report from the bank's prime services unit, which caters to the biggest hedge funds in the world, said managers had been steadily selling out of Magnificent 7 stocks since June. The report notes that exposure to these stocks was at the lowest levels since mid-2023 after hitting a high last summer.

"Mag7 stocks collectively now make up ~15.5% of total US Net exposure," the January report said. In June, it was at 21%.

There was likely still plenty of pain felt across midtown Manhattan and Greenwich, Connecticut, though the full extent won't be clear until funds' January returns trickle out.

Regulatory filings on hedge funds' holdings are delayed, so it can be difficult to gauge what funds are doing in real time. But these filings provide a snapshot of how invested managers were at a certain point in time — and who got out before disaster struck.

A review of the filings revealed several big names that moved in and out of these stocks.

For example, Mala Gaonkar's SurgoCap Partners sold its stakes in Microsoft and Nvidia during the third quarter while adding a large position in Meta, which has been mostly unaffected by the sell-off. The billionaire Stanley Druckenmiller's family office also liquidated nearly all of its Microsoft and Nvidia holdings over the same period.

Philippe Laffont's Coatue sold large chunks of its Nvidia and Meta positions but added to its Microsoft, Amazon, and Alphabet stakes. Alex Sacerdote's Whale Rock trimmed its Meta, Nvidia, and Alphabet holdings, but added to its largest position, Amazon, in the third quarter.

The already busy year for Magnificent 7 stock analysts won't slow down anytime soon — Microsoft, Meta, Tesla, and Apple are all set to report earnings later this week.

• The biggest US-based multimanagers like Citadel and Point72 still have their investors in longtime locales.
• London and Hong Kong, regulatory filings show, have hundreds of people, while Dubai and Singapore trail.
• London, in particular, is still a massive hub for US-based managers, data show.

London is far from dead in the hedge fund industry, despite many predictions about its soon-to-come demise.

Following the Labour Party's electoral victory this past summer and the Brexit vote in 2016, there's been chatter that London is losing its standing as a global financial hub. Other cities in Europe, the Middle East, and Asia have all been vying to pry off a piece of the city's business.

But regulatory filings for some of the biggest US-based multimanagers, including Citadel, Point72, and Balyasny, show that offices in Mayfair and elsewhere in London were packed with hundreds of investors for these funds, at least as of March of last year. Their numbers in the English capital far outweigh, for now, that of offices in locales trying to lure investors away with lower taxes and warmer weather, including Dubai.

Filings for Citadel, Point72, Balyasny, Schonfeld, Verition, Walleye, and Hudson Bay show that London has more than half its international investing talent. Millennium and ExodusPoint, two other large, US-based multimanagers, do not list their international offices on their regulatory filings and are not included in the graphic.

A person close to Millennium points out the firm has a large international presence, and the $72 billion manager's website notes it operates from more than 140 different places around the world, a majority of which have investment staff. The firm has 18 locations that are deemed "primary offices," and 12 are located outside the US, including London, Paris, Dubai, and Hong Kong.

ExodusPoint declined to comment, but its website states that it has offices in London, Dubai, Jersey, Tokyo, Singapore, and Hong Kong. (The story continues below the graphic.)

Following the UK's official exit from the European Union in 2020, many predicted cities like Paris would become more formidable financial hubs. However, investing talent in European cities, including the French capital, Copenhagen, and Milan, is dwarfed by outposts in the UK. Dubai has not yet made a significant dent in London's head count.

Similarly, in Asia, Singapore was expected to take some of Hong Kong's business, as increased geopolitical tensions between the region and China worried US-based managers, but that has not yet been the reality on the ground.

Of the seven firms that disclosed their international offices, only Verition has more investing talent based in Singapore than Hong Kong. Verition, its December 2024 filing shows, has 13 people who "perform investment advisory functions" in Singapore and no Hong Kong office at all.

Point72, meanwhile, has more than double the number of investors in Hong Kong — 92 — than it does in Singapore, as well as significant footprints in Tokyo, Taipei, and Sydney.

Still, Dubai and Singapore are growing.

In Asia, for example, Bobby Jain's new firm, Jain Global — which wasn't included in this data review because it listed only its New York headquarters in its first regulatory filing in September — chose Singapore as its first Asia hub, tapping former Morgan Stanley executive Sam Kellie-Smith to lead the office.

Hudson Bay, meanwhile, states on its website that it has a Dubai outpost, though it did not list the office in its regulatory filings. The firm did not respond to a request for comment as to why. Walleye's only international office outside Europe is in Dubai.

Recruiters and fund executives say eastward movement from London is driven by two things: talent and capital. Senior PMs who want to sit in the Middle East — for tax purposes or other reasons — can demand it given the tight talent market and high demand for money-making investors, and funds that set up in the region often hope to tap into the massive pools of sovereign wealth capital in the region.

"There is a certain element of Dubai being new and shiny," said James Barfield, buy-side client director for recruiting firm Selby Jennings, "but that doesn't mean a hedge fund is going uproot from New York and London and move their entire operations there."

"I don't see New York or London ever really losing their status," he said.

• A review of regulatory filings of the biggest multimanagers reveals New York's continued supremacy.
• Managers like Citadel and Balyasny have most of their PMs in New York, even if they are headquartered elsewhere.
• Despite interest in places like Miami, investing talent remains in established locales.

This week, the $4.5 trillion hedge fund industry is gathered in Miami for iConnections' annual Global Alts conference. Nearly all of them will leave the Magic City after the conference concludes.

While some big names have fled high-tax cities like New York and Chicago for sunny spots like Miami and West Palm Beach, especially amid the pandemic-era buzz over Wall Street South, the data show that New York is still the place to be for money-managing talent.

Regulatory filings for the industry's largest multimanagers, including Citadel, Millennium, and Point72, show that a vast majority of those who "perform investment advisory functions" work from the Big Apple. Including the three aforementioned managers as well as Balyasny, Schonfeld, ExodusPoint, Verition, Walleye, and Hudson Bay, more than 75% of US-based investing talent works in New York, a Business Insider review of ADVs and internal metrics from certain funds show.

(Story continues after graphic. The ADVs, while updated throughout the year, show a snapshot of the investing head count for each firm from March, so the data reflects firms' staffing from last spring.)

Even managers not based in New York — such as Citadel and Balyasny— have more investing talent in Gotham than their respective headquarters in Florida and Illinois. The same applies to Connecticut-based firms Point72, Vertition, and Hudson Bay. Walleye, which was once based in Minnesota and still has 21 investors in Minneapolis, moved its headquarters to New York at the end of 2023 and now has dozens more traders there than any other office.

"It's an apprenticeship business," Adam Kahn, founder of headhunter firm Odyssey Search Captial Partners, told Business Insider. "For the most part, the opportunity to surround yourself with the best people is going to be in major money centers."

"If you want to sit next to your PM, you need to be where your PM is," he said. And while there are senior leaders who have decamped to sunnier, cheaper spots around the country, New York, Chicago, and San Francisco still have a significant concentration of people.

Greenwich and Stamford, a pair of bedroom communities of the New York metro, have also continued to be important centers of gravity for hedge funds, which have become a part of the social fabric of these Connecticut towns.

Citadel's talent breakdown, according to its ADV showing data from last March, is interesting given the firm's billionaire founder's preference for Miami. Ken Griffin, who is originally from Florida, moved his firm's headquarters south from Chicago in 2022 and has commented that one day, the city could surpass New York as a financial center — though he still referred to Manhattan as the "epicenter of thoughtful people passionately engaged in their careers" in 2023.

While Griffin and some of his executives, including chief risk officer Joanna Welsh and commodities head Sebastian Barrack, have relocated, the firm's investing talent has not yet moved en masse to Florida.

The data showed that more investment-focused staffers were based in the firm's two Texas offices, Houston and Dallas, than in its two Sunshine State offices, Miami and Tampa. The $66 billion fund has more investors in each of its two New York offices as well as its Greenwich, Chicago, and San Francisco offices than it did in its Miami outpost last March. (Story continues below the graphic)

A person close to the manager said the firm is committed to Miami and plans to break ground on its new 54-story waterfront building that will serve as company headquarters sometime later this year or early next year.

"We've welcomed roughly 400 team members to this vibrant city since establishing the firms' global headquarters here in 2022, and we have exciting plans to keep growing our presence in the months and years to come," a statement from the firm reads. The 400 people include employees from both Citadel and Citadel Securities, Griffin's market maker.

Can always catch a flight

Investors on the ground for these managers say different locations provide different benefits. Stockpickers focused on certain industries, like energy or technology, find places like Houston and San Francisco useful to be plugged into the companies they invest in. Quants who do not need to meet with corporate leaders to run their strategies say they're generally more flexible about where they can work than stockpickers who want to hear directly from CEOs.

Meanwhile, young analysts working for portfolio managers based in Connecticut offices often reverse commute from New York to places like Greenwich or Stamford so they can still enjoy the nightlife and culture of the Big Apple.

The ongoing talent war for top-shelf PMs means funds are generally more flexible on location, said Vikram Tandon, the head of Durlston Partners US, a recruiting firm. But that flexibility has a limit.

"The only people who demand to be somewhere and get it are the senior people who are setting up a whole team," Tandon said.

This isn't to say Florida isn't on the rise. Data from hedge-fund seeder Borealis Strategic Capital Partners shows that 11% of US hedge fund launches in 2024 were in Florida, compared to just 3% in 2020. The Tri-State area was at 52%, down from 56% the year prior, according to Borealis.

Two portfolio managers who moved to Miami and West Palm in recent years for two different multimanagers told BI that it's been a net positive for them and their families.

Plus, one of these PMs said, "It's only a two-hour flight back to New York."

• Laura Sterner, Steve Cohen's top fundraiser, is leaving Point72.
• Sterner has worked for Cohen since 2015 and was critical to raising billions for the firm's relaunch.
• A person close to the $37 billion manager said Sterner's deputy will assume her responsibilities.

Steve Cohen's $37 billion hedge fund is losing what the firm describes as its "primary point of contact with external investors," three people with knowledge told Business Insider.

Laura Sterner, the global head of capital development and investor relations at Point72 Asset Management, is departing the manager after working for Cohen for nearly a decade. A person close to the firm said Sterner is taking on a senior role at a healthcare venture.

Sterner has worked with Cohen since 2015, when the firm was managing Cohen's personal capital, and was an "integral part" of the firm's nearly $4 billion fundraise in 2018 when the firm reopened to external capital, according to her bio on the firm's website.

Cohen, the owner of Major League Baseball's New York Mets, was barred from managing outside cash for two years following a settlement with federal regulators, which investigated Point72's predecessor, SAC Capital, for insider trading. The former firm pleaded guilty — and paid a $1.8 billion fine — but Cohen was not personally charged and did not admit or deny liability for the actions of a few of his employees as a part of the settlement.

Sterner has been in her current leadership role since Point72 started taking outside capital, according to her LinkedIn, a period of time when the firm's assets skyrocketed. Since 2020, the firm's assets have more than doubled, and The Wall Street Journal reported earlier this month that the manager plans to return up to $5 billion in capital this year to investors following a strong performance in 2024.

Point72 made 19% last year, trailing only Schonfeld among its peer set, and beating out larger rivals Citadel and Millennium, BI previously reported.

A person close to the manager told BI that Elena Bukowski, the firm's deputy head of capital development and investor relations, will take on Sterner's responsibilities. Bukowski has been with the firm since 2018 and previously worked in marketing and investor relations for Tourbillon Capital, the now-shuttered hedge fund run by Jason Karp, a one-time portfolio manager at SAC Capital.

Sterner started her career at Lehman Brothers, according to her LinkedIn, and worked at UBS as the firm's head of liquid alternative research before working as a consultant for several years.