• Two Sigma's billionaire cofounders, John Overdeck and David Siegel, are heading to arbitration.
• The pair stepped down from the $60 billion quant in August.
• Despite the cofounder drama, the firm's flagship returned 10.9% in 2024.

Two Sigma's billionaire founders are not done fighting, but luckily for investors, they're no longer at risk of being collateral damage.

The cofounders, John Overdeck and David Siegel, are heading to arbitration over their long-standing feud about how to manage the $60 billion asset manager that they started in 2001.

According to a Bloomberg report, the firm disclosed the arbitration in a letter to investors on Wednesday and said that it isn't party to the dispute. The firm did not respond to a request for comment.

Many hedge funds stumble when it comes to succession planning. For example, Bridgewater Associates went through several top executives over a decade before Ray Dalio finally let go of the reins. Investors in managers with aging founders push their funds to come up with succession plans, with varying degrees of success.

In the case of Two Sigma, the LPs are likely breathing a sigh of relief that the dispute between the two billionaires didn't complicate succession plans or stop the firm from humming along.

Two Sigma's investors enjoyed solid returns through 2024, as its flagship Spectrum fund gained 10.9%. The manager also made 14.3% in its Absolute Return Enhanced strategy, a person close to the New York-based quant giant told Business Insider.

The firm announced in August that Overdeck and Siegel would step down from their roles atop the firm to become the manager's co-chairmen. Carter Lyons, formerly the firm's chief business officer, and Scott Hoffman, former Lazard general counsel, took over as co-CEOs in September.

Siegel's and Overdeck's visions for Two Sigma decoupled in recent years to the point that the firm had to make a disclosure in a filing saying that its management committee "has been unable to reach agreement on a number of topics" — including succession.

While a leadership change affects every fund, quant platforms have proven themselves to be more capable of adapting. D.E. Shaw and Renaissance Technologies, two of Two Sigma's biggest competitors, have turned over their C-suite and continued to produce strong results.

The cofounders' decision to leave their day-to-day at the firm left LPs feeling optimistic.

"It's what we wanted to see," one Two Sigma investor told BI in August.

• 2024 was a good year for many of the industry's biggest quant names.
• Players like Renaissance Technologies and Marshall Wace returned more than 20%.
• Cliff Asness's AQR also had a big year, with its multistrategy Apex fund returning more than 15%.

Much like their peers in the multistrategy world, quant hedge funds had a strong 2024.

Algorithm-driven trading firms mostly delivered double-digit returns across different quant strategy types, including "quantamental" funds that blend systematic and human-run qualities into one and trend-following offerings. However, most of these funds failed to match the S&P 500's 23% gain.

In 2024, the biggest and oldest names in computer-run hedge funds led the way, such as Renaissance Technologies, the firm founded by the late billionaire Jim Simons.

The firm's two main funds available to investors — Renaissance Institutional Equities Fund and Renaissance Institutional Diversified Alpha — were up 22.7% and 15.6%, a person close to the manager told Business Insider. Of course, the manager's legendary Medallion fund, which now runs around $12 billion of internal capital, performed even better with a 30% return, Simons' biographer and Wall Street Journal reporter Gregory Zuckerman said in a Linkedin post.

In the UK, longtime strategies for $70.9 billion Marshall Wace and $13.1 billion Winton Group had good years. Marshall Wace's TOPS fund, an alpha-capture pioneer that systematically evaluates ideas and research from humans to create its portfolio, made 22.7%, according to a person close to the London-based firm. The all-quant multistrategy Winton Fund was up 10.3% last year, a person familiar with the firm told BI.

French quant firm Capital Fund Management, which is expanding its US presence, made 14.2% in its Stratus fund, which manages roughly $11.8 billion. The firm overall runs $16.7 billion across its half-dozen strategies, all of which were up double-digits in 2024, a person close to the firm said.

Cliff Asness's AQR meanwhile made 17.9% in its $2.5 billion trend-following Helix fund, a firm spokesperson told BI. The manager's $2.3 billion multistrategy fund, Apex, returned 15.1% on the year.

Graham Management was also up, returning 11.9% in its quantamental fund known as Proprietary Matrix while its trend-following option returned 6.7%, according to a person close to the Connecticut-based manager with $20 billion in assets.

But these managers have no time to rest. Artificial intelligence advancements have firms racing to build out systems and teams to better their processes. A new fund from OpenAI alum Leopold Aschenbrenner has the backing of Stripe's founders and former GitHub CEO Nat Friedman and is "focused on" a type of AI that would match human intelligence.

"The industry is experiencing an information arms race with respect to how much information can be gathered and how quickly it can be processed," a new release from Don Steinbrugge, an industry consultant who runs Agecroft Partners, reads.

"Information advantages are often short-lived, and many managers will continue investing in a host of new technologies."

More firms' performance figures will be added as they are learned.

• Bridgewater Associates cut 7% of staff, or about 90 people.
• The hedge fund, which manages $172 billion, is known for its radical transparency and high turnover.
• The company last laid off people in 2023 to cut costs and free up resources

Bridgewater Associates cut 7% of its staff on Monday in an effort to stay lean, a person familiar with the matter told Business Insider.

The layoffs bring headcount back to where it was in 2023 for the world's largest hedge fund, the person said. It's unclear which divisions were impacted by the cuts.

Bloomberg first reported the layoffs, including that 90 people were affected. Four of the firm's funds posted double-digit returns last year, Bloomberg said.

The Connecticut-based company last laid off people in 2023 to cut costs and free up resources. At the time, it eliminated about 100 jobs in a workforce of roughly 1,300 employees.

Last year, Bridgewater's high-profile hires included macro traders Jerome Saragoussi and Ben Melkman, and Ziad Hindo, a veteran investor with Ontario Teachers' Pension Plan.

The company is still hiring — the firm lists three open jobs for its Shanghai office.

Ray Dalio founded the firm in 1975 and relinquished his voting rights in 2022. Nir Bar Dea, who started as a management associate in 2015, is now CEO.

The hedge fund had about $172 billion under management as of November, according to a Securities and Exchange Commission filing.

Bridgewater is known for its culture of radical transparency and pushing employees.

Dalio instituted a real-time rating system in which employees used iPads to score each other. One former intern told BI last year that she loved the process.

Dalio said in a 2019 interview that about 30% of new employees leave the firm within 18 months.

• Big-name managers mostly performed well in 2024, but some under-the-radar players soared.
• Managers like Glen Kacher's Light Street and David Rogers' Castle Hook returned 60% last year.
• Jason Mudrick's firm returned more than 31%, a person close to the manager said.

The biggest hedge funds in the world — names like Citadel, D. E. Shaw, and Millennium — had good years in 2024, as Business Insider has reported.

While most of these funds failed to match the S&P 500's 23% gain, their investors love their consistency and risk management.

But allocators also need managers who can make big bets and rip past peers and the market in a good year, as seen in the growth and interest in Chris Rokos' eponymous fund.

BI identified a few hedge funds that have been around but are not as recognizable as their industry subsector peers — though that might change after their impressive performance.

Big-name macro funds, for example, had strong years thanks to geopolitical events like the US election, which many were able to capitalize on. Rokos, PointState, and Rob Citrone's Discovery Capital Management all recorded large gains — but none of these bigger names matched the 60% gain by David Rogers' Castle Hook.

Rogers, a former investor in George Soros' family office, launched Castle Hook in 2016 with his fellow Soros alum Joshua Donfeld with capital from the billionaire Stanley Druckenmiller. The manager now runs $4.4 billion, a person close to the firm said.

Light Street Capital, a Tiger Cub run out of California by Glen Kacher, is smaller and less well known than other firms linked to Tiger Management's late Julian Robertson, such as Tiger Global, Coatue, and Viking Global. But Light Street's 59.4% gain last year and Kacher's focus on artificial intelligence are sure to draw attention.

Kacher said on X that his "AI5 basket" outperformed the Magnificent Seven last year. There's some overlap between the two groups of stocks, specifically Nvidia and Microsoft, but the other holdings in his basket are semiconductor and AI-infrastructure companies such as Advanced Micro Devices and Broadcom.

Meanwhile, when stocks are soaring, there's often a lack of interest in credit managers, especially those playing in the distressed space. But Jason Mudrick's $4 billion firm managed to pull out a market-beating year, a person close to the firm told BI.

The person said Mudrick Capital made 31.7% for the year and ended 2024 by investing up to $50 million in the flailing British flying-taxi startup Vertical Aerospace to bail the company out.

By comparison, the average credit fund, according to Hedge Fund Research, returned less than 10% through November.

• Among the multimanagers, $12 billion Schonfeld led the way in 2024.
• The firm bounced back from a tumultuous 2023 to return close to 20% last year.
• Its multistrategy peers ended with double-digit returns but didn't match the S&P 500's 23% gain.

What a difference a year makes.

When 2023 came to a close, Schonfeld Strategic Advisors was trailing its peers and shedding staff. A year later, the $12 billion New York-based manager is atop the league table with a 19.7% gain in 2024, people close to the firm told Business Insider.

Schonfeld was positive every month in 2024 and added 19 portfolio managers across different strategies, one person close to the manager said. The firm was one of many in the industry that expanded their international footprint, with an office in Dubai, and 40% of the firm's risk is now managed by portfolio managers operating outside the US, the person said.

For the most part, the massive multimanager firms that dominated industry news for the past few years performed as expected.

While these managers didn't match the S&P 500's 23% gain last year, nearly all finished 2024 with double-digit net returns.

D.E. Shaw, the $65 billion giant based in New York, returned 18% in its multistrategy Composite fund and more than 36% in its macro-focused Oculus fund, a person familiar confirmed. Bloomberg reported that the firm was planning to return billions of profits to investors.

Ken Griffin's Citadel, which about two years ago was named the most profitable hedge fund of all time, returned 15.1% in 2024 in its flagship Wellington fund, three people familiar with the firm's performance told BI. One person close to the firm said the Miami-based firm returned more than 22% in its Tactical Trading fund, which comprises the firm's fundamental equities and quant teams.

Izzy Englander's Millennium, meanwhile, finished the year up 15% after a 2.5% gain in December.

One of the year's most interesting managers, Walleye Capital, capped its big 2024 with a 1.8% gain in December, bringing the firm's 2024 returns to 17.7%, a person close to the firm said.

For more returns, see the table below. Managers declined to comment or did not immediately return requests for comment. Firms will be added as their performances are learned.

• Dmitry Balyasny and Steve Schurr, a senior portfolio manager, discussed the firm's equities rebuild.
• Balyasny has been leading the unit since Jeff Runnfeldt's departure in October 2023.
• The manager wants its equities teams to focus on deep research, not short-term trading.

Throughout its 23-year history, Dmitry Balyasny's firm has been known, first and foremost, as a stock picker.

While the $20 billion multistrategy firm has added strategies like macro, commodities, and quant over the years and expanded its head count to 2,000 people, the Chicago-based manager still leads with its equities expertise.

So when the firm's equities teams were dragging the manager's performance down to the bottom of the league tables in 2023, Balyasny decided to undergo a "course correction" in its largest business unit, the founder told Business Insider in an interview at the firm's office in London's posh Mayfair neighborhood.

"People were trading too much and not investing enough," Balyasny said.

The "top-down philosophical" refocus, he said, has been on ideas, research, and longer timelines. Instead of trying to "catch every wiggle" or make money on every market twitch, portfolio managers are being pushed to find multimonth or even multiquarter investment ideas, he said. The result has been lower position turnover and less trading in PMs' books.

And performance rebounded in 2024: After a big November that had the manager up 11.6% through the first 11 months, the manager is set to land squarely in the middle of its peers for the year.

While the firm's hiring — for the equities unit as well as other strategies — got most of the headlines for the manager this year, Balyasny said it was the improvement of existing stock-picking teams that drove the returns.

DNA change

Balyasny's equities struggles coincided with multistrategy firms' growth and hedge funds' increased use of alternative data, such as credit-card transactions and email receipts, which can provide a sneak peek of a company's performance before it reports earnings.

This data, which provided an invaluable edge a decade ago but is now table stakes at firms like Balyasny, pushed investors to focus "excessively on triangulating and calling quarters," said Steve Schurr, a senior portfolio manager who was promoted to the equities leadership team in mid-2023, when the "course correction" began.

"It's become a strategy of diminished expected returns" as more firms use this type of data, he told BI.

Schurr, who started his career in investing working for the legendary short-seller Jim Chanos, performed well during the equities division's run of underperformance. Balyasny identified his focus on primary research as a winner and pushed him to spread it across the firm.

"We had to change the DNA of how we conducted research here," Schurr said.

The firm built out an internal research database called Telescope, which has an AI overlay to summarize things like podcasts, expert network calls, and sell-side research. A new 15-person internal research team with data scientists and former journalists has done 120 projects for PMs this year.

Schurr said he believed that "durable edge" for all multistrategy firms investing in equities would come through primary research, not alternative data.

"I think we are back to the anarchy of having to be good investors," he said of the multistrategy sector, adding that "80% of a portfolio manager's opportunity is going to be from equity selection."

Player-coaches

As the industry has matured, the titans of the field have gone from brash traders to business-building executives. The leaders at Citadel, Millennium, Jain Global, Brevan Howard, and more do not run a book.

Steve Cohen, the billionaire founder of Point72 and owner of the New York Mets, stopped trading this summer — and it felt like the official end of an era.

But Balyasny has begun trading a book again for his firm after giving it up for a time. Other leaders on the equities team — including Schurr and Peter Goodwin, who's launching an internal stock-picking unit called Longaeva Partners and plans to hire PMs to work underneath him — are also managing portfolios of their own.

Balyasny, who has tapped people to run his quant, commodities, and macro units, isn't planning to hire someone to oversee equities. Jeff Runnfeldt, now the chief investment officer of Fortress' multimanager platform, oversaw the equities unit, but Balyasny stepped into the role on an interim basis after Runnfeldt and the firm parted ways in October 2023.

For now, the interim tag has been removed. Balyasny said he believes that trading alongside his employees helps him connect with potential recruits as he's in the trenches with them.

Balyasny has had its ups and downs — specifically in 2018 when the manager laid off 20% of its staff and saw investors redeem $4 billion. The circumstances this time around are much different, he said, thanks to the diversification of the firm's assets and LP base.

In 2018, 90% of the risk was in equities; now it's 40% to 50%. The firm's investors were only 20% institutional in 2018; now that figure is 70%, giving the firm long-term capital partners.

That's important to have as the firm has remade its biggest unit. There are 65 to 70 portfolio managers in the firm's three equities groups — Balyasny, Corbets, and Longaeva — and plans to expand, specifically in Goodwin's unit.

Schurr said the pitch to recruits was simple: "You're not just going to be a cog in the machine."

For years the best portfolio managers have had to choose between having all the resources and building a business — but Balyasny says you can have it all. He compares running an equities team to being a young company pitching a venture firm.

Year-end meetings between PMs and business heads lay out why someone should get certain resources and capital based on their plans and expectations for the year ahead.

While top investors can also launch their own funds, Balyasny argued that this path "is not really worthwhile" given where the capital in the industry is flowing — and which funds have been seeding new launches. "Why not be in-house and get all the resources?" he said.

Schurr has three questions for each potential PM: What's your unique strategy? How do you build a team and a research process to support it? And how would you construct a portfolio to optimize it?

"Among the multistrats, I think we have a really compelling offering," Schurr said, adding: "I'll let others try to call quarters. I want Balyasny to be the house of the best investors."

'You have to grow'

Growth is, in many ways, a requirement of a multistrategy firm instead of a goal. Assets, head count, strategies, office locations — all should be ticking up if things are going as planned.

Balyasny said the firm is always looking for people "to deepen the bench" on both the investing side and the business side of the equation, such as Kevin Byrne, who was brought over from Millennium this year to be the firm's chief operating officer. He pointed out that Byrne joined Millennium when that firm was roughly the same size — $20 billion, give or take — as Balyasny is now.

When asked if tripling the firm's assets was the goal — which would put the manager close to where Millennium currently sits — Balyasny said he didn't have a specific AUM goal in mind. Still, as long as the liquidity in the markets they trade in grows, their strategies should be able to as well, he said.

The firm wants to be a leading industry player, Balyasny said. "You can't be substantially smaller than others," he added.

Size certainly matters in the recruiting battleground as guaranteed payouts grow. Balyasny said the money the firm spent on new hires this year is in line with what the manager has historically invested in talent.

He said the manager had traditionally spent 1% to 1.5% of its AUM on recruiting annually, which would put this year's figure at $200 million to $300 million. A significant portion of recruiting costs are tied to performance over time, he said.

This year, more of that recruiting spend has gone toward equities hires, including big names like Goodwin, who have commanded larger packages.

The firm knows that to keep up, "you have to grow over time," he said. "But it doesn't have to be a straight line."

• Generative AI is transforming technical tasks, making them accessible to non-experts.
• AI tools like v0 and Julius AI streamline processes such as web development and data analysis.
• Vercel's CFO uses generative AI tools to become a "quasi-coder."

The AI boom has added trillions of dollars to tech company valuations. Is it living up to the hype?

In some real ways, the answer is yes. This is especially true when it comes to the technical plumbing of modern companies. These are tasks that often go on behind the scenes and are either unknown or taken for granted by most non-technical people.

Generative AI burst onto the scene in late 2022 with OpenAI's release of ChatGPT, a chatbot that answers many questions and creates realistic and convincing content.

Since that flashy launch, this new form of AI has quietly begun to transform more mundane jobs and processes, such as web development, data analysis, legal research, and code writing.

At Vercel's Next.js conference in San Francisco earlier this year, the event was packed with young developers who were using AI models and tools to streamline hundreds of these technical tasks. This stuff has mostly been run by human technical employees. Now, that's changing in major ways.

"All the power was previously behind a gate guarded by programmers who were paid hundreds of thousands of dollars a year. Now, these capabilities are available to all," said attendee Rahul Sonwalkar, founder of Julius AI, a startup that's using AI models to automate data analysis.

Saving on legal fees

It's not just startups. A good friend who's an executive at an investment fund used ChatGPT recently to research a legal issue.

The chatbot helped him understand a lot of the background, including relevant laws and other rules. 

When he met with his law firm, he was able to jump past the basics and get to the meat of the task more quickly. This is important when attorneys can cost $500 to $1,000 an hour. 

My friend estimates this initial AI-powered research saved his investment firm $50,000 to $70,000 in legal fees and roughly 60 to 80 hours of work time over 2 months.

20x more code at Google

At Google, generative AI is upending how the internet giant creates products.

Another old friend of mine has worked at Google for well over a decade. He recently described how he's writing 20 times more software code than he used to, thanks to generative AI tools.

He starts in the usual way, by typing in some initial code. Then the AI autocompletes much of the rest.

The technology sometimes autocompletes in the wrong direction — essentially misunderstanding his intentions. He still needs the technical skills to spot these occasional mistakes. But fixing it is pretty straight forward: He goes back to where his own code ended and types a bit more of his own work. Then the system adjusts and completes the task accurately.

A CFO becomes a 'quasi-coder'

Vercel CFO Marten Abrahamsen is no professional coder. But even he's experienced the benefits of generative AI making technical tasks more accessible.

He cited Vercel's v0 service, which lets anyone type in English language requests and responds with code and outputs such as brand new websites.

"I can't do complex coding, but I can type in English and v0 creates what I want. This turns me into a quasi-coder," Abrahamsen said.

The CFO said this tool helps him get ideas in front of more technical colleagues quicker, and ensures the nascent products are in better shape at the pitch stage.

Vercel's goal is to use generative AI to increase "iteration velocity" by automating a lot of the technical blocking and tackling so developers can spend more time on the creative parts of their jobs, he explained.

"Making developers much more productive with generative AI — investors and Vercel are quite bullish on this. That's a very interesting new use case for AI," Abrahamsen told me in a recent interview.

Creating a website in 2 minutes or less

I tried v0 myself on Friday. It took about 45 seconds to create a website based on this simple request: "Make me a website that looks like Business Insider."

Vercel's v0 system responded in English with the steps it would take. Then, on the right hand side of the page, it swiftly pumped out the required software code and previewed the new website in less than a minute. Here's a look:

I asked for a little tweak: "Make the background more blue and add photos."

v0 responded with a similar English language answer, followed by more code generation and an updated site.

I then asked to make the top of the site blue and the system added that in maybe 20 seconds.

I could go on, but you get the point. I can't code at all, and I made a relatively solid website in about 2 minutes with v0.

2 million lines of code a day

Julius AI is taking a similar approach to automate data-analysis tasks. The service is used by scientists, marketing folks, hedge fund analysts and anyone else who needs to interpret a lot of data and isn't an expert at pulling such insights from mountains of information. 

The online tool can ingest data in many forms, including Excel tables and PDFs, or via APIs and databases. You can drag and drop these into an open window and ask questions in plain English. Julius AI then taps into various AI models to spot correlations in the data and generate insights in seconds via charts and text outputs. 

The service automatically generates the software code needed to do this analysis, and makes that available to re-use on other projects. This also helps users go back and check how the outputs were created. 

Julius AI has about 2 million registered users and has pumped out more than 7 million data visualizations so far, according to Sonwalkar, who notes the service writes roughly 2 million lines of code a day.

"It would take an army of human coders to do that," he said. "A good engineer who's focusing on a good day can put out about 1,000 lines of code."

Quantitative hedge funds use Julius AI to create financial models from the data they drop into the tool. One model might factor in currency changes and how that impacts other parts of the world, such as oil and gas prices, for instance. 

One Julius AI customer is a hedge fund with seven employees who are finance experts. 

"Normally this firm would also hire a quantitative programmer to create financial models for data analysis," Sonwalker said. "AI does this in seconds now, without the need for a programming expert." 

• Based on conversations with industry insiders, Business Insider rounded up the hedge funds to watch in 2025.
• Firms include Walleye Capital, Lone Pine, Renaissance Technologies, and an OpenAI-connected launch.
• 2024 was a strong year for the industry, though pressure is building on the industry's middle class.

With trillions of dollars in assets and dozens of billionaires, the hedge fund industry is doing fine, even if there's been a renewed push from the industry's biggest backers to rein in costs.

Funds performed well in 2024, returning more than 10% through November, according to industry tracker PivotalPath — even though the average firm won't match the returns of the S&P 500, which is on track to finish above 20% for the second year in a row. Managers handled the volatility around the reelection of former president Donald Trump well, and top managers can still command eye-popping fees and yearslong lock-up periods.

But, like any sector, the industry is increasingly splitting between the haves and the have-nots. Based on conversations with a dozen industry insiders — from LPs to prime brokers to fund executives themselves — Business Insider compiled a list of 10 hedge funds to watch in the coming year.

It's a mix of longtime giants, new launches, struggling managers, and overseas specialists.

1. Walleye Capital

$7.4 billion Walleye — a firm that is hoping to be the best midsize multistrategy fund in the industry — spent 2024 reconfiguring.

Coming into the firm were big names from bigger firms: former Citadel executives and investors like Matt Giannini and Rory Murphy, one-time ExodusPoint marketer Anil Jethanandani, former Balyasny PM Anil Gondi, WorldQuant's options head Rupert Graham, and more. Meanwhile, leaders like Raj Sethi, who topped the manager's macro and fixed-income team, and Anuraj Dua, who had led some systematic macro efforts at the firm, departed the manager.

The firm's ambitions have grown. The manager, which started in Minnesota as an options market maker, now has offices across the US as well as in London and Dubai. And it has former Citadel executive Tom DeAngelis as president.

With strong performance in 2024 — Walleye was up 15.4% through November — the firm is set to continue to make headlines in 2025.

2. Pinpoint Asset Management

Asia's hedge fund scene has been booming, with new launches in Singapore and Hong Kong from former Millennium executives as well as expansions from regional players like Dymon Asia. But while many players in the region focus on markets like Japan or South Korea — or look westward to the Middle East — Pinpoint boasts its China focus proudly.

The manager, which has headquarters in Hong Kong but offices in Shanghai, is set to have its best year in its $1.2 billion multistrategy fund since 2020, with an 8.6% gain through November. Yet it is the firm's China fund, which is soft closed, that has been the story of the year, with a 17.3% gain through November, according to HSBC's Hedge Weekly report. As Trump woos China's leader, Xi Jinping, Pinpoint hopes its expertise in the country will set it apart in 2025.

3. Viking Global Investors

Another year, another CIO departure. Since 2015, Viking Global, the $48 billion stockpicker run by cofounder Andreas Halvorsen, has had four CIOs or co-CIOs depart the firm, including Ning Jin, who left the firm in August.

Viking, however, has proven its ability to train the next generation of investment talent internally and keep the trains on schedule when a senior leader departs.

As Jin follows the path of many former Viking investing heads in setting up a new fund, the firm — up 12.2% through November — has tapped portfolio manager Justin Walsh to be its latest CIO.

According to a presentation he gave to Harvard Business School students this year, one of his biggest worries is a possible multistrategy meltdown.

4. Eisler Capital

Ed Eisler's eponymous firm has struggled to keep up with the multistrategy pack. With most firms in the firm's peer group expected to return around 10% or more this year, $4 billion Eisler will likely end 2024 with returns below 5%. The manager had returned a little over 2% on the year through November, a person close to the manager said.

It's not for a lack of trying, of course — another person familiar with the firm told BI that Eisler forced portfolio managers to be fully deployed earlier, meaning all of the capital they managed had to be invested in something, even if they didn't necessarily see a good opportunity.

One tough year doesn't doom a manager, and turnaround stories like Schonfeld prove that any fund is just a strong stretch of performance away from being back on top. Whether Eisler can rise to the occasion in 2025 remains to be seen.

5. Marshall Wace Asset Management

One of London's blue-chip managers, $70 billion Marshall Wace spent 2024 institutionalizing even further. The firm is fully invested in the war for talent, despite its billionaire cofounder speaking out against the trend — the manager has spent recent years poaching talent from rivals and added a talent surcharge on top of its existing fees.

It led to some growing pains internally, as Business Insider reported, as some of the new hires clashed with some of the firm's old guard. Still, the manager is on as stable a ground as ever.

The firm's expansion to the Middle East, with a new office in Abu Dhabi, is proof that it's not slowing down, and the firm just nabbed a former Citadel portfolio manager to trade for them. Its Eureka multistrategy fund was up 14.5% through October, a person close to the firm said.

6. Situational Awareness LP

A new San Francisco-based hedge fund is set to launch in the new year with serious backers and Silicon Valley-flavored team.

Leopold Aschenbrenner, a former OpenAI employee who graduated from Columbia at 19, is set to launch his AI-powered fund with capital from Stripe's founding brothers, Patrick and John Collison, as well as former Y Combinator partner Daniel Gross and one-time GitHub CEO Nat Friedman.

Named after a series of blogs Aschenbrenner wrote on AI's impending might, Situational Awareness will be a good test of what pure AI can do in the hypercompetitive investing industry.

7. Ilex Capital

2024's biggest launch, Bobby Jain's new firm, has sputtered out of the gate. One of the biggest from 2023 has not faced the same challenges — and is attracting new capital.

Ilex Capital, a stock-picking multimanager run by former Citadel employees Jonas Diedrich and Dave Sutton out of London, is set to end the year with more than $3 billion in assets after raising another $1.5 billion this year. The firm is one of the most notable, alongside former Millennium PM Diego Megia's Taula Capital, to spin out of the big multistrategy firms.

As managers like Millennium look for places to put their ever-growing assets, deals with former employees looking to start their own firm offer an interesting opportunity.

8. Lone Pine Capital

Long-running Tiger Cub Lone Pine Capital is getting its mojo back. Its long-short hedge fund Cypress made 9% in November alone, bumping its 2024 gains to 34.3% through the year's first 11 months.

Beyond strong performance though, the firm is investing in its business and looking to grow. After the retirement of its billionaire founder Steve Mandel five years ago, and the departure of buzzy industry star Mala Gaonkar in 2022, the $16 billion Connecticut-based manager has dealt with rocky performance and outflows.

In response, the firm has performed well the last two years and — for the first time in its history — put resources into its marketing. The 27-year-old manager hired Pat Cronin to be its first-ever business development leader in 2022, redid its website, and even attended last January's iConnections conference in Miami to meet with potential investors.

While some managers slowly fade away after a founder steps back, Lone Pine has decided to ramp up — and has two strong years of performance to go off of.

9. Renaissance Technologies

The late Jim Simons had already passed the torch of his legendary quant manager Renaissance to the next generation, but his death in May was still a monumental milestone for the asset manager.

Renaissance, known for the world-beating performance of its Medallion fund, which is only available to fund employees, had battled redemptions and poor performance in recent years in its largest strategies available to outside investors. But 2024 was a strong year, as its largest external fund returned close to 24% through November.

Unlike some of its quant rivals like Two Sigma and D.E. Shaw, Renaissance has not expanded into non-systematic strategies. In its first year without its visionary founder, the Long Island-based manager is one to watch.

10. Whale Rock Capital Management

Boston-based Whale Rock has dealt with the market's peaks and valleys in recent years. It surged 32% in 2023 after losing 40% and 9%, respectively, the two years prior. This year was another peak.

The manager's flagship fund is up 51% through November, thanks to a tech-heavy portfolio full of big-name US companies and under-the-radar international firms. A recent report notes that Alex Sacerdote's $9 billion firm plans to reopen to new capital, hoping to raise between $200 million and $300 million.

• Institutionalization was one of the biggest themes in hedge funds this year.
• A once-scrappy industry is starting to resemble private equity and venture capital.
• The biggest firms and new launches have evolved significantly from the days of a couple of guys and a Bloomberg.

The game has changed.

Hedge funds, led by the industry's biggest names who set the agenda for the multi-trillion-dollar sector, were once known for their scrappiness, speed, and reliance on the brains and vision of their founders.

Now, as the industry's investor base has shifted to long-term institutions from wealthy families and small funds-of-funds, hedge funds have become institutions of their own. 2024 may be the turning point for the space that, in 10 years' time, industry observers will look back on as the beginning of the next era.

The biggest managers in the space are preparing for life beyond their founders, long-standing funds are becoming more formulaic and bureaucratic, and new entrants need to raise more money than ever before.

Multistrategy managers like Millennium, Citadel, and Point72 have long been moving in this direction, but recent moves by each of the firms' founders point to a world in which these giants outlast their larger-than-life leaders.

Ken Griffin, Citadel's billionaire founder, said in November that he would be open to selling a stake in his $66 billion Miami-based asset manager. Millennium and the world's largest asset manager BlackRock have reportedly had talks about the latter taking a stake in the former.

Both firms are set to outlast their founders, with built-out infrastructure and leadership teams littered with former Goldman Sachs partners. $72 billion Millennium, for example, created the office of the CIO in late 2022 and promoted longtime executive Ajay Nagpal to president, providing investors with a clear line into the next level of leadership beyond founder Izzy Englander.

The legendary founder of $35 billion Point72, meanwhile, has stepped away from trading his own book of stocks, which is how he burst onto the scene decades ago.

While Steve Cohen spends plenty of time and money on the baseball team he owns, the New York Mets, a person close to the firm said the decision to step back from running a book was not an indication that he's spending any less time working at his manager.

In a recent internal town hall, this person said, he described no longer having a book under his purview as "freeing" as he can spend more time on strategic initiatives for the firm. Without a portfolio to manage, the market's hours no longer dictate Cohen's schedule — a flexibility he appreciates as he balances running the manager and his baseball team.

For example, in mid-October, Cohen was set to appear on a panel at investment consultant Albourne Partners' annual conference in New York, but canceled because the Mets had gone on a run in the playoffs, people familiar with the event told Business Insider.

Succession, quality launches, and a promising environment

Beyond the main multistrategy names, a number of long-running firms across the industry are, structurally, starting to look more like peers in private equity than smaller rivals in the hedge fund space.

Places like Elliott Management centralized decision-making and created more internal structure, which has frustrated some veterans of Paul Singer's asset manager but provides the needed hierarchy.

Meanwhile, firms like Two Sigma and Bridgewater have officially moved on from their founders with new leadership. Brevan Howard's billionaire founder Alan Howard no longer trades for his firm.

At the other end of the industry, the bar for new launches has increased substantially, and the next generation of industry leaders are starting the firms with a much more institutional feel than even five years ago. Bobby Jain's $5.3 billion launch in July, for example, had plenty of big-name hires and titles right from the start.

In 2023, the average fund launched with $300 million, according to Goldman Sachs' prime brokerage division. PivotalPath, the industry data tracker run by Jon Caplis, said in an end-of-year report that it expects 2024 to be similar, driven by the increase of multi-managers allocating externally.

It's been driven by a focus from allocators on "quality" launches, PivotalPath's report states; the firm is tracking 145 new funds launching between the start of 2024 and the second quarter of 2025 with founders who come from funds with more than $1 billion.

If you're able to command enough capital — either from a platform like Millennium or big allocators like pensions, sovereign wealth funds, and endowments — it should be worth it. Longtime industry players and investors believe it is shaping up to be a strong period for the industry thanks to increased volatility that will allow actively managed investment firms to shine.

"Our underlying hedge fund managers are active, fundamental stock pickers who seek to identify the best opportunities and offer differentiated exposure," wrote New York-based fund-of-funds Old Farm Partners in a recent note that focused on why active management should shine in the coming years.

"Given the argument that we have laid out in this paper, we think the current market backdrop should provide a favorable setup for our strategy going forward."

• "Business development" has become a coveted role at hedge funds amid the war to recruit top PMs.
• The Citadel BD ace Matthew Giannini's joining Walleye was one of the most noteworthy moves of 2024.
• Hedge funds hired dozens in BD in 2024 — BI tracked the names of more than 40 who joined top firms.

One of the most intriguing hedge-fund personnel moves in 2024 came late in the year. It wasn't a superstar portfolio manager or another big bank executive migrating to the buy side.

It was someone with barely any media profile at all: Matthew Giannini, a senior leader in Citadel's business-development unit whom Walleye Capital hired in October as chief operating officer of its long-short equities business.

The move from the industry's $66 billion killer whale to a much smaller fish surprised several industry insiders Business Insider spoke with at the time, underscoring the continued demand for the niche role of vetting and wooing investment professionals.

BI wrote in May about the evolution of the "business development" role, which has grown into a coveted specialty amid the boom in multimanager hedge funds. These firms, prized by investors for robust returns uncorrelated with the stock market, have added $200 billion in assets since 2019. Hiring has followed suit — head count since then soared by 90% at multimanagers compared with just 6% at other hedge funds — provoking a talent war that has been one of the industry's defining themes and challenges over the past few years.

Though total assets managed by these firms declined in 2024 for the first time in seven years (some investors pulled money amid growing costs paired with lackluster returns in 2023), "the war for talent appears to be continuing unabated," Goldman Sachs' prime-services team said in a September report on multimanager hedge funds. These roughly 50 firms added 2,400 employees over the previous year, Goldman found, a 15% increase.

Business development was no exception, with dozens of hires by top hedge funds in 2024, according to industry sources, LinkedIn bios, and publicly reported moves.

Millennium, the largest multimanager, with $72.1 billion in assets under management and more than 6,000 employees, hired at least 10 people in business development in 2024, BI found. Balyasny, which spent hundreds of millions of dollars hiring PMs this year, added at least six new BD executives to facilitate hiring, including three managing directors — most recently the commodities specialist David O'Connor, who joined in November from the external search firm Maven.

Citadel has been hiring as well, adding a handful of people to one of the most revered BD units in the industry. The hedge fund last year became the most profitable of all time, something its founder and CEO, Ken Griffin, attributed in part to an "unparalleled" ability to "recruit experienced professionals to Citadel" and "tremendous success attracting gifted graduates from the premier colleges and universities." Unsurprisingly, Griffin's talent whisperers are highly sought after.

Perhaps none has more gravitas than Giannini. Several industry professionals who know him say he's tall, charismatic, intelligent, and deft at winning over PMs — someone who provides an actual edge in an industry desperate for it. Giannini's leaving Balyasny in 2018 to rejoin Citadel contributed to a turf war between the funds.

"Matt is, if not the best, one of the best closers I've ever met," a BD professional told BI this year.

Leaving Citadel for Walleye may raise some eyebrows, but joining Walleye offers a potentially lucrative upside for Giannini compared with a typical BD role. Business group heads at these funds usually take home a cut of their unit's profits, and while Walleye struggled in 2023, it has been executing an overhaul that's bearing fruit. The fund was up by 15.4% through November, putting it near the top of its peer group for 2024.

He also joins some familiar faces at Walleye, including Thomas DeAngelis, an ex-Citadel BD leader who's now Walleye's president, and Anil Gondi, a longtime PM who joined from Balyasny this summer and will oversee the long-short equities division with Giannini. The two overlapped at Balyasny in the 2010s.

The hiring of Giannini and dozens of others at top funds in 2024 signals that the burning demand for investment talent, and those gifted in recruiting it, isn't likely to dim anytime soon.

"One clear theme from our conversations with multimanagers was that the 'war for talent' synonymous with this segment has not seen any material de-escalation in the last year," Goldman Sachs said in its report.

BI tracked business-development professionals who joined top funds in 2024, using industry sources, LinkedIn bios, and publicly reported moves. This list isn't exhaustive, and we may update it as we learn more.

• The $19 billion manager Rokos Capital is an outlier in the increasingly institutional hedge fund industry.
• Its billionaire namesake, who was a cofounder of Brevan Howard, runs the majority of the portfolio.
• While multistrategy funds are attractive for their diversification, Rokos is appealing for its big bets.

Investors in the billionaire Chris Rokos' eponymous hedge fund had reason to celebrate the reelection of Donald Trump.

The firm made nearly $1 billion in profits the day following Trump's victory, Bloomberg first reported, pushing its year-to-date gains to more than 28% through mid-November.

The macro manager, now running $19 billion, made money across asset classes following the election, when US stocks ripped upward, the dollar strengthened, and Treasury yields jumped — as did many funds that put on the "Trump trade" before the election.

But very few firms the size of Rokos Capital Management have so much of their portfolio concentrated with a single risk-taker. While Rokos has hired quasi-portfolio managers who can put on trades — known in the firm's parlance as "investment officers" — the firm's founder still runs the majority of the portfolio, several people close to the firm said.

As the hedge fund industry's titans have shifted away from macro philosophers to business-building executives, Rokos is a throwback to a time when names like Stanley Druckenmiller and George Soros were on the top of every allocator's wish list.

And the anachronistic London-based manager has ridden its strong performance and, ironically, the movement away from its style of investing to its record size. The biggest investors in the world — sovereign wealth funds, pensions, endowments, and more — now need diversification in their portfolios from the sprawling multistrategy managers that often move as a group and put on similar trades.

Against this backdrop, Rokos stands out for its lack of correlation with the industry's biggest names.

"Pensions need the volatility," one Rokos investor at a US pension told Business Insider. Limited partners in Rokos include Canada's main pension fund and Blackstone, people familiar with the firm said.

And after raising another $2 billion in assets earlier this year, Rokos is not slowing down, industry insiders said. The firm declined to comment.

'Deprived' of his abilities

The 54-year-old Oxford-by-way-of-Eton grad cut his teeth at UBS, Goldman Sachs, and, finally, Credit Suisse, where he spent a little over three years trading alongside Alan Howard.

In 2002, Howard, Rokos, and three other Credit Suisse traders left the now-defunct Swiss bank to launch Brevan Howard (the "R" in Brevan is for Rokos). A decade later, the star trader left the manager hoping to start his own investment firm.

A five-year noncompete agreement stopped any immediate plans, though, despite Rokos' lawyers arguing that the sit-out period would leave the public "deprived" of his "skills and hard work."

Eventually, Rokos and Howard settled their dispute, and Howard even backed Rokos' new manager, reports at the time said. Rokos Capital Management launched in the fall of 2015, quickly growing to $3.5 billion before closing to new money.

In a preview of things to come, Rokos profited from Trump's first election in 2016 — the manager returned close to 20% in its first full year of trading.

Nearing its 10th anniversary, Rokos today resembles the original Brevan more so than the current iteration of Howard's manager. Brevan, which has seen its assets rise and fall thanks to uneven performance over the past decade, is structurally closer to multistrategy managers like Citadel and Millennium as it diversifies assets across risk-takers around the world.

When Brevan launched, Howard was the biggest risk-taker; Now, he no longer trades for the manager, BI reported earlier this year.

Headquartered on the posh London strip known for its bespoke tailoring, Roko's firm has a "Savile Row style" of customization for its founder. The team and research functions are molded to his way of investing, a former employee told BI, even down to the font and color coding of reports.

The goal of the firm's dozens of investment officers, analysts, and researchers — regulatory filings show that 60 people perform "investment advisory functions" across the firm's London and New York offices — is to be his "eyes and ears," this person said, adding: "When he had a question, there was a number we could find to answer it."

Rokos' superpower is his ability to monitor positions like "a human quant." One person who worked with him said he knows the positions put on by his investment officers better than they do, despite managing a much larger book.

This person also said he could stay steady in areas he's confident in, even if markets move against him in the short term.

"He's willing to wait through cycles if he believes the risk is worth it," another person who worked for him said.

A demanding place

It wasn't the plan for Rokos to be the only one putting on trades when the firm launched, people familiar with his thinking at the time said, though that was the reality for a number of years.

Several people at the firm at its start said the issue was that he couldn't find people who thought and traded exactly like him. These people said it's a physically demanding place that requires working long hours alongside a founder who constantly questions everything.

"He has a relentless pursuit of the truth," one person said.

As a result, the firm has cycled through several executives and management structures over the years. Mark Edwards, a former Goldman Sachs managing director who joined Rokos at its launch, stepped down from his CEO perch earlier this year, triggering a slew of changes.

Matthew Sebag-Montefiore, a onetime partner at the consultant Oliver Wyman, is now the CEO, while Pria Bakhshi was promoted to the global head of strategic solutions. Quita Ramirez joined last December as the global head of business development, investor relations, and communications from Schonfeld. Dmitry Green and Lauren Fairbairn, both partners, left this year.

Still, Rokos has worked to delegate some of the risk-taking to others. One investor estimated he takes 60% to 70% of the firm's risk, and that may continue to go down.

Several people close to the firm said he's hoping to add more investment officers, specifically in equities. The exact number of investment officers the firm employs is unclear, though a LinkedIn review shows 17 with the title, many of whom are also partners.

Volatility wanted

While it's counterintuitive, the manager's biggest selling point might be the roller-coaster nature of its returns. A 44% surge in 2020 was followed by a 26% drop in 2021. In 2022, when the S&P 500 dropped more than 18%, the manager had its best year on record, with a 51% gain.

With worries the industry might be hitting peak multistrategy, managers with a higher risk-return profile should be more common, the billionaire AQR founder Cliff Asness wrote earlier this year.

Alternatives "are generally more effective in higher-vol versions," he wrote but "mostly (not entirely) missing from the market today and should take on a bigger role."

As Brevan has transformed into a more diversified platform, and the likes of Louis Bacon, Michael Platt, and David Tepper have returned outside capital, allocators and industry insiders said it's hard to find a peer of Rokos'.

Jeffrey Talpins' Element Capital mostly runs internal money after returning funds at the start of the year, and Said Haidar overhauled his manager after a 43% loss in 2023. Paul Tudor Jones has expanded into quant strategies and seeded external funds, though he's still known for big directional bets.

Rokos, a press-shy billionaire whose media mentions are mostly about construction projects at his multimillion-dollar properties, including a 100-bedroom manor that dates to the days of Henry VIII, is in a league of his own, one investor said.

The limit to the firm's growth, this person said, is going to be internal restraints, not external interest.

"He could raise another $2 billion with a snap of his fingers," this person said.

• Jaffray Woodriff's Quantitative Investment Management wants to grow after a stretch of tough years.
• The 21-year-old manager changed its research process, freeing Woodriff to focus on what he does best.
• In conversations with Woodriff and those running the $1.1 billion firm, they're as optimistic as ever.

Jaffray Woodriff, the face of $1.1 billion Quantitative Investment Management, is stepping back into the spotlight.

The firm, which fell from $5 billion in assets a decade ago thanks to a stretch of underperformance, has been quiet—likely too quiet. When contacted for this story, a few allocators who had met with the firm before but hadn't been in touch for a number of years thought it had been transformed into a family office.

Headquartered in Charlottesville, the western Virginia town home to the University of Virginia, QIM became an easy option to skip for investors looking to meet with multiple funds in a day in places like New York or Greenwich.

Yet its three cofounders — 55-year-old Woodriff, president Mike Geismar, and researcher Greyson Williams — are as optimistic as ever about the future.

"This is as excited as I've ever seen him about research," said Geismar, who was roommates with Woodriff 30 years ago, nearly a decade before QIM started.

"He's not going to stop."

New hires and the creation of a research team have freed Woodriff, still the firm's investment engine, to spend more time on idea generation and less on implementation. There's a renewed focus on marketing, and the firm is courting investors from institutions around the world with hopes of growing up to $4 billion.

And it's the time is right for firms like QIM.

As large multistrategy managers like Millennium and its peers become a bigger part of institutions' portfolios, there's a growing need for volatility that a place like QIM, which systematically trades equities, indices, futures, and more and has no correlation to stock or bond markets, can provide. Performance ticking up has also helped.

Strong returns from both programs, including a 19.2% gain in its oldest strategy, in 2022 opened eyes again. This year, through October, the firm's more aggressive offering is up more than 34%, while its older program has returned 1.7%.

"I like math geeks. That's what Jaffray is, and his team," said Salem Abraham, an investor in the firm for 17 years and a longtime business partner of late billionaire T. Boone Pickens.

"QIM is the type of firm Harry Markowitz would have been happy to find," said Abraham, referring to the late academic who came up with the Modern Portfolio Theory.

Volatile ride for a volatile manager

The 21-year-old quant manager was a darling in the industry at its start. Woodriff, who lives in Charlottesville and owns a farm nearby, grew up on a farm outside the "magical city," he said. He went to college at the University of Virginia, where he came up with the foundation of his trading system during a Pepsi-fueled, 40-hour coding session.

In 2019, he made history by making the largest donation in the school's history, $120 million, to create a school of data science.

Woodriff, deemed "the monk in managed futures" by a 2009 Institutional Investor profile, got the reputation of someone "obsessed with markets and how they work," said Kyle Dunn, a former hedge-fund marketer who now consults for funds and worked with QIM to develop their "story."

Its Global Program strategy soared in its first two full years of trading in 2004 and 2005, with gains of 21.8% and 18.4%, before its strong crisis showing put the firm on the radar of bigger allocators. With gains of 29.6% in 2007 and 12.5% in 2008, the firm added assets quickly.

But the 2010s were not a decade for a strategy uncorrelated to stocks. The firm's Global Program lost money in 2013, 2014, 2018, and 2019. QIM's Tactical Aggressive strategy, launched in 2008 and willing to take bigger swings than the flagship, followed a 60% gain in 2017 with a 42% drop in 2018.

Assets left for more stable managers with strategies that weren't a black box.

"There were lots of conversations with clients about what went wrong," said Geismar, QIM's president. There were also conversations internally about how it had gotten to this point.

Woodriff said he had "thought experiments" about going the family-office route or closing one of the programs.

"The consistent theme has been: The research looks way too good to give up now," he said about the tough stretch of performance in the mid-2010s. The firm was helped by its equity investment into Florida-based Voloridge, a $9 billion quant manager run by David Vogel, who first met Woodriff when they were competing in a Netflix data science competition.

QIM charges no management fee, so when the firm's strategies lost money, there were no revenues coming in. But thanks to Voloridge's rapid growth and strong performance — the firm went from less than $1 billion in 2010 to more than $6 billion in 2020 — bonuses were able to still be paid out to keep employees happy.

Still, Woodriff admitted he had "gotten close to the threshold of shutting things down."

Back to being an idea guy

Instead, the manager reworked itself.

The firm's risk management was overhauled, and Woodriff began sharing some of the research responsibilities, in part thanks to the 2022 hiring of Chris Lankford, one of five research team members with Woodriff and Williams.

Lankford, who had worked as a consultant for QIM for a year before joining the firm full-time, has a doctorate in systems engineering (from UVA, naturally) and previously cofounded a company that tracks the eye movements of disabled individuals to help them communicate. The company was sold to DynaVox in 2010.

"For the first time in my career, I had people who could listen to me describe a complicated scenario and process and go do it three times faster than me," Woodriff said.

"There's such an increased speed in trying out ideas. It's a shame we didn't have this dynamic five, 10 years ago."

It's given some relief to allocators who were concerned with all of the risk-taking being tied to one person. Woodriff said there was an "extremely consistent drumbeat from investors and potential investors asking how dare you be the only one working on alpha."

"It's always been a difficult conversation," he said, in part because "people have known my best skill is idea generation and creativity," and he wouldn't have time to devote all of his energy toward that.

Woodruff said the research team, which also includes longtime data scientist Seth Oldham and 17-year QIM vet Greg Tylka, gives him a better answer to the "bus question" — as in, who would take over if he was hit by a bus, a common question allocators ask during due diligence to understand succession plans.

Lankford, in particular, has given a new lease on life to the firm, Williams said.

"He's been a great link" between Woodriff and other parts of the business, he said.

"I don't think Jaffray appreciated the constraints on his time before," Williams said.

Not going anywhere

While Woodriff has passions outside work — on top of his work building out the UVA's newest school, he received a US Squash Special Recognition Award in 2014 for his "leadership and substantial contributions to squash," of which he's an avid player — one conversation with the intense researcher reveals where his true passion lies.

"I knew in college I'd never want to retire," he said, and nothing about the past three decades has changed that drive.

Woodriff would be "bored" if he retired, his cofounder Williams said.

"It's a passion, career, and hobby for him," he said.

Those close to him say his renewed interest in the firm's strategies and more time to think have not so much reignited his passion as added fuel to the fire.

"They're a unique find and a unique fund," said Abraham, the investor in the firm and a longtime quantitative trader himself.

"It's difficult to find the things to make the stew special," he said. Stocks and bonds are the meat and potatoes of a portfolio. Funds like QIM are the pepper.

"They're spicy," he said.

Since college, Woodriff has been on a mission to "be totally different from everyone else."

In that regard, it should be no surprise the firm didn't shutter during its tough years or that Woodriff still believes in what he and his team can do.

"I still feel like I'm very good at it," he said.

• Quant hedge fund Seven Eight Capital is winding down, according to people familiar with the matter.
• The fund managed around $500 million at its peak and traded for Schonfeld for many years.
• The funding is closing after large investors pulled capital, the people said.

Quant hedge fund Seven Eight Capital, which for many years invested money for Schonfeld Strategic Advisors, is winding down, according to people familiar with the matter.

Seven Eight Capital is closing as a hedge fund and will cut most of its staff after two large investors redeemed capital, the people said, asking to remain anonymous because the information isn't public.

The firm could continue to operate in some capacity, the people said, potentially as a separately managed account for an existing hedge fund.

Cofounder Adrian Sisser declined to comment when reached by phone.

Seven Eight, founded by Sisser and Stephen Cash, managed around $500 million in assets at its peak, sources familiar with the firm said. It had 22 employees this year, according to a regulatory filing,

For many years it managed capital for Schonfeld Strategic Advisors, trading on the multimanager hedge fund's platform for more than a decade.

The two firms cut ties last year amid a reorg and cutbacks at Schonfeld.

• Stephen Wu transitioned from tech to finance, starting a hedge fund with $10 million.
• Wu's experience at Amazon and Microsoft taught him efficiency and managing technical debt.
• He said trading is more fun and more money than tech.

This as-told-to essay is based on a conversation with Stephen Wu, a 29-year-old hedge fund manager from New York. It's been edited for length and clarity.

If you ask Alexa to play Taylor Swift, my team built the system that recommends similar songs to listen to afterward.

I studied computer science and philosophy at Carnegie Mellon during college and always thought I would work in engineering. I applied to work at Amazon during my senior fall semester in college and started at Amazon Alexa right after graduating. I was hired as a software engineer in Seattle, creating and building the music recommendation system and overseeing a team of three engineers.

It was a good mix of my passion for music and engineering, but eventually, I left Amazon for Microsoft and then left tech to start a hedge fund with about 80 investors.

I raised almost $10 million from friends, family, high-net-worth individuals, influencers, and others in the hedge fund space that first year. I still love engineering, but hedge funds make money, so they're much more fun.

Amazon taught me how to prioritize and be efficient

Working at Amazon, I learned that its ethos differs from other tech companies.

Google and Meta are more engineering-focused. Microsoft aims to build the best tool for the customer, even if it takes extra time. Amazon, on the other hand, seeks to make things fast.

Instead of building it right the first time, Amazon allowed me to create the minimum viable product usable to meet the deadline. While working there, I learned a lot about prioritization and efficiency.

Still, after about three years, I wanted to explore new roles. A Microsoft recruiter reached out to me via LinkedIn. I took the call and was intrigued by their offer of an engineering-heavy business role. I would work directly with engineers to build and plan the machine translation system used by Microsoft Azure.

I liked the opportunity to combine my strengths in engineering and business for this role, so I accepted it in 2020.

I learned a lot in tech and used it to launch my hedge fund career

I loved working at Microsoft and worked there for about three years. In my free time, I dabbled in hedge funds, which are any fund using a non-traditional investment style.

One crucial learning takeaway that helped me in my future endeavors was technical debt — if you build something too quickly and take shortcuts, you may spend twice the time just fixing the bugs.

I can tell if a product wasn't built right or if it might incur additional unforeseen costs that other hedge fund managers may not know about. Also, because I built statistical models and AI algorithms recommending songs to users at Amazon Alexa Music, I understand the statistical behavior of price movements. This allows me to take a more data-driven, probabilistic approach to trading, while most fund managers focus on financials.

After 6 years, I left Big Tech for the finance industry

I specifically invest in options trading after volatile events. I always loved it, but I never thought I could do it full-time.

Along the way, I discovered a very lucrative strategy for trading in a specific niche in the options market. I did this for fun with my portfolio through 2020 and 2022. It was during the pandemic in 2022 that I realized that NASDAQ was down 33%. That year, I proved my strategy in a bear market and felt confident enough to pursue this as a serious career.

For years, my friends and family asked to invest with me, and I was finally comfortable trading with their money. I left Microsoft in April 2023 to work on the hedge fund full-time. I worked extremely hard during my first year of fundraising and trading simultaneously and was very stressed.

Fundraising was difficult initially, but I allowed investors to try with a small amount first and see the returns for themselves. The minimum amount to invest is $100,000.

I love trading and plan to do it forever

Since our trades are weekly, I allowed them to withdraw any week if the performance was poor. This was highly unusual and risky for hedge funds because they could withdraw any week, and my fund would die. However, I was confident I could perform. After several months of good performance, many of my investors doubled or tripled their investments.

And now, more folks continue to invest through word-of-mouth.

I aim to grow this to a $100 to $200 million fund in the next few years. It's just me, so it's a lot of work, although I have part-time analysts helping. Once reaching $100 million, I can hire more analysts and expand the strategy.

I love trading. It's fascinating because it's like solving a puzzle every single day. As an engineer, I was making a solid six figures a year. It depends on how much profit I generate this year, but if my fund is $15 million and I achieve the 30% yearly profit target, I'll make $1.2 million.

I enjoyed solving complex engineering challenges, but trading offers a more dynamic, fast-paced environment and I plan to do this for the rest of my life.

If you left Big Tech for another industry and would like to tell your story, please email Manseen Logan at [email protected].

• In a new podcast, billionaire Point72 founder Steve Cohen talks about the intangible values good investors have.
• Cohen, the owner of the MLB's New York Mets, spoke about how the level of discipline is similar to professional athletes.
• Investing at Point72 requires analysts to be in a "constant learning," he said.

The employees of billionaire Steve Cohen's two companies compete in different arenas.

The New York Mets, the Major League Baseball team Cohen has owned since 2020, play their games in front of tens of thousands of fans in Queens and opposing teams' stadiums. Meanwhile, Cohen's hundreds of portfolio managers and analysts at his $35 billion hedge fund Point72 are trying to beat the market and peers at firms like Citadel, Millennium, and more every day in offices around the world.

Cohen just handed out the largest contract in baseball, signing phenom Juan Soto to a 15-year contract that could pay him up to $800 million — but he expects the mindsets of the baseball players and traders on his payroll to be similar.

No matter the situation, there are key intangibles that an individual must have, Cohen said on a Point72 podcast with the firm's co-CIO Harry Schwefel. Good investors need to be opportunistic, vulnerable, passionate, and curious, but most importantly, like great athletes, they need to be disciplined.

"The talent in this industry is exceptional," said Cohen, wearing a gray New York Mets pullover, speaking about investment management.

To outperform, it's about "doing it day in, day out, no matter how it feels, how you feel." He spoke about how he hated weekends early on in his career because he wanted to trade and compete, comparing it to baseball players who, despite having a season that spans at least six months, can't wait for Spring Training.

Because of the discipline required by high-level sports, former college athletes have become a major recruiting ground for finance firms. A 2023 Harvard Business School study found Ivy League athletes "outperform their non-athlete counterparts in the labor market."

"Athletes attain higher terminal wages and earn cumulatively more than non-athletes over the course of their careers," the study found. Athletes also attain more senior positions in the organizations they join.

Point72 is a good example: Schwefel played for Harvard's hockey team.

In the conversation between the two, Cohen also revealed the questions he asks of any potential hire. He wants to understand "what makes them tick" and also how flexible they are.

"Do they want to be right or do they want to make money?" Cohen said. People who are right are "rolled over by the markets" all the time, he said, so a good investor has to be "constantly redefining who you are."

It's why at Point72, Cohen said, "constant learning" is mandatory for any employee. Once you find the area you're passionate about, he said, you have to be fully in it, improving every day, just like an MLB player or a pro golfer.

"This is pattern recognition and knowing what you're good at," he said about investing.

"Throw your best pitch."

• The industry's biggest names were up despite choppy markets following Donald Trump's victory.
• Balyasny led the way among multistrategy firms, posting a 3.9% monthly gain.
• Firms like Citadel and Schonfeld continue to build on a strong year of returns.

The biggest names in hedge funds ended an up-and-down month in markets in the black.

Multistrategy managers overcame the volatility surrounding Donald Trump's electoral victory — when markets initially skyrocketed but then sold off briefly before rebounding — with firms like Balyasny, Schonfeld, and Citadel posting strong returns for the month.

Balyasny led the way among its peers with a 3.9% gain in November to bring the Chicago-based manager's 2024 returns to 11.6%, a person close to the manager confirmed.

Schonfeld meanwhile continued its strong streak for the year, returning 1.8% in its flagship fund. The New York-based manager is up 17.2% for the year, a person close to the firm said. Ken Griffin's Citadel was also up 1.8% last month in its Wellington fund, while Izzy Englander's Millennium made 2.2%.

The billionaires' firms are up 13.2% and 12.5%, respectively, on the year. Bloomberg previously reported on the firms' November returns.

While multistrategy managers' returns were dwarfed by those of macro managers like Rokos and Discovery Capital that took big swings on Trump's victory, their biggest selling point — steadiness in turbulent markets — was proven true in November.

See below for more performance data. Additional firms will be added as their numbers are learned. The managers declined to comment or did not immediately respond to requests for comment.

• Quant funds are expanding beyond computer-run strategies.
• Firms like Qube and Squarepoint are backing legions of human stockpickers.
• "We want to diversify our alpha sources," said Squarepoint's Nicolas Janson.

As mega hedge funds like Millennium, Citadel, and Point72 battle for the best stock-picking talent, another segment of the multi-trillion-dollar industry has joined the fray.

Quant funds are increasingly turning to their longtime competition — human stock-pickers — to diversify their returns. Firms like Qube Research, Squarepoint Capital, and Engineers Gate are backing human traders through portfolios run by third parties, also known as separately managed accounts, or hiring them to trade internally.

Qube, the $20 billion London manager that started 2024 with a bang, has backed 44 stock-picking managers via its SMA platforms since the start of last year. This platform gives the firm insight into the managers' trading and risk management but allows the stockpickers to remain external and raise capital from other allocators.

The firm hopes to grow that number to 100 in the next few years, a person close to the manager told Business Insider. The firm declined to comment.

Squarepoint Capital declined to say how many portfolio managers it has backed on its SMA platform but noted that it only allocates to non-systematic strategies. The manager does not allocate externally to a strategy that would compete with one they have internally, according to Nicolas Janson, the firm's head of external investment strategies who joined at the start of 2022 to build out the platform.

"We want to diversify our alpha sources," Janson said in an interview with BI.

As these firms' assets swell thanks to strong performance, executives are constantly evaluating possible growth areas.

Engineers Gate, for example, is continuing to grow its footprint. The quant firm, which expanded to Asia earlier this year and runs more than $10 billion, according to regulatory filings, hired Mike Daylamani to build out a fundamental team, several people close to the firm told BI.

Daylamani will start in his new role in 2025 and comes from Schonfeld, where he ran a team that blended fundamental and quantitative strategies. He previously ran a similar team at Balyasny for a year after working as a fundamental portfolio manager for Steve Cohen at Point72 for close to a decade.

Two Sigma, one of the largest managers in the hedge fund industry, started hiring human stockpickers for the first time over the last few years, nabbing people such as Zach Rieger and Daniel Schuster, former partners at Maverick spin-off fund ROAM Global Management, in 2022, and Ernesto Cruz, who is the firm's director of research for fundamental equities after working as a portfolio manager for Singapore's sovereign wealth fund, in 2021.

While the manager cut 10% of its workforce in November, no PMs were included in the culling.

Firms that expand beyond their core strategies can occasionally struggle to integrate a different style, but big-name quant managers like Two Sigma and D.E. Shaw have been able to consistently generate returns as they've added investors focused on areas like private markets, real estate, and more.

In fact, D.E. Shaw might be the poster child for other quants considering expansion. The firm's website lists eight different discretionary strategies compared to three systematic offerings and two hybrid strategies that blend the two.

• Reflexivity is a startup cofounded by two former hedge fund traders.
• It sells software to hedge funds and institutional investors to speed up the research process.
• The 4-year-old upstart just raised its $30 million Series B.

A startup looking to transform how investors and traders use data just received funding from some of the biggest names in the hedge fund world.

Reflexivity, formerly known as Toggle AI, raised its $30 million Series B in late October. Interactive Brokers and Greycroft led the round, which included participation from billionaire investor Stanley Druckenmiller and Greg Coffey, the Australian founder of hedge fund Kirkoswald. Existing investors include Millennium Management's founder, Izzy Englander, and General Catalyst.

Reflexivity was founded by two former hedge fund traders who were all too familiar with the woes of wrangling disparate data sets to find an investing edge, or at the very least, to not miss out on an opportunity others are seizing. The startup aims to mitigate that by combining third-party data from a dozen providers like S&P Global and newsfeeds, in addition to proprietary internal information, for a full-view analysis and also flagging the potential impact world and market events may have on a portfolio.

"When you are an investor inside a major hedge fund, one big fear that is always present is that you are going to miss something," cofounder and CEO Jan Szilagyi told BI. "It's always exciting to have a trade that you are the only one that's in it, but the thing that is far worse is to miss on the trade that everybody else but you is in."

The four-year-old startup recently changed its name to more closely align with how the platform helps with the investment process, Szilagyi told Business Insider.

"Reflexivity is the act of examining one's own assumptions, beliefs, and judgment systems, and thinking carefully and critically about how these influence the research process," he said, referring to a term popularized by legendary investor George Soros.

Szilagyi was a portfolio manager for nearly 20 years at firms including Druckenmiller's Duquesne Capital Management and Fortress Investment Group. The fintech's president and other cofounder, Giuseppe Sette, also worked in asset management including a stint at macro giant Brevan Howard. They remember the investment analysis process as one that "seemed hopelessly broken" because critical data sources were fragmented and spread out across different providers and systems, Szilagyi said.

The firm estimates the potential market for its services is $16.4 billion. Reflexivity so far has about 20 institutional clients, tallying some 15,000 individual users. Clients include trading platforms like Interactive Brokers, banks, including Japan's largest in MUFG, and several hedge funds, including Millennium Management, Soros Fund, and ExodusPoint. The startup was highlighted as one of Business Insider's up-and-coming fintechs in 2023.

It has a valuation between $115 million and $150 million, Szilagyi said.

How Reflexivity works

The upstart's platform lets stock-picking investors analyze data that covers about 40,000 securities from a dozen different providers, including Refinitiv and the London Stock Exchange Group, the Federal Reserve, and S&P Global. It is also built to alert customers, mostly discretionary investors who work at hedge funds and asset managers, to market events and their potential ripple effects on a given portfolio.

If there's a big move in treasury yields, Reflexivity will automatically examine the ripple effects and see how that could impact banking stocks. In this hypothetical example, Reflexivity would see that its user, say a hedge fund trader, has Wells Fargo stock in her portfolio, and flag to her that Wells Fargo stock historically reacts very well to a rise in yields.

Behind the scenes, a proprietary knowledge graph and generative AI-powered user interface helps users connect the dots and better understand investing relationships, Szilagyi said.

Szilyagyi says he also has an answer to a question many Wall Street technologists are facing with hallucinations, or generative AI's tendency to make up answers that are presented as fact.

Reflexivity's answer is a so-called closed system, wherein the AI models can only pull answers from data that's been pre-vetted by the startup. The reason other models, like OpenAI's ChatGPT, hallucinate is because it operates on an open system that takes in data from anywhere on the internet, Szilagyi said. If it can't find anything, it'll be inclined to make up an answer because these tools are built to deliver some kind of answer, he said.

On top of that, Reflexivity also programmed its models to not force an answer to every question. About 5% of the time, Reflexivity will say it doesn't have the ability to answer a given question if it's unable to generate an answer from the data it's been given, Szilagyi said.

"For finance professionals, the ability to get the candid and honest answer is absolutely critical because it only takes one, two hallucinations to be extremely costly when it comes to trading," Szilagyi said.

Here's Reflexivity's pitch deck it used to raise its Series B.

(Because the startup only recently changed its name, these slides include its former name, Toggle AI.)

• A 2017 presentation for macro investor Scott Bessent's hedge fund explains his research process and "edge."
• Bessent, the nominee for Treasury secretary by President-elect Donald Trump, said his "guiding research principle is change."
• His firm, Key Square Capital, struggled to generate returns despite its strong pedigree.

As Scott Bessent's political profile rose, so did the chatter around his macro hedge fund's relatively poor returns.

Bessent — the former righthand man for billionaire George Soros and now the nominee for Treasury secretary by President-elect Donald Trump — saw billions of dollars leave his firm, Key Square Capital, after its 2016 launch, Reuters reported. The manager lost money in 2017, 2018, 2020, and 2021 before notching double-digit gains in the last three years. This year's gains were helped by a bet on Trump's reelection.

In macro investing though, performance can be choppy, and Bessent's investing process is a throwback to old-school macro traders like his former boss, according to a 2017 Key Square presentation reviewed by Business Insider.

It's not clear if there have been any changes to the investment process in the seven years since the presentation was created. Bessent worked for Soros for 15 years and, before that, was the first-ever analyst for legendary short-seller Jim Chanos' Kynikos Associates.

The presentation details how Bessent might go about crafting his views on fiscal policy in his new role, should he be confirmed by the Senate following Trump's inauguration.

"Key Square views its research process as a think tank that is bolted on to disciplined trading and risk management," one slide reads. The manager describes the team as "aggressive intellectuals" who "organize frequent teach-ins" and have a constant stream of outside experts coming to the office to speak to the team.

"Our guiding research principle is change," the presentation continues, stating that there isn't a "singular framework" for evaluating potential investments, but instead an evolving view that changes when new information is available.

The firm prides itself on finding that new information. The presentation claims that the Key Square team reads "voraciously," travels frequently, and taps the firm's "unparalleled global network of contacts consisting of policymakers, political advisors, industry leaders, corporate management teams, consultants, academics, and market participants."

Sell-side analysts, though, do not factor heavily into Key Square's process.

"We finish rather than start with the Street," the presentation states, tapping the research teams at big banks only to "understand consensus or seek alternative views."

The presentation also said that it considered the firm's patience and investment horizon a part of its "competitive edge."

"We are investors, not traders," the presentation reads. The typical investment is held for one to three years, and the firm is comfortable waiting to put money to work until the timing is right.

"We invest in the future, study the past, and focus on current pricing."