It’s a good time to go on gardening leave. Summer is coming. The on-off war is still on. And maybe you will get a bigger, better, offer while you’re on the beach.
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Bloomberg says the latter is happening to the most desired portfolio managers in hedge funds. They leave for gardening leave with one job lined up, and then another fund jumps in with a bigger and better offer and hires them during their time out of the market.
It happens a lot. Bloomberg counts 14 hedge fund professionals in the recent past who’ve had their eyes turned by such things. They include Stanley Sheriff, the 32-year-old ex-Goldman Sachs rates trader who briefly went to Taula Capital Management in May 2024, but who left Taula for Balyasny Asset Management within a month. More recently, they include Tarun Tyagi, who left Capula for Millennium a year ago, only to bought back by Capula shortly before he was due to join Millennium as his year’s gardening leave ended. Capula even repaid Tyagi the money Millennium gave him to sit out, and so he effectively achieved a very long paid holiday with his current employer.
This technique, known as the “interception trade” can be used to supercharge compensation. Bloomberg points to $120m hedge fund pay packets, and the possibility of achieving higher offers if you’re on the way to one hedge fund when another one intercepts waving more cash. Hedge fund professionals are “economic animals”, says one observer. They like this kind of thing.
Hedge fund headhunters like it less. Jason Kennedy, a hedge fund headhunter who has his very own family office, says he spent four years finding the perfect job for a trader, who duly sat out of the market in preparation for joining it, but was diverted to another fund for four times the money just before he was due to arrive. Kennedy lost his fee. The trader reportedly promised to cover Kennedy’s cost, before ignoring his calls.
It doesn’t help that as traders’ mandatory garden leave comes to an end, they become increasingly desirable and increasingly valuable to all the other funds that want plug-and-play candidates. With this in mind, some headhunters are reportedly assembling lists of candidates enroute from one fund to another so that they can charge in and gazzump them. In doing so, they’re rendering their own lives more stressful. Headhunters presumably now have to spend the entirety of their own candidates’ gardening leave trying to persuade their “economic animals” not to let them down. Good luck with that.
Separately, at this stage of humanity, the most illustrious Deutsche Bank alumnus is not Josef Ackermann, the hirsute ex-Deutsche CEO, but Alexander Gerko, the bearded ex-trader.
Gerko, who now runs market making firm XTX, will imminently receive a £1.5bn dividend as XTX’s majority shareholder, says Bloomberg. Remaining XTX shareholders will share £700m between them.
Alongside his activities at XTX, Gerko also has a frank and sometimes profane presence on social media where he is known for blocking people and expressing large opinions. There, he recently also divulged an unknown element of his backstory: before XTX and before even Deutsche Bank, Gerko said he worked for Dulance, a price comparison engine in Russia. Dulance was bought by Google, and Gerko says he pitched his idea for XTX to Peter Norvig, Google’s then-director of research. Gerko says Norvig reportedly turned him down because finance was “evil”. At that stage Google was still “good.” It’s not clear where XTX is on the scale.
Meanwhile…
It sounds like Citadel Securities will want to hire prediction markets specialists soon, but not for sports contracts. “We’re not there yet. There is not that much liquidity,” says president Jim Esposito. As markets “ramp and scale”, the firm will “potentially get involved.” (Bloomberg)
Flow Traders is the poor relation in electronic trading. Only 15% of its revenues are generated in the Americas and it hasn’t grown there in four years. Two-thirds of its 660 people are in Amsterdam. (Rupak Ghose)
Saudi Arabia’s Public Investment Fund has $900bn in assets but has been making some large investments ($55bn for Electronic Arts, $10bn towards Paramount, $100bn for AI) and is maybe spent out. (Bloomberg)
Mohammed Al-Jadaan, Saudi Arabia’s finance minister: “I still believe that markets and all other people are still trying to take a more positive picture than what reality is. Anyone who’s counting for a quick recovery, even if there is a total end of hostilities, will need to recalculate that.” (WSJ)
Doug Ostrover and Marc Lipschultz are no longer using their shares in Blue Owl as collateral for large personal loans. (FT)
Hedge funds own a record-high 8% of US Treasuries, and with combined repo and prime brokerage borrowing exceeding $6 trillion, any forced unwind of these leveraged positions could send shockwaves through global fixed income markets. (Apollo)
If it drizzles when you visit a college, you won’t want to go there. It’s not clear whether this also applies to hedge fund jobs. (WSJ)
“if you need to work to maintain your lifestyle, you are not a member of the upper class.” (The Purse)
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