Breakdown of Commodity Trading Houses
Am in the oil space, and am right about the point in my career where I am likely to be changing companies soon. Obviously, the trading houses are some of the best companies to work for, but there's relatively little information about them outside of the largest ones (and even for those there is often spotty information at best)
Was just wondering whether there's any rough breakdown of information regarding each of them (from the largest to the mid-sized/smaller ones? Could be anything really, such as their regional/product specialisations, trading styles, risk limits, culture (which actually seems to be pretty important in this space), etc. So not just looking for a generic WSO style prestige ranking tbh.
Also, was specifically wondering about the mid-sized space in this industry; seems that companies like Hartree, Castleton, Freepoint are all pretty desirable firms to work for, and was wondering how individual traders think about working for one of these companies versus a larger one like Vitol or Gunvor? Would people almost always automatically choose to work at Vitol over Castleton for example, or is the decision a lot more situational? Is it similar to a BB vs EB debate, or is it more similar to a BB vs MM thing? Or is it a fairer comparison to use the largest MM HFs vs the smaller SMs? What about companies like Koch which clearly aren't majors but also don't seem to traditionally be defined as trade houses?
Any information would be great, and it just seems that this is one of the topics that is very rarely covered. Would appreciate any insight even from a parallel vertical like LNG or metals trading for eg.
If you do well at any of them, you’re going to be obscenely wealthy. I’d say it strongly depends on the role that you’re pursuing and the managers you work for. The risk tolerance/size of the physical system may be better at your VITOL/Trafi/Mercuria/Gunvor’s of the world but some of the brightest guys I know are at the other couple “middle market” shops you mentioned. Sure there’s some pretty lucrative private stock programs at VITOL namely, but I think it comes down to trusting your presumptive environment/manager the most. Also might be easier said than done to break in given in my experience, a lot of shops are much more “real world experience” based than a traditional bank would be (go through our analyst program with a Ivy League degree etc). I think whichever opportunity you get, you take it. It’s all about comp structuring and risk tolerance and if they give you a VAR and a cut of your P&L, you’re going to be fine
edit: if people want to keep hitting me with monkey shit, then how about someone else comments so we can have a discussion
Got hit by monkey shit, so fine, go work for somewhere with a crazy private stock package. That’s how these guys make $100MM+ in 15 years and retire by 40. Just don’t see why you couldn’t get a similar gig being a partner at a freepoint/hartree/castleton.
Don’t think you deserve the monkey shit either, if it’s for the comment about midsized firms, I somewhat agree with your anecdote that there are extremely bright people at some of those shops
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So your belief is that the bar for traders at midsized firms is higher?
Does make some sense from my anecdotal experience, but at the same time big parts of the street seem to have a strong preference for the biggest names interestingly
Depends what you’re looking for. The Houston guys are going to want you to bring a phys book and the other guys might be a bit more flexible. And they’re all “big guys;” if I remember right Hartree was a bunch of ex-Goldman guys. There’s no shortage of “prestige” at any of the shops listed. It’s about fit
lot of the mid size shops hire a book so you are bringing them a biz and they are providing capital.... freepoint and merc dont have a biz thats plug and play.... hiring the right trader brings their own list of relationships and biz
Yes simply because there's nowhere to hide if you aren't producing value.
The structure where I'm at is pretty pod-like, and some guys I work with are the most exceptional traders I've seen (and I've been at both a supermajor and a well known multistrat fund). You don't have a cash business to fall back on unless you build it yourself, so either be great at spec or get your hands dirty and build out your own physical book. By the no free lunch theorem it makes sense the bar is higher at midsize firms; the payout % is higher (significantly sometimes) and all cash without deferral at some firms, so the financial incentive is there to make the leap if you can survive.
I am curious about commodities trading - any advice on how to get started?
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