I guess you've all read the bbg article on the Balyasny team that is down 100m.
I'm working at a Big 4 and I still have a hard time understanding how is it possible?
Thanks for the explanation.
| +24 | % of pods making 9 figures consistently? | 29 | 2d |
| +14 | Average single manager slope | 5 | 12h |
| +13 | Fastest Way to MMHF? | 6 | 1d |
| +6 | Bad PM | 3 | 1d |
| +4 | Amakor Capital - Who are these guys? | 2 | 5d |
| +2 | Walleye SA 2027 | 4 | 1d |
| +2 | X | 4 | 2h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Guess may be liquidity driven and took time to unwind book. But does raise questions from risk mgt perspective.
They hired the Head of risk of HRT very recently. It might solve these kind of issues …
The guy leading the team is well known for illiquid Strats. This might be the consequence of a losing Strat that can’t be canceled easily
If you assume he was managing $1bn ish, it's a 10% loss, which is large, but definitely doable.
It is a little surprising he didn't get cut earlier, but then maybe given he managed an iliquid asset class it was a messy unwind when he got shut down that led to more losses.
Not that uncommon at big 4
Was in an AHG where he was a very large holder...thought it was extremely odd to see BAM involved there.
More common in credit/illiquid stuff. It's not out of the question for a large book. If you can make 200 you can certainly lose 100. Saw a few teams at my previous MM lose that much in 2022.
Bloomberg said the book was 1% of AUM so I assume it was $1bn in size and a 10% drawdown if Balyasny is 4x levered.
That’s a big % draw but the $ don’t shock me. I’m surprised this made headlines at all.
0
Almost everyone was down in HY in 2022, this magnitude sounds right.
Welcome to credit my friends! Land of if it goes down, we buy more. Things like timing your trade and risk management are overrated and for losers.
One of the articles mentioned that he played in illiquid HY. Given the timing (article hits after a face-ripping rally in Nov.), I wonder how much of the losses were on the short side (short illiquid CCC paper in size?)
Had some big longs blow up. Some bad credit picking
Can happen when you don't pay enough attention to sizing and being lazy with hedges.
What are some illiquid asset classes that Big 4 traffic in?
CLOs/structured credit, some distressed, converts, vol derivatives (swaptions/variance/vol swaps/warrants), less-liquid EM credit are all things that come to mind.
George blew up at Citadel so this wasn't a major surprise. A lot of guys got burnt in situations like SFR (Altice France), Casino and Adler this year in Europe. It's funny because EUR high yield has had a good year and is up around 10% YTD. No doubt George and team will resurface at the next pod after a well earned break!
Laboriosam sit eveniet quia. Voluptatem iste eum ab. Labore illum voluptatem cum odio molestias aut. Dolor expedita est necessitatibus officiis illum aut.
In quod enim voluptate consequuntur vel quibusdam. Enim ea aut non ratione. At ut similique ea enim et at quam. Enim et repellat illum assumenda magni facere.
Iure ut voluptas error voluptatem est quo ipsum qui. Neque veritatis suscipit quas sint nam. Aut tempora error vel et ex dolores animi repudiandae.
Temporibus amet dicta aut molestiae rem nam. Commodi eos ratione deleniti illum in eius. Libero voluptatem ducimus distinctio voluptas porro.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...