Diameter Departures
Heard diameter had like 5 analysts leave in these past few months. Any truth to this? If so, how does a firm not descend into chaos
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They have a senior / junior analyst model and I don’t think they lost both analysts in any sector. Also they run with more analysts on the hedge fund side than others + lastly its a trader driven model. So summary is, they will be fine and somewhat business as usual beyond maybe not trying to make as many calls on the edges.
what do you mean when you say trader driven model, are you talking about P&L?
As an analyst you never really really "own" your positions there. Its like being on a bank desk where its the traders own the risk. This is a different model than for example a Redwood or a Silverpoint where its much more of an analyst driven model and more analysts calling shots than trading. Other more trader driven approaches include places like Sona and majority of credit pods at multi-managers.
where did the departing analysts go?
I saw one go to TPG
What headhunter do they use?
Anyone know what type of seats they left for?
Saw one step into an MD role at TPG credit. Something like credit opportunities on Jacob Gladstone’s team. I think it’s a legacy AG platform. Seemed to skew more towards privates and direct origination.
https://www.angelogordon.com/team/michael-seidman/
Not sure Jacob Gladstone has a team
Other credit hedge funds / multi-strats / credit investment managers. Not just this year, but analysts I know have gone to HBK, DK, Canyon, Citadel, founded own fund, Shenkman among others.
They’ve been looking to make upgrades on their analyst team for the past year so not a surprise that some people are being moved out as that takes place. They have around 40 people on that team globally across their hedge fund and clo products and typically have turned over 5-10% a year.
Most of these departures have been voluntary.
why did people leave?
1) one exited not just the industry but the workforce / labor market entirely
2) others exited for better culture and/or better comp. Culture at diameter is rough; very nitpicky, hotheaded culture. And comp just isn’t up to par for senior/midlevel analysts there. Too many analysts there who haven’t seen $2+ million when their coverage / P&L would have merited it. That is, when they would have easily earned that much somewhere else.
Define nitpicky/ hotheaded?
This is incorrect. They sent some messages at year end to create some openings on the team and yes one person did move home to another country as expected. The comp numbers there are typically top of market senior analysts making 1-10mm depending on their and fund performance.
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also was wondering if anyone has thoughts on multistrats seeming to be growing credit pods/IP headcount. This seems to be the case to me anecdotally, but would love anyone's input on why/if this is actually happening.
Here is the story on why MMs are now starting to get into credit (again)
From 2009-2020, interest rates in the U.S. were 0% and net of inflation below 0%.
Now in the 2020s interest rates are higher so you are once again allowed to make money in credit by earning interest. If there is an opportunity to make money, you better believe the MMs are going to be there hat in hand
But I would push back on this because my understanding is that total return/distressed/opportunistic credit (wtv definition you want to use - which is my assumption for what the newer credit pods at MM's are doing) was still a business that was around and doing ok during the 09-2020 period. Granted it was obviously less ideal of a opportunity set given most firms made P&L primarily on price app/pull to par but it was not like select active managers did not perform well (and there were microcycles during europe crisis, oil/gas 2017-2017 period etc... where high correlation and zero dispersion in sellof created reallly attractive alpha opportunities for distressed players). And with spreads at close to all time tights today (aside from CCC) despite all the software noise, even if SOFR is up 350-400 bps, doesn't seem to me like an MM decides that because base rates are up they want to build a team in credit now to do event driven stuff driven by idiosyncratic business performance that btw is pretty hard to lever up relative to an equity strat for obvious reasons. For context, I am still in college but have talked to ppl about this and would love any advice on where I might be thinking about this wrong. I guess my main point is that I don't see base rates as an obvious catalyst for MMs to get into credit but would would love to hear more experienced folks inputs.
It’s a marginal comment. Higher base rates just make credit more attractive. MMs have lots of teams. The MMs goal is to generate like 10% net returns per year for their investors. In a world where base rates are 0%, investing in credit to try to hit that bogey can be a big uphill battle. In a world where base rates are 4%, it’s just that much easier to hit the “absolute” return expectation through credit instruments. I hope this helps
Yes this does, thank you! Do you know anything about what they are looking for in terms of juniors. The most junior analysts I have seen are 3-4 years out of undergrad from top tier distress shops (think SPC/Oaktree) just curious if you are familiar with those pods at all (mandate/avg tenor/portfolio construction) etc...?
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