Goldman's risk arb alums - why so many closures?
As tiger cubs have entered the spotlight recently for their overall success, i'm reminded of another prolific HF family tree: rubin's risk arb cubs. Seems like a lot of them (that have once been successful) have fallen on hard times and have shut down / dwindled in assets. Can anyone knowledgeable explain why? Were they just 1 strategy wonders that weren't able to adapt? Seems interesting that such a successful group had such a stark turn of events.
Funds that shut down or are a shell of their former selves: ESL, Eton Park, Perry, TPG axon, the group that went to KKR
Unless I'm missing any others, the only one that seems to be doing alright are Farallon and Och Ziff.
So 5/7 that used to run multiple billions are now closed or family offices
The founder of farallon would come into the office everyday with a coffee and donut.
Lol that arbitrage used to be acquiring private information and using that to make trades. Literally how the big I banks started out
What WSM said. Back in the old day, risk arb was basically paying lobbyists / ex government officials for privy information on deals closing. I heard this second hand.
That doesn't fly anymore.
Dunno how well they're doing, but Taconic is also from that group and seem to still be around in size
And their returns kind of suck
Might be way off base here...
Don’t some Tiger cubs just have crazy tech exposure? Consider their long plays on tech. How many of them have actually done significantly better returns/vol wise than e.g. a simple portfolio of top x tech stocks weighted by market cap with biannual/quarterly rebalance ?
Basically, how much of the game is performing well within a certain sector vs happening to align yourself with the right factors? If e.g. tech starts to do badly and another industry starts booming and these places call it in time I’d be a more impressed, until that happens I’m not entirely convinced that there’s much more going on than some survivorship bias.
A lot of it is what you're describing, others just kill it anyway (e.g., Samlyn)
Samlyn has good returns? I was under the impression that they were solidly middle/lower end of pack?
Curious - what were the returns pre-2020
Running investor capital and off a bank line are two different things. And it's a lot harder to do risk arb when there is no "chinese wall" to peer over.
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