HF Investment Style - Single Manager vs Pod Funds
Hi Monkeys - trying to understand the differences in work/style in single manager HF vs multi manager pod hedgefunds. From what I pieced the single manager funds tend to put a bit longer term positions more focused on deep fundamental research, vs the market neutral funds that are able to be more tactical and take advantage of quick market movements, with core short/longs. Had a few questions:
What are the differences in investment styles?
Are pod/market neutral funds as bad as ppl make it seem? I don’t understand the hate.
How does the day to day change?
Is there a difference in the pod funds between Millennium, Balyasny, Citadel, P72? P72 seems to be the up and comer here but all of these seem to have done well last year, curious as to how they differentiate from others.
Not really concerned about comp difference between the different styles/funds.
Multi-managers (or platforms) and large funds do not differ in terms of investment styles. These represent different types of structures. The point of a MM is that they provide the infrastructure, capital and operational support so that PMs can be quickly onboarded or booted without much disruption. Certain MMs like MLP take drawdowns and risk limits much more stringently, and do not hesitate to fire after just one bad year. Some claim to have no strict drawdown limits, but I think that is bs.
One just rides beta the other are real investors
I actually don’t agree with this.
Many of the SM funds are high nets and have beta but also hold positions for 6-12-18 months.
Most of the MM funds are low/zero nets and are at least factor aware if not factor neutral and encourage much shorter holding periods given factor limits and leverage levels.
Depending on how you define investor, you could make the case for each. Perhaps the best way is that SM are not truly HEDGE funds. And MM are not truly LT investors.
That is very helpful. Other than tighter risk limits at some places, is there a difference between P72, BAM, Citadel, MLP? Or are they basically doing the same thing? I would guess they all have access to alt data, Corp access, etc. but more in terms of investment process/rationale?
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