Insanely high pod comp?
Can we get a thread going about how unreal some of these numbers guys are getting from pods - $40-60m guarantees even as high as $100 and I’m sure higher. And outside of guarantees, analysts making mid singles / junior PMs making high singles bonuses it’s ridiculous (in a tough tape too). There was a Bloomberg article recently, but then friends have also told me several recent cases for firms outside BAM. Most of the info I get on the pod world come from friends at the 2 big ones, and even the ones just having an “okay” year are getting 7 figures. I started digging around and spoke a bunch to friends this past week, and probably got ~20 data points on bonuses or guarantees: all of them were way higher than I expected if not jaw dropping. It’s the 4 big firms, not the struggling ones. And even among the 4, skew towards the big 2. We’re talking about people cumulatively making mid 8 figures if not 9 figures over a pretty short time span.
I don’t work at a pod, but I had no idea this was the case. The numbers (bonuses and guarantees) I’m hearing for PMs are just insane. It’s not so much the junior most guys, it’s more the senior analysts and PMs.
Everyone said 2022 was “peak-pod”, but seems like 2 years later the numbers have actually moved up…a lot. Is this the new norm? Will it continue?
The Balyasny figures surprised me… guys mentioned in the article are like late 30s/early 40s and never knew discretionary equity PMs could get $50+ packages (or even $20+ assuming the $50 figure is inflated once you account for potential clawbacks etc)
I know one of them pretty well. He’s worth every penny of that to BAM.
But agreed. And it seems like $50 isn’t even the high end, I’ve now heard a bunch higher than that.
Not surprised as good PMs/analysts should do big numbers in good years like 2024.
in the $50-100 packages - any breakdown of how much is deferred/buying out old deferreds + money to hire and build team as opposed to real cash to the PMs themselves. Any idea how much is guaranteed as opposed to potential based on book size P&L target and % payout?
Let's be real BAM is known to overpay and then fire everyone they hire a couple of years later..
But to your question these deals aren't structured as pure cash guarantees which makes the aggregate numbers quoted somewhat misleading. Kind of like how pod PMs quoting their leveraged X billion dollar book size rather than XXX million which would be more accurate. It's an ego thing
A typical deal may look like
So in aggregate this is a "50m" deal but you're not guaranteed majority of it. You still have to put up the numbers.
Also remember the real BSDs aren’t moving platforms. There’s massive selection bias in PM recruiting. You aren’t moving for a 50m guarantee if you are consistently putting up XXXm dollar PnL years
So overall what is a realistic take-home number for these folks in a given year?
I mean every deal is different, but I know one of the 2 mentioned in the article, and my understanding is he will actually collect $50m cash (subject to some clawback whatever)
Not every deal is structured like that. Also like it wouldn’t shock me if some of these guys have like $20-40m of deferred. Based on the bonus numbers I’ve been hearing, it has to be at least $20-40m deferred, and then at least a 2-3x lift to get someone to leave. Again these are just the numbers I’ve been hearing
But even if we just ignore guarantees (so just talking bonuses here), I’m hearing people my age make mid singles, junior PMs high singles, regular PMs 8 figures like clock work. And not for unreal performance - talking pretty average/above average but not home-run performance.
Again, the 2 big guys, not as much detail into B/P, but similar numbers wouldn’t shock me.
Also, I don’t think BAM overpays. The reason they’ve underperformed is they didn’t spend as much as C/M during the last few years to attract the same caliber of PMs.
It’s actually fucking insane what the guys at C and M are pulling in ok years. If only I had the balls to swing at a pod. The churn just feels too high.
Yea comp is great in general at C given avg pod better than rest, but good pods at some of the other platforms have people making much more than an analyst at c. Always look at pod first
I'm more familiar with C/M; what they pull is a function of how big the books are at C and how loose risk limits are at and how large % payout you get at M (given you are one of the larger more established pods ofc)
See this is where we’ve all been wrong about multi-manager churn. If the PM gets poached away by some big guarantee or if the PM gets fired, you simply get placed on another team. My friends have said the churn is way less than we think, and the churn at the big 2-3 firms is people getting guarantees vs people getting fired.
But yes, the numbers I’ve been hearing from the C/M guys are eye-watering. The analysts and PMs - not the junior-most.
Love the dichotomy of articles like this and others saying yo completely stay away from pods
This is a great point. I will say there seems to be a pretty massive distinction between C/M, B/P, and then everyone else. Would imagine people are referring to horror stories in the “everyone else” category.
Isn't the difference between your experience at either of the big 4 dependent on the pod lol? Platform matters very little
Others have hit on this but the numbers are misleading due to the structure.
I know someone very well (seen the contract) who got $15mm “guarantee” but similar to an athlete etc it is over time. Some of these are 2, 3 or even 4 year numbers. So yes you have a guarantee of that much but it is misleading to call it annual comp.
Think the fact that we’re arguing about whether a 31 year old is getting $7.5m / yr for 2 years or $15m for 1 year gets the message across
I think I can count on 1 hand the number of people at my fund/other tiger cubs that got paid that much in the same age range
I’m just saying it can be highly misleading. $50mm in a year vs over 3 is a BIG difference. In the case of the person I know it was 3 years so that is more in line with “senior” positions at big funds.
Wtf am I doing rotting away in my seat Jesus Christ
Any idea what coverage sector these PMs have?
I got a good sample. TMT (mainly tech not the M or T), healthcare, consumer, financials, industrials
Is it predominantly Tech / Consumer? Rarely see any success outliers like these for financial / industrial / HC. Why? Is it a structural sector selection empirical outcome? Less L/S spread in certain sectors? Less variance driving lower return excess at same Sharpe assumption?
Goodwin is HC but did some consumer at point
One day we’re going to look back at these days with nostalgia and just shock at the pay packages like we did for IB pre GFC
PM at one of the large MM shops (C/P72/BAM/M) in Industrials, chiming in with my two cent. While the above commenters are right in that a big part of the "50-75MM guarantee" needs to vest, is to buyout your remaining deferred comp from your current shop, PnL credit/other arrangements as well as money for hiring analysts for your own pod, one thing to keep in mind. After accounting for all the above, the guarantees are still very hefty for one reason. MM HFs are a phenomenal product for LPs, which they have been realizing over the past couple of years.
- MM HF returns have nearly zero market correlation and are largely protected from market downturns/crashes
- Despite relatively low risk (don't mistake volatility for risk), top pod shops have phenomenal returns. Citadel's Wellington fund returned 19.7% CAGR net of fees since inception, Millennium 13.4%, Balyasny 12.4%, Point72 10.9%, all of which are on par with SPY if not higher, without the risk
- Splitting AUM between pods that once again, theoretically have zero correlation and overlap with each other is another way to reduce diversifiable risk as a result of trading strategy or behavioral factors to nearly zero
Now onto why fees haven't compressed which gives MMs the funding to provide these comp figures
- L/S HFs are a bit of a natural monopoly given the scale/infrastructure needed to buy shit that is table stakes (Yipit, other alternative data vendors, satellite imagery, tech infra, quants, etc). Due to this, there are less small upstart funds unlike PE which saturates the market and compresses fees by fighting for LP dollars
- LPs in recent times (post-ZIRP) are pivoting away from private markets in their alternative asset allocation "bucket" toward MM HFs due to liquidity (not having their money locked up for an entire fund cycle)
“PM at one of the large MM shops (C/P72/BAM/
M) in Industrials”. Yeah right. You’re a banking intern look at your post history just regurgitating every reason said on WSO why pods have outperformed in the last few years. Don’t comment on topics where your only insight comes from WSO.
Very strange posting history behavior from this person lol
LOL mid 20s-30s HF guys finding out who LowCaliberTalent is.
LowCaliberTalent is an infamous shitposter who frequents the off topic forum with 4chan-esque posts. Not to be taken seriously at all.
Why the fuck am I getting monkey shit from lowly analysts? The points I'm making have been regurgitated on WSO by analysts who can take risks and have a sleeve because they're good points.
lol he said don’t mistake vol for risk
have you sent out the latest turn of the M&A pitch your vp asked for?
Is this only happening for equity guys? Are macro or quant PMs getting crazy deals like this?
Is this only happening for equity guys? Are macro or quant PMs getting crazy deals like this?
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