See a lot of articles about MLP seeding people with $ for their own fund. How does this differ from joining MLP as a new PM/SPM? (Economics/payout, risk model)? is the main difference the naming + ability to raise external capital, or other considerations?
finally, what is the criteria to get seeded this way as opposed to joining as PM?
It's the exact same thing
Criteria is you need to be vain and want your special name on the door
Thanks. I was under impression they had option to raise outside capital same time though? Or is that true for other MLP PMs too?
All MLP PMs have a spin out clause now - also none of the "named" funds can raise external capital from day 1. They all are locked up only managing MLP capital for the first 3 years. There is literally no difference - even MLP will tell you the same.
Agreed
Can we put together a running list of the MLP seeded funds (which are effectively the same thing as being a senior PM at MLP)
Kodai
Meridiem (though MLP pulled capital)
Delta Global
Throughline
Taula (though they are macro)
Aaron Weiner (former Coatue)
Sone Cap (Echo street guy - though his is very small)
It seems like in L/S, Kodai is the biggest now, and Throughline will likely be the biggest. I’m sure there are many more
Never heard of Throughline. Or at least haven't seen any articles about them. Are they trading equity, credit, both, or something else? I'm familiar with Kodai, former GE tech guys mostly. Can raise external capital which helps them be largest AUM.
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Most of these have low-net, market-neutral or some RV backgroud like taula.
Coatue guy is the standout since he did Tac Opps at BX and Coatue. Is MLP giving him mkt-neutral money or is this their first venture into capital solutions? I know they hired some UBS guy for private credit as well so they're definitely expanding beyond mkt-neutral/highly-liquid strategies.
I’m pretty sure he’s doing tac ops type stuff/illiquid at MLP as well
Is the UBS guy from O'Connor?
Axe Capital, and Mike Prince Capital
Username checks out
I believe Helix Partners also falls into this category within the distressed debt world
Wallach (healthcare equities) from Citadel/Point72 as well based on recent Bloomberg article
tamridge
AlphaSys Global
Anyone know what the economic model for these businesses is, i.e for a Throughline or a Tamridge, is it something like a 25% payout at the top, with mid teens for PMs, or something lower?
It’s literally the same structure as any of the in house PMs
You keep on saying that across various questions but having spoken to several of them, it is absolutely not. Perhaps you're confusing internal teams with a brand (for ex. Passaic) as opposed to external teams like the ones referenced in this question?
Any thoughts on Passaic? They’ll probably spin out at some point too.
Spoken to who? Some analyst on the team? Yes I'm sure they know the intricacies of their PM's deal...
I think you're confused. Bottom line is these "funds" don't even have their own 13F filings which means that they aren't external funds at all. They are within MLP's umbrella and that means that there's no difference in the structure or deal or anything than someone who's a SPM at Millennium. They may have a different payout structure or whatever but that isn't because they have their own special fund name. Any SPM at MLP can get whatever payout structure they want if MLP is willing to underwrite it
TLDR Throughline and Tamridige aren't spinouts - they are only exclusively managing MLP's money and no different from any other SPM. The reason they have their own name is solely an ego thing from the PM. If they were true standalone funds they would have to file a 13F
They’re probably on the way to spinning out and raising external capital one day - there is a lot of groundwork and proving that they need to do before they can get there.
It’s wrong to think of it as just an ego thing. The way I think about it is that when you are only managing MLP money you are capturing [20-25%] of the economics per dollar of alpha, MLP is getting [15-20%] and then the LP gets the rest. If you raise external capital then the portion of your AUM that comes from external parties you get the % that MLP would normally take and LP gets the same deal (or slightly better deal). Ive just thought through it logically, obviously not privy to the intricacies of these deals - but surely that’s why the SPM is doing it? This is not just ego.
Every SPM at MLP nowadays has a spinout clause - so yes it is just ego if you want to have your own special named team to put on your Linkedin. These teams show up in the MLP internal org chart just as any other SPM team does
And on the economics - sorry but Tamridge or Throughline or whatever stockpicking group isn't going to command passthrough fees as a standalone fund raising external capital. The max they can charge is 2 + 20 (more likely 1.5 + 20). Do the math and that equates to around 30% of the economics per dollar to the GP and the remaining to the LP. But if you run a standalone you have to pay all of your support staff, back office, accounting, etc. you have worse capital relationships on the street so all of your fixed costs are higher. Economics are very comparable if not slightly worse as a mediocre spinout (yes if you are a top spinout commanding passthrough fees it's obviously different but none of these groups are)
So yes it really is mostly an ego thing
It's comical how everyone claiming it's either about the economics or the ego, and no one mentions arguably the biggest potential difference which is breaking free from MLP's risk, factor and drawdown limits.
its also useful for 1on1s!
Given that each team (internal and external) has their own deal, your answer doesn't help at all.
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Anyone have any light on mlp Concorde?
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Looked at this a few years back, Millennium BD was quoting 20% payout on performance + cover 90% of your expenses in first 2 years, but also a commitment to be the exclusive client for that duration, after which the idea was to diversify out with a scale up.
Hit it right on the head that the main appeal is to diversify the client base. LP community is a much stickier source of capital than pod capital, making it a tremendous resource to have, even if the economics on payout are similar.
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