What is the distribution of PNL look like at C/MLP? Feels like everyone talks about outliers (this guy got fired after a bad earnings call, or made $10mm as an analyst on $100m of PNL)
the factors are GMV x % return -> any sense of what the 0,25,50,75,90 percentiles are? This feels like a better way to think about an MM career vs staying in PE (or doing SM which is like PE except much worse NPV but the job is enjoyable and not a grind)
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lsd is okay, 5% on gmv is good, 10%+ is fantastic and rare. this is for market neutral at a MM
Just taking a rough guess would think below is somewhat reasonable, maybe this is low but feel many of the numbers here discussed are unrealistic in my experience:
25% Percentile- Negative
25% Percentile $0-10M PnL
50% Percentile $20-30M PnL
75% Percentile $50-75M PnL
90% Percentile $100M+ PnL
It depends firm to firm. Someone like C has fewer pods but more GMV per pod which shifts the PnL percentiles upward
Puts and takes but think if you were to take an average across the big4, this would be reasonably correct
Yeah when I wrote the above was thinking across the big4 if we are just talking C and MLP its going to be higher because C books are a lot bigger. An average pod across the four is probably $1.0-1.5B at P72 or MLP with 2-3% return which would be the 50%th percentile above.
in my mind the question was asking for what was “normal” so I think thats the right way to look at it, sure you can be on a $3B team at C putting up MSD% every year but thats not most new analysts experience
These number seem accurate but have heavy survivorship bias.. median pod PnL if you include all of the PMs that have been fired and out of the industry is probably 0 or slightly negative
Accounting, residual, or skill pnl?
This isn’t the right question to ask as you can’t normalize for a guy running $3.5 at citadel vs $500 at Balyasny
What you should ask is sharpe %tiles. If you can make assumptions around $vol allocations for a PM with XX years of experience in Y sector, you can estimate PnL percentiles with more accuracy
A book with $50 of vol that can do 1 sharpe can expect to make 50 of PnL in an average year
Too many generalizations involved in asking average PnL per pod across all sectors and firms, but gun to my head I’d say the above guy person is correct maybe slightly higher. But varies a lot obviously
There are PMs with >100m vol budget
Assume what 3-5% annualized vol? If you have 2.5% annualized, and assume sharpe range (obviously you can lose money but let’s just ignore that for simplicity sake) could be 0 - 4 or 5 = 0 to 12.5% roGMV
You can have a 5 sharpe for a year but it’ll obviously mean revert. That’s not sustainable but if we’re thinking in percentiles…
3-5% vol seems too high when a 2.5% draw will get your capital cut in half at many of these places.
Hard to say exact numbers, but from experience there are two stylized facts:
1. The median pod loses money.
2. The majority of PnL is made by a couple of pods ("super pod" or whatever you prefer to call them).
Edit1: The hiring tends to chase the PM who can eventually grow into this big pod, not focused on the average outcome. Relatively similar to VC model, but, perhaps, with less skew.
Comment 1 implies that over 50% of pods lose money?
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