Smaller platforms
Is there any reason an established PM would choose to go to a smaller/ upcoming platform (e.g. Verition, Walleye, Eisler, Brevan etc.)
Struggling to understand the pitch versus just going to MLP/Citadel
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Calling brevan an upcoming platform in the same sentence as a walleye or verition is off by miles.
If you are a senior analyst or junior pm trying to scale you may consider smaller platform. Some shops aren’t really platforms and only focus on a core strategy. Other than that I can’t see the logic of joining the smaller shops either.
I mean Brevans platform business is probably on the same scale as the others I mentioned. Tbh even Baly I would consider a smaller platform
You can’t really look at the current AUMs to make your comparisons you have to look at the speed at which they raised. Brevan and Baly a couple of years ago were around 5-10bn. Just because they are 20+ now doesn’t mean they have the expertise/ infra to run that amount of capital. Thus I would group them with the smaller platforms
Brevan has been around 20+ years, most smaller platforms not even 10.
Look at the caliber of PMs. Walleye and verition literally hire “kids” and have high turnover. PMs at brevan have been there a decade plus. Can’t compare the strategies either (macros vs equities/options trading). Literally comparing brevan to those guys couldn’t be further apart.
Baly is to be placed in the same group of the other big multi Strat funds Citadel, P72, MLP. A bit smaller than those but multiple leagues above bravan and the other you quoted.
Some of the smaller platforms have more forgiving risk and drawdown limits than the large 4-5 MMs.
So if you run a higher-vol strategy, you might be more comfortable at a smaller MM even if earning a lower payout and lower AUM.
Think that’s their claim but I have encountered this not to be the case. May differ by strategy. Just think their degree of sophistication (risk mgt, systems, career path) is so far off the big 3.
less sophisticated risk mgmt is better for a PM tho. bad for the fund sure but as a PM you can try to exploit it.
I don't see much of a case for smaller platforms unless its a player/coach opportunity where you are heading up or building out a group. MLP/Citadel in particular will beat out any fund in terms of economics/comp/infrastructure if they want to make the hire. More lenient risk limits, PM development, collaboration is usually the pitch for the smaller platforms but if you have an offer with the big guys its generally a no brainer. None of this is to say that the others aren't great firms with massive upside.
Hypothetical but Verition gives me $10m guarantee and 30% payout in first couple years vs Millennium giving me $5m and 15%. Same book size, no brainer.
Hm I guess but the main inconsistency is that in order to command an 8 figure guarantee you have to have been managing at least 500m-1bn. Afaik Verition won't allocate those types of book sizes to new PMs because they are small. Therefore you definitely will not get the same book size with a 10m guarantee from Verition. MLP won't bat an eye at giving you a 30-50m drawdown to start if you are good.
Yes you are correct. I was making up the numbers to give an extreme example but higher payout (but smaller book size) is a fairly common thing you see
Agreed. Sure, accelerators can be part of the equation and help give some leverage. We can also discuss deferred comp which is better at MLP.
Highly doubt that sort of payout. Maybe at a bluecrest / family office.
I haven’t heard $10m from a Verition but extremely common amongst blue chip MM obviously. Usually poaching an SM analyst with track record to MM or an analyst/PM from adjacent MM. Debatable how much people dress up their track record.
The player/coach model is the primary way to get more senior talent. If you're given the chance to run a business unit and build from scratch with potential management co/partnership upside as AUM grows I'd argue that (with the right team/partners you trust) it could be a better spot than a big 3. The wider risk limit is the other major point, as often the smaller shops do let you run less "tight" from a shock/scenarios perspective (having been at both a big 3 and smaller shop) which for certain strategies is helpful.
The sweet spot for the smaller platforms hires are generally those who either are #2 guys at existing pods who aren't given the nod for whatever reason (experience/politics etc) or sellside traders who aren't senior enough to walk into a big 3 book at the PM level. Some of the small multis are more collaborative/focus more on internal talent development (since they can't pay up for the superstar hires).
I will throw the question back at you, forget “established”. If you could make the exact same payout at a smaller platform would you rather work at Citadel/MLP?
Many reasons already on here explained why to consider the difference between the two. The main reason I see in this thread that Citadel/MLP wins hands down is if you are uber bullish your book’s performance they will probably give you the biggest axe. If you are even neutral your payout many reasons to consider otherwise.
What are the other reasons? I don't really understand your logic.. are you saying if you think you suck you should go to a small platform? If you are a PM and aren't bullish your own book you probably shouldn't be a PM
Sure, I will try to explain what I mean. The initial assumption is 1) PM sucks 2) PM has great year.
Reality is there are many “neutral” years. The two shops you mentioned are notorious for believing the binary scenario. They are well known to demand a certain %risk deployed to maintain/grow AUM. They also have little issues allowing central use of resources nor adding a PM that trades basically your strategy/market. That is the culture of those firms. Further as already mentioned they do not truly budge on risk tolerance and overall thinking around risk.
On the other hand as people have pointed to in this thread the smaller platforms are not that “stringent” in their thinking and will allow to build a business your way. Be it looser risk limits, making sure no one else will trade your product/market, coach/player example
So again without a doubt the year where your market/strategy has record volatility you probably want to be at Citadel/MLP but the many other years the formula to get to your “payout” goes beyond I need the biggest bat to swing when the market is just offering me pitches out of the strike zone.
Friend works for one of the smaller firms you listed - he said it's because those firms are paying so much in guaranteed money for a year+. He also wanted to move back home in a LCOL compared to NYC
This guy has nailed it. Majority of people, regardless of years of experience/where they are moving from, will have deferred. The big MMs have no problem buying out huge amounts of deferred and give extra on top to bring in more experienced people with a track record but they won't to the same extent for someone less experienced/moving from sell side. The smaller MMs are the opposite where they won't dish out the blockbuster buy outs but will happily buy out 1-5m packages (deferred/sign-on/guarantee/accelerator) from someone less tenured that has shown potential. Essentially, if you don't have a long track record, you leave money behind to move to a big MM vs a small MM and the opposite if you do have a long track record. At the end of the day it doesn't really matter - if you go and do well at a smaller MM, the big MMs inevitably come knocking.
I myself was in this position when I first moved to the buyside. I had an offer from a large MM as well as a small MM. In monetary terms, the offer from the small MM was almost double the offer from the large MM.
I had 2 Senior Analyst offers when I was last looking - 1 from Citadel (with a sizable guarantee) and 1 from a smaller multi-strat (zero guarantee). I took the small MM offer for a few reasons:
1. I don't trust Ken Griffin and have heard too many complaints from former PMs there.
2. I have an incredible amount of flexibility to go downcap and trade other asset classes which is a significant part of my strategy (~40% of cumulative P&L).
3. My strategy is not infinitely scalable.
#2 & 3 combined mean what I give up by not being at a mega multi strat (AUM, other resources) are way less valuable than what I gain by being at a smaller multi-strat (freedom, duration, job security).
People probably won't believe it but I wouldn't leave my current gig for a PM seat at Citadel for a 8-figure guarantee - I can make more money where I am and be happier at the same time. Every book/strategy is different and the less your natural book looks like a mega-multistrat book (large cap, liquid, earnings/catalyst-oriented), the more attractive the smaller multi-strats will be.
What did your path look like leading up to those 2 offers? Curious what sort of setup gave you the latitude in the first place to develop a flexible strategy (e.g. trading equities + other asset classes, with duration)
Single manager
What's the book's high-level strategy?
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