Thoughts on Ellington Management Group?

I'm an incoming intern at Ellington but I'm honestly not sure what they do. Can't find much information on their strategies and understanding the types of instruments they trade other than they trade credit. They seem to have a pretty solid AUM, but I also have no frame of reference for this number other than comparing to equity L/S or activist HFs. Does anyone have any information about the shop, especially reputation, culture, and strengths? Would also appreciate any advice on how to succeed in the industry.


Also, structured credit investing isn't a very well-known option in undergrad, which is why I initially was planning on doing IB. But should I be focused on staying at Ellington (ie; would it be a strong exit after doing IB, or are these just completely different worlds)?


Thanks in advance for the help. 

 
 

I’m not sure and don’t take this as fact at all, but I believe a lot of the AUM is tied up in more structured credit products oppose to the more typical, vanilla long short equity or credit. Also, a lot of I believe is systematic.

This is purely what I have gathered from articles and the website though so I may not be correct.

 
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Ellington isn't your average L/S or activist HF, you should have figured out that much by now. They develop quantitative strategies for structured credit products...RMBS, CMBS, CLO, ABS, etc. Those asset classes are largely independent...so you should figure out which group exactly you're going to be under, doubtful it's a rotational thing.

Don't be expecting to be making stock pitches. You'll be looking at mortgage or loan data. Also has very little to nothing to do with IB, although most HF investing has very little to do with IB. You hear about IB all over this forum but most quant funds could give a rat's ass about investment bankers, totally unrelated and useless skill set.

 

If you're looking for a fund that leans heavily on fundamental qualitative analysis then Ellington is absolutely the WRONG fund to be at. Even within the Structured Products space - I work at a competitor - Ellington skews more quantitative in their process.

Hedge funds in general are becoming MORE quantitative these days, not less. This is still true in L/S equities, and still true whether or not trading is systematic or discretionary. There's generally not much competitive advantage in anything else.

 

The asset classes they invest in (structured products/ mortgages/ credit) themselves require a blend of fundamental and quantitative reasoning, so I think anyone going here will find something they like whether they are more quantitative or fundamentally inclined. The firm is unique in the regard that they place an emphasis on the quantitative side, because a lot of credit shops are lead by generic finance and law types, not overpowered math guys. Furthermore, the quant work you see here won't get heavy unless you're working with pricing and prepayment models. At that point you would need a PhD in math or physics or an MFE at the very least. If you are on the investing side, you will likely be doing standard data analysis and maybe playing with alternative data. If you took some stats and a basic machine learning course, you'd know plenty.

 

Would someone from a direct CRE / RE lending and CMBS background be attractive for such a firm? No technical math background. Knowledge routed in real estate

 

I don't think any of the above commentors really answered the essence of the question the OP was trying to ask. Is a long-term career at Ellington (regardless of ABS, CLO, RMBS, etc.) better or worse than long-term career in IB, PE, Tech, etc.? 

The essence of the question is - is the asset class they play in sufficiently interesting and does it have enough runway that one could theoretically be doing this when they're 50/60. And at that age, would you be stuck as just a PM or is there enough whitespace to have more senior executive roles? 

It feels to me like this is too niche of a space to really build out a long-run career and there isn't much in the way of transferable skills/exit options, which means odds are that you're a PM at retirement. Some people might be fine with that, but if you're goal is more senior executive positions - Ellington probably isn't the place to start your career. 

Would love to hear other views if someone thinks I am wrong. 

 

I think insurance is a good option if you’re looking for HF exits on this side of the aisle. The ABS space probably has more optionality. I don’t see anything wrong with building a career in this asset class. I would however, only really consider this opportunity if there is no flagship HF offer in hand.

 

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