what is millennium management reputation
thinking compared to prop trading. which has more exits.
How is the job security at a multimanager vs prop shop like drw
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Mlp is regarded as a top multimanager, just look at the efinancialcareers average pay for hedge funds. Would put them in-line with Citadel, BAM, P72. PMs at Mlp either get poached from middle-market multimanagers or leave to run a substantially bigger book.
Pretty much all multimanagers have shit job security. I believe that Mlp runs a similar risk model to Citadel where if you lose 2% alpha vs benchmark, your book it cut by half.
Your comment is pretty accurate expect PM at MLP and other platform are not compared to a benchmark.
Drawdown is instead computed based on the portfolio itself.
thanks, I didn't know that. so how is a PM's book assessed if they are covering a certain sector? Ie, what happens to an industrials PM if the whole industrials sector declines?
He is immediately shot in the head and replaced with new blood for the next ritual sacrifice.
He should've known better than to run a book in a declining sector.
That PMs we are talking about can either long or short their coverage. So a declining industry wouldn't be a good excuse for having lost money.
As others have mentioned almost all MM require their PM’s to be market neutral (some factor neutral, etc). So if you cover industrials you can pick winners vs losers, winners vs the sector, etc but you can’t just be net long.
I thought MLP was 4% draw = halved, 8% draw = shut down. Maybe Citadel is half that because they run twice the leverage?
No, it all depends on the PM’s arrangement with the firm. No idea why people think there are some hard drawdown constraints etc when 99% of the time the answer is it depends.
Source: I’ve worked at 3 HFs (including both that you mentioned)
Job security is very poor at multi-managers, no question about that. There is a reason you see some of these hedge fund analysts who have been in the industry for a while who have bounced around all the big shops. Although nowadays I think places like Millennium try to place you in another group if your team is let go, but no guarantees.
The drawdown limit at Millennium is pretty tight, ~2.5% of capital from what I've heard. So if you are running a $1 billion book ($500 long $500 short), then anytime you experience a $25MM drawdown the team is done. Because of this, most teams are never fully deployed (probably deploy 60-80% of capital max) and are very risk adverse when it comes to concentrations on individual names.
Can learn more about multi-managers in the link below if interested:
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