Most respected funds out there?
Obviously the 3 big tiger Cubs + Pershing get the most attention, particularly on this forum. But does anyone have any intel on the lesser known funds that are equally, if not better, respected/prestigious on the street? Guessing there’s a small subset of funds with >$700m per head, but some names would be helpful. Thanks
I don’t think this is the answer you’re looking for but...
I’m not entirely convinced that those elite tiger cubs add any value whatsoever beyond a tech index. It seems like they just aligned with tech decades ago and enjoyed the ride. Could be completely wrong, let’s see if they can still perform if the tech factor goes to shit. Ackman’s track record just makes him look like a white collar gambling degenerate tbh.
While most don’t consider the multi managers as elite/prestigious, IMHO Citadel and Millenium should definitely be a lot more respected than all of those firms. It is much, much more likely that their performance is a result of skill.
IMO, the truth is somewhere in between. MMs are not the most exclusive in that there are many teams, but the best MM teams with long track records of sustainable alpha are arguably better than the Tiger Cubs and their tech/ factor investing. There's a misguided understanding of how AUM per head works, so Tiger Cubs may look good from the outside. The average or below average team in the same MMs are not as good as the Tiger cubs, as they still deserve some return attribution for getting the sector allocation right.
Not sure why OPs bringing in Pershing Square in the picture...
Definitely, they’ve been right about the sector for a while. But if you believe they’ll continue to be right and that they won’t deviate strongly from their tech mandate, then I’m not sure how much better their future performance (minus 2/20 fees) will be than an index, and I wonder if their LPs might ever come to that conclusion. Agreed about the MMs, certainly there are teams there that aren’t producing alpha, but my understanding is that the allocators are quite good at weeding them out quickly before giving them sizeable books anyway.
How does AUM per head work then?
Well, Ackman is also differentiated in that he does some publicized market manipulation. Those have been well executed (doing one right now where he wants Fed to raise rates).
Apollo
I think Sachem Head is more interesting than Pershing lol
Activist funds are always interesting. SH just took a position in USFD but I'm not sure what they can do to fix that one up.
It's always these duopoly type situations like with Elanco but yeah based on what I've heard it's gonna be tough to do for USFD what they just did with IFF. They're like super successful in Japan though. That's something I always thought was impressive.
Unfortunately I think there should be a distinction between what’s a great fund to work for and what’s a great fund to be invested in.
For a lot of people - the cut throat and apparent short term nature of MMs are deal breakers. You can be an excellent investor but sometimes, things are just unpredictable and Citadel won’t give a shit about a little bump in your career. SMs provide way more career stability which is very attractive to kids that want to be in public markets - especially if you’re coming from 2+2 where you’ve worked pretty hard (along with good luck), to get to where you are. The thought of going to an MM where you have to relearn a new skill while taking on the risk of losing your job in a short span, just makes it unattractive risk/reward if you’re coming from MF PE for example. The SMs have a stickier employee base and it really is true that they are lean teams where you do benefit a lot in the up years. So it definitely is much more attractive to work at an SM versus MM imo.
Which type of fund would I rather be invested in? Probably a Citadel versus Tiger cub. LPs don’t need to give a shit about culture of the firm or whether an employee has lost his job. Just make me money and the MMs seem to do it year in year out in a market neutral way.
The big tiger cubs have been around for awhile and have big capital bases. As long as that’s sticky (who cares why people allocate money to your fund), I’d rather work at an SM any day.
Well said. Totally agree.
MMs manage their people risk as well as their stock risks, as in, if one blows up, they just fire the person / pod and the firm is still okay.
Elliott Management? That firm is literally so secretive.
Just make sure you hide your ship
One of the things about Tiger Cubs that makes them so desirable is ease of promotion. In a long-only, nobody leaves the fund so it can be really tough to move up since your PMs are happy clipping $1m checks with little risk of getting fired.
The expectation at a Tiger Cub is that high performing senior analysts will leave to start their own funds and that they will have access to the "Tiger Cub network" to help raise money. This creates space for high-performing juniors to move up as well.
Some other tiger cubs/grandcubs that do well: Maverick, Whale Rock, Samlyn, Matrix, D1, Coatue, Light Street, Anomaly, Impala. There are a bunch of other ones that get started but stay smaller due to mediocre initial performance. Know one guy personally who worked at Tiger Global after 2+2 and performed well enough to launch his own fund, got seeded with $200mn and slightly underperformed the market for a couple of years. So rather than trying to raise institutional money, he just turned it into a family office. Not sure what the economics of that look like or if he had to return a lot of the capital but I think he's doing ok for himself.
There were a couple of funds started by former Archegos people after the blow-up that Bill Hwang really went to bat for. Forget what they're called tho.
i believe Hwangs proteges funds are called Red Ember & AriseN if i'm not mistaken
Some subjective takes here: D1, Farallon, Melvin, Abdiel, Sequoia, Elliot, Maverick, Viking, Third Point, Davidson Kempner, Element
Agree with most mentioned here. Curious why you included Farallon.
Diameter seems to do pretty well for an all-weather credit (and slightly more liquid) fund (better than Anchorage and Silver Point lately).
Scion Asset Management
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