Physical Commodity Trading Offers: Hartree Partners Vs Castleton Commodities International (USA)
Hello! I currently have two job offers in the physical commodity space: one for an analyst position on the oil desk at Hartree Partners (HETCO) and another rotational offer in Castleton Commoditie's Merchant Operations division. I like the Hartree role due to it being an analyst role with direct exposure to traders, though the Castleton offer pays more (and the brand name is better?). For someone wanting to eventually become a trader, which offer would you recommend?
Bonus question: how does this compare to a BB S&T offer and other physical trading opps i.e. Trafigura Global Graduate Program and BP's IST.
Congrats on the offers. On a pure role basis, it sounds like you are leaning towards Hartree role which makes sense. Castleton is definitely well known in the commodity trading space. Is Castleton role cost of living higher since it is in Samford if I recall? It could explain why there is the salary discrepancy. Is Castleton rotational actually rotational? If so that is a good sign, since it means that they are willing to take the time to invest in you and groom you into a trader as opposed staying as an analyst which could happen at Hartree. Note that while the Hartree role is excellent in terms of exposure to traders, I would not discount how much exposure the Ops role has to trading, although in this instance you know more than I so if it really does sound like Ops doesn't deal with the traders it is important to know. All said without more info, I would go Castleton unless they are giving a truly boring role or you particularly like/dislike the culture at either shop.
On the bonus question, according to folks on this site BP IST is excellent, I met a few folks from Trafigura during my last internship, and they do not seem happy. Compared to BB, it is apples and oranges since physical trading is very different from trading at a bank. Generally if you make it to S&T in a front office analyst role first year, you are almost guaranteed you will trade a book at some point within the next couple years as opposed to physical trading where no such promises can/should be made. That said, I personally find the complexities of getting to true delivery of goods fascinating. Physical roles lend themselves to good exit opps doing stuff like supply chain management, running commodity divisions, logistics roles, etc whereas bank trading there are no exit opps besides an MBA and resetting your career which being at a bank you do have an advantage in doing.
Thanks for the in-depth reply, truly helpful. My concerns with Castleton are that the rotations are solely within operations i.e "physical operations, settlements, trading operations, and product control" (quoting Castleton's words), thus it doesn't seem that the role is intended to groom traders, rather it is meant to develop leaders in operations with potential to move into trading.
The one thing you really need to understand more is Castletons merchant operations role meant for grooming traders and what rotations you will be doing. Where the Hartree role gives you more exposure to traders like you said which will allow you to develop a strong commercial understanding of trading. BB and trade shops are quite different one is more flow oriented where as the other you get to take risk but again much easier to trade at a BB than a trade shop.
As mentioned in the other reply, it seems the rotations will consist of physical operations, settlements, trading operations, and product control, thought it was mentioned during interviews that a transition into the more commercial, trading side of the business might be possible.
yeah to me then that seems like its not really a trader grooming role. Personally id pick Hartree as the role is more commercial and will give you better skills down the road. If your goal is to be a trader a extra 10k or whatever now is a drop in the bucket in comparision to what you can be making if you actually become a trader. Id go where you can gain more commercial skills the Castleton rotations are basically back/middle office.
The thing is, nobody is going to guarantee you a trading seat. Get the right experience and build your knowledge and skills. The amount of time invested at being at x company for x years doesn’t entitle you to a trading seat either.
Network and get a long with people in your organization. Then develop strategies that complement the team and eventually form your own and push for a seat by getting right support from management. Don’t expect anyone to hold your hands.
Back to your question. Personally, I’d go for CCI. Actual operations experience trumps analytics in my opinion. You can’t understand fundamentals unless you have skin in the game - if you want to be a physical trader that is.
When they were involved in metals I didn't really see one as any more impressive than the other even CCI has a higher profile. Hetco and LDE/CCI have been around a long time.
Hartree. The CCI gig is MO/BO type stuff per your "physical operations, settlements, trading operations, and product control"; this does not lead me to conclude that it is an "operations" role as gets mentioned on here, i.e. scheduling. This to me sounds like more of a finance rotational program--settlements and product control being listed is my tip off--a lot of places have re-branded these types of programs to lure kids in that think it will lead to trading, it almost never does. Rotational programs are great at places that take them seriously and have them built out--BP, Shell--but a very high risk play at places that don't. Personally, I would take the desk analyst position, you will learn more about actually running a trading book.
Bonus: BP IST is your top of the line ticket it maybe have a shot @ trading via a rotational program. Trafi's I think is too new, haven't heard of any traders popping out of it yet (though I'm not talking w/ Trafi ppl that much @ the moment). I have no idea how this relates to banks, different beast and banks are exiting the space.
Awesome response, an interesting aspect of Castleton's rotations is that during any rotation it is possible to leave the rotational program to join the group your working in. If at any point I ended up in a "proper" operations role like scheduling, is it worth considering?
No. Look at it this way, you would effectively be betting that you would have better odds of leaving this program, during say your product control rotation, to a scheduling seat vs. a desk analyst. I don't think so.
If you want to work in trading you need to start building a risk focused mindset. Where is there greater risk in getting a trading seat: desk analyst or "operations" rotation?
Side note: the whole you can leave early thing could be a political landmine internally (it was at my old shop) so be wary of who is telling you this (is it HR trying lock you down? one of the managers in the program? someone who did the program?)
A few notes. Citadel is probably the top dog for natural gas trading. Vitol is the top for physical oil. It really boils down the the culture.
I would go to the shop where you get along with the people on your desk. Both Hartree and CCI are are great shops.
As for the Vitol comment. The shop has definitely changed. At least for the Houston. It is more bank like ( not necessarily bad) vs the Vitol of the old ( guys being able to drawdown quite a bit of bank and a very lax expense account !)
why is citadel top dog in natty gas? Physical or Financial?
Is Vitol trading more in financials?
Citadel is top guy for both. If you look at the index of customers for nat gas pipelines in the west. They are moving some serious volumes.
Vitol is the largest physical oil trader in the world
Citadel has a decent amount of cap out west but are non-existent east of the rockies (physically). I wonder how much the whole "Citadel is a top natty shop" gets overstated as west gas is the hot market at the moment.
Agreed. Citadel is probably the 'newest' shop throwing VaR at natty. The bought the WPX transport portfolio when they first started the phys business, so thats why they are huge in the west. Looks like their new strategy is to build out a more physical merchant style of business, as their fin business has had moderate success. That being said their nymex desk is pretty good and I would imagine its one of the bigger desks out there.
Guvnor/Trafi building out new desks. HET/CCI/Citadel/mercuria have been in the biz for quite some time and have both phys/fin desks. Six One looks like they are doing some interesting stuff. JAron has a big phys/fin presence but hard to know how much is flow, etc
For gas, you dont necessarily need to be a phys player as the fin market is liquid enough. However as a fin desk you wont get the flow from producers/utilities. If you understand how phys gas works, it puts you in a good position to trade financial storage and locational spreads but understanding analytics is more important. Phys trading is expensive, and to post all that credit,etc translates to higher costs, aka less % of PnL but the operational knowledge is more important for a phys role.
In the old world it was Operations to Analyst to Scheduling to Cash Trading to Term Financial Trading (if deemed you had potential) as you learned each step of the market. Business model was more about take out cheap assets (pay little EV as possible in pipe and storage assets) and hope you catch a regional blowup.
In the new world with more data & analytics the Hedge funds just directly higher the Financial Trader or the Analyst. HFs are looking more for analysts/traders that can model supply & demand and put together an investment thesis to put on a financial trade. Its becoming more of a "pod" structure/ PM approach
This entire thing is great, confirms some trends i have been thinking are developing on the natty side (jumped to pwr a few yrs back). Six One is interesting for sure (just took one of my old traders), going to be interesting to watch as they build out.
I, too, have been wondering about the business model of running a marketing/retail to pay for your transport, storage, capacity, etc. and then basically waiting for some basis blow-out and run a printing press (aka collect pennies via marketing and $100 bills been basis goes your way). Curious if you think that capital costs of running this kind of biz in a lower vol environment just don't make it work anymore.
HFs for sure have been wanting more data guys but for the moment they prefer to pull them from a physical shop. The pitch I hear is they want a "quantamental" person (quant skills + fundamental knowledge)
Both are excellent. I have friends at both. Either place has great people who you can learn a lot from.
I will offer you some perspective on it being "ONLY" an operations role
Commodities is the ONLY place where an operations person can save a traders ass over and over again. Personally, I would take (and have) a team of killer operations folks who can schedule, ship, who will wake up at 3am in the morning to reroute a coal train, move shipments across the globe, etc. without hesitation. Some of the smartest people I have ever met were operations. You will learn more that way than sitting on a desk trading natty vol. They are very happy calling their folks they have known for 20 years to request a favor to schedule some additional "whatever" to flatten the books over the weekend.
Most, not all, life long commodity folks learned this way. You wont be a billionaire driving a BMW and doing models and bottles three times a week, but you WILL learn and when you are ready, folks will be reaching out to manage and/or take risk.
Again, both are great. The deciding factor for me would be Bill Reed @ CCI. I like Bill very much.
Namaste
D.O.U.G.
My understanding from reading the rest of this thread is that some posters are concerned that the ops role is not a "true ops role", which supposedly are hard to come by. So it might be more data entry than traffic/scheduling. Not that this is necessarily the case for the role as no one really knows here, but that it's a possibility and so OP must weigh the risk against a more "certain" analytics role.
OP here, after speaking with the hiring managers, it seems the Castleton role will revolve around three areas: natural gas scheduling; foreign exchange risk management and "strategic initiatives," which seems to be a business development type role. It'll be around these areas as opposed to product control etc, because of location (the three areas mentioned are the only areas of operations at the hiring office). Knowing this, I am leaning towards Castleton. Hartree also seems like a great business, though it will be far more focused on derivatives (I'm not sure if this is a plus or disadvantange yet).
Another consideration is that Hartree is a more crude/oil role as opposed to CCI's more gas focused role. I don't have experience with gas, thought it does seem to be more of a growth area (and also more transition-able to power, which could be very interesting)
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