Morning Coffee: A hedge fund that seemed to overpay people is now being awkward with them. Ken Griffin says Gen AI is no good for alpha generation

Eisler Capital Management, the hedge fund that's winding down its portfolio by year-end after spending $396m on pay last year and then reporting a negative return of 1.7% this year to August, doesn't want its people to go.

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Bloomberg reports that Eisler has told its traders and its portfolio managers that if they leave before March 2026 their bonuses will be crimped by 30%. This applies to bonuses for 2025 and to previous years' deferred compensation.

The move is understood to be causing a fuss at Eisler, where people have been receiving 12 calls a day from headhunters inviting them to work elsewhere. Some have left already. 

People at Eisler appear to be mystified by the move and claim they don't have much to do right now anyway. 

They are, however, being paid well for apparently doing nothing much. Eisler's last set of accounts revealed that it employed 324 people last year and paid them an average of $1.1m (£820k) each. In its final investor letter, the firm said, "the challenge of attracting and retaining experienced money managers capable of deploying capital at scale within a cost structure acceptable to investors," had become a problem. In other words, it couldn't afford its people.

Eisler has a history of imposing punitive pay structures on its people. The fund operated clawbacks so that anyone who left within 24 months of joining would have to repay their sign-ons, while traders who left before year-ends would have to repay cash bonuses. Gross amounts were to be repaid in both case. Eisler's best portfolio managers left all the same. 

Separately, for all the talk about Gen AI doing the work of quants and software engineers, it seemingly can't do the work of portfolio managers at Citadel. 

Bloomberg reports that Ken Griffin told a New York investor conference that Gen AI "falls short" in the generation of alpha, even if it enhances productivity in other ways. Meaningful research done by human beings is still necessary, said Griffin.

Meanwhile...

Morgan Stanley overtook Goldman Sachs in equities trading in the third quarter for the first time since 2022. (Financial Times) 

Ted Pick says the investment banking flywheel is flying again: "It's happening across industry groups. It's happening across regions. It's happening against a generally more favorable regulatory backdrop."  (Seeking Alpha) 

Everyone wants a piece of the market for the $93 billion of ETFs listed in Taiwan, including Jane Street. (Bloomberg) 

SMBC is considering expanding its partnership with Jefferies and might include M&A and DCM too. (Bloomberg) 

In a worse case scenario, one analyst calculates that Jefferies could be exposed to $960m in losses from First Brands.  That's if Jefferies bails out its Point Bonita clients and there are regulatory fines. (Bloomberg) 

Peering into Jefferies' balance sheet. (Just Dario)  

Oliver Briars is going from Point72 to LMR, where he will trade consumer stocks. (Bloomberg) 

Two Sigma is closing its Eclipse Fund, which is tiny and only worth about $120m of its $70bn in assets. (Bloomberg) 

Sallie Krawcheck is still traumatised by being fired by Citi. "I was alone in my office, and those Wall Street offices always had CNBC playing in the background. I was at my desk, and I turned and saw a woman on the screen wearing what I thought was a pretty terrific-looking suit. It said she was leaving her company. I looked at it and thought, "Great suit, tough day . . . OH MY GOD, IT'S ME!" Then the phone and emails lit up." (Business Insider) 

It's not easy having a trophy husband. Sukhy Desangh, a 41-year old management consultant, was earning more than five times what her ex-fiancé earned. "I realized I was just bank-rolling him...When we were out for dinner with friends and family, he would message me to say, 'Give me your credit card and I'll pay with it.'" (Business Insider)

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