Morning Coffee: Hedge funds’ need for juniors is getting intense. European traders have had their best time in a decade

If you heard the chief people officer of a multistrategy hedge fund say something like “people are pursuing a career instead of a job”, your first reaction might be to ask if they were feeling all right. Multistrats are more famous for providing not so much structured career development as the opportunity to occupy a desk for as long as you’re making money, and then to clear it out really quickly if you lose any.

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But, if you're a hedge fund, that kind of transactional relationship with your employees is expensive. When people are subjecting themselves to the rigours of “pod shop” risk management policies, they want to be paid handsomely for doing so.  This is why one of the biggest problems for the multistrategy hedge fund industry has been the war for talent and the associated cost inflation, with eight- and even nine-figure packages dangled for proven portfolio managers (PMs). 

Instead of constantly hiring-in new people, Business Insider notes funds like Citadel, Point72 and Balyasny are therefore trying to produce their own home-grown talent. Like a sports team, bringing stars through the youth academy is a lot more cost effective than buying them on the open market.  Two-thirds of the PMs in Citadel’s fixed income and macro groups were developed in-house, while 60% of Point72’s equity PMs have come through “LaunchPoint”, its program to develop analysts into managers.

It looks like these numbers are calculated in terms of headcount, though, rather than assets under management, risk limits or P&L contribution.  Some investors are apparently cynical about people who get into hedge fund investing through a graduate program, rather than by demonstrating their talent somewhere else.  As one puts it, “Do you still know how to hunt if you were raised in captivity?”

The pod shops do seem to recognise that there are different management styles needed to deal with juniors stepping up, compared to high-profile external hires who are presumed to be big enough and nasty enough to look after themselves.  Ilan Weiss, who manages a technology portfolio for Balyasny, says that coaching junior analysts into running their own trading books is “frankly … not that much different from being a therapist”. 

Although one way in which it is quite different from being a therapist is that at Balyasny, when one of your analysts leaves your pod to run their own, you often get “some type of economic interest” in their performance.  For managers who are particularly good at recognising and developing talent, this could be a nice little earner.

But you first have to find the raw material.  Multi-strategy firms are now using almost as many analytics and quantitative measures to try and select top graduates and match them to the right mentors as they do on managing their own portfolios.  There’s an obvious reason for doing so, but it’s an intrinsically difficult problem and luck probably still counts for a lot.  As one executive puts it, “half of the battle in becoming a PM is getting in the right situation”.

Elsewhere, the year of “Hotline Bling”, the first Minions movie and that dress was also, for a very long time, the last “good year” for European trading revenues.  The Eurocrisis was being resolved, interest rates were low and Deutsche still had an equities business, back in 2015.  The record that was set that year got broken in 2022, but it has been absolutely smashed in 2025, with total revenues set to reach €43.9bn.

The causes were partly external and partly internal.  Trading businesses always benefit from “good volatility” – not too much but not too little, plenty of changes of direction in an underlying bullish trend.  And although it seemed frightening at times, the global climate delivered exactly that.

But more importantly, the secret of making money in trading is usually “not losing it”.  As well as a good year for client volumes, 2025 was the first year in a long time when we didn’t see at least one major European bank wasting several years’ worth of profits on some silly mistake or other. Although the traders and risk takers are likely to have been well-paid for their efforts, the risk managers and controllers ought to be looked after too.

Meanwhile …

Verition Fund Management has licensed the Photon trading technology platform, which was regarded as one of the crown jewels of Eisler Capital now that it’s winding up.  They have also hired a number of former Eisler employees to work on it.  (Bloomberg)

Raine Group is betting that the current AI panic will subside and there will be plenty of tech and media IPOs in 2026.  They have hired Anthony Kontoleon, most recently at a wealth management firm, but an experienced former equity capital markets banker at Credit Suisse. (WSJ)

The head of product for Claude AI models at Anthropic says that it’s actually “a little bit of an overreach or overreaction” to say that their latest launches are going to undermine everyone else’s business model. (Bloomberg)

Crispin Odey’s lawsuit against the Financial Conduct Authority goes on – in a ruling over what he is or isn’t allowed to sue for, it seems that he will get to make the case that, for some reason, the regulator had an “animus” against him. (FT)

It might be a bit much to describe the former Milan office of Credit Suisse as “iconic” or “a landmark” – they do have the Duomo and La Scala there after all.  But the fact that Goldman Sachs is moving in to the building does most likely indicate a significant expansion of their ambitions in the Italian market. (Bloomberg)

James Fishback became a minor financial celebrity a few years ago after he tried to sue Greenlight Capital for refusing to agree that he had ever had the title “head of macro”. He’s apparently been busy since then, racking up a lot of other colorful episodes on the way to his current campaign to be Governor of Florida. (The Bulwark)

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