Hedge funds cultivated mercenaries. Now they want loyalty

Puerto Rico's Dorado Beach, known for its luxury resorts and stunning scenery, isn't an evident prime for a hedge money hub. But erstwhile a prized portfolio manager from Millennium, Izzy Englander's $79 cardinal hedge money behemoth, requested a relocation determination a fewer years agone to instrumentality vantage of Puerto Rico's generous taxation incentives, the steadfast was blessed to oblige.

A akin petition by a portfolio manager astatine Point72 to beryllium transferred to Milan, Italy, different taxation haven, besides got an enthusiastic response. Point72, Steve Cohen's $41.5 cardinal fund, arranged for the PM to enactment retired of a WeWork and, according to the astir caller regulatory filings, the outer bureau present includes six radical moving successful investing roles.

Several years in, the endowment warfare raging among the world's biggest hedge funds has reached a fever transportation — and employees are the beneficiaries.

A hiring crunch has raised the barroom for what firms are consenting to wage to lure apical endowment from rival firms. Firms are dangling wage packages successful the tens of millions — successful 1 case, $100 cardinal — to support apical performers, oregon poach competitors' talent.

Top endowment tin acceptable their ain presumption successful a mode that would person been unheard of adjacent a decennary ago. In summation to moving to taxation havens and off-the-beaten-path locales — Millennium has much than 140 offices, including Durham, North Carolina, and Boulder, Colorado — PMs person been known to invent caller titles for themselves oregon request to beryllium the 1 to inquire the archetypal question astatine meetings with firm CEOs.

This leverage extends down the ranks. Funds, erstwhile known for their cutthroat attack to cutting underperformers, person go much consenting to place a atrocious 4th oregon 2 by money-losing PMs, allowing them clip to retrieve their losses alternatively than instantly showing them the door.

It's not uncommon for a portfolio manager to enactment for 2 oregon 3 of the apical funds implicit a five-year span, including breaks to debar violating non-compete clauses successful their contracts. A PM who gets fired connected a Tuesday often has an inbox afloat of suitors by Wednesday, and immoderate PMs are adjacent getting re-hired by firms that erstwhile pink-slipped them for losing money.

"Historically, superior was the bottleneck," says 1 capitalist successful respective big-name hedge funds, who asked to stay anonymous successful bid to talk candidly. "Now it's 100% talent."

Founders, meanwhile, are progressively uncovering themselves connected the backmost foot. They're complaining privately — and successful uncommon cases, publically — that their hired guns, who they trained implicit decades to beryllium mercenaries, are behaving similar mercenaries.