How You Get and Actually Keep a Job at a Multi-Strat Hedge Fund

Brian Yelvington (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Joe Weisenthal (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:22)

And I'm Tracy Alloway.

Joe Weisenthal (0:24)

Tracy, there's a lot we've discussed about multi-strategy hedge funds, but there's still a lot we don't know. And specifically, although I've come to learn things about comp and alignment and the importance of risk management and risk models and all that stuff, I actually don't know how the pods make good trade.

Tracy Alloway (0:45)

This is part 298 of our attempt to understand multi-strat hedge funds. That's what it is. But you're right, we haven't really looked at it from the, I guess, the perspective of a PM who is actually working there and what it takes to get hired, what it takes to avoid getting fired and things like that.

Joe Weisenthal (1:04)

I have a feeling that avoiding getting fired is a really big part of the story. You want to do well, right? You want to make money and all that. But I also get the impression that you just want to hang on to that seat for a really long time, and that a big part of, I don't know if the game is the word, but a big part of the game is, yeah, holding on to that seat, avoiding being part of any given call, avoiding having your name show up on Bloomberg in a story that gets read spiked about so-and-so out after losing 260 million or whatever in a trade.

Tracy Alloway (1:36)

This is exactly what I was wondering. How do the drawdowns actually impact a bunch of PMs? Is it really embarrassing and doesn't have an actual effect on their trading? I imagine it does, and it must have an effect on their confidence as well. But I am very interested in this subject, and we have joked a number of times about if we were at a multi-strat hedge fund, things like that. Maybe we'll get a better idea.

Joe Weisenthal (1:59)

Yeah, we definitely have to learn more about the pod level, because I do get the impression from talking to some people. We talked to Ronan Cosgrave recently. It's like, oh, you just put a bunch of people in a room, and if you have the risk management right, it kind of works out. Anyway, we're going to continue our journey of learning more about these big...

Tracy Alloway (2:14)

There's a natural affinity between podcasts and podshops.

Joe Weisenthal (2:18)

Oh, that's right. God, wouldn't you hate it if we screwed up, or we had an episode that didn't do very well and our traffic was down or something, and there was a big article on this, like, Joe and Tracy out after one month of underperformance on the podcast. Oh, yeah.

Tracy Alloway (2:32)

Well, this is the other thing, like, what happens if you outperform for, like, half the year, and then you underperform for the second half of the year, and how is that actually calculated in terms of your comp?

Joe Weisenthal (2:43)

Totally. And this came up before, which is that people who have really good starts at the fund level, you don't want them taking off risk just to lock in their annual bonuses. So these are important questions. Anyway, let's dive right into it. We have the perfect guest, someone with a long track record and experience across many aspects of this space. We're going to be speaking with Brian Yelvington. He's currently a consultant for executive search firm Carrington Fox. But he's been a former analyst and PM at several large multi-strand funds, Millennium or Capital, etc., a few others in there. And so Brian, thank you so much for coming on Odd Lots.

Brian Yelvington (3:18)

Thank you for having me. Great to be here. I always enjoy the podcast and enjoy hearing the varied subjects you guys come up with.

Tracy Alloway (3:25)

Thank you.

Joe Weisenthal (3:25)

We love to hear it. We're going to clip that and put it in the mix. Before we go on, why don't you just give us the real brief version of who are you and why are we talking to you? Other than the fact that if I go to your LinkedIn page, there are a bunch of famous companies listed on it.

Brian Yelvington (3:39)

Yeah, probably a few too many for my taste, to be honest. I've been one of the few people who've been both a pod PM, as well as helped bring those people into a large multi-strat. I left the risk-taking world and went to work in the business development area. Business development is just a badly disguised euphemism for manager selection, although it means very different things at very different firms. So I've seen it both from a junior analyst side to a senior PM, to the person who's the necessary, if not sufficient, gatekeeper at a hedge fund.