Tomorrow's Titans
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2021 Tomorrow’s Titans TOMORROW’S TITANS 2021 Introduction Fifty Rising Stars HAMLIN LOVELL his is the sixth edition of handful of managers were seeded by family In the quantitative space, statistical learning and our Tomorrow’s Titans “Increased appetite offices, which are not usually disclosed. machine learning are areas of growing interest. report; previous reports At least six managers – ActusRayPartners, were published in 2010, on the part of Investment structures are most likely to be Blueshift, Leibniz, Rosetta, Manteio and 2012, 2014, 2016 and Cayman, Luxembourg or Ireland private funds Bayforest – are using some degree of machine 2019. The format has been managers to give or managed accounts, but a few have launched learning but all apply it differently in their own expanded from previous with a UCITS fund as their first vehicle: such as ways, and only one of them claims to be applying editions, which published interviews reflects a Venkat Pasupuleti of Dalton and Markus Schanta 100% deep reinforcement learning. fifty short profiles. This generally optimistic of BlueBalance. Tyear, thirty-six managers have short profiles, and Generally, the quantitative managers have fourteen have extended profiles written off the mood around hedge There is a wide range of assets under previously worked for larger quantitative back of interviews. management: some managers have raised more managers, such as AQR, Man Group, Tudor fund performance than $500 million or $1 billion – in some cases Capital Europe, and Credit Suisse Asset Increased appetite on the part of managers to give from day one – while others might have started Management, though one of them – Blueshift – interviews reflects a generally optimistic mood and asset raising.” with as little as $20 million, using a third-party came from a proprietary trading firm and another around hedge fund performance and asset raising, management company and outsourced service – Rosetta – was previously at an investment notwithstanding some anxiety around Brexit providers. Many have offered, or are still offering, consultant and OCIO. Some firms, such as 2021 and European fundraising for some UK-based discounted fees in founders’ or early bird share ActusRayPartners, are in a sense hybrids between managers. classes. A few managers started off working with discretionary and quantitative while others such Tomorrow’s a regulatory hosting platform of some kind, before as Haven Cove and Shikuma Capital contain both Titans The report highlights portfolio managers who are building out their own full scope management discretionary and quantitative sub-strategies. already leading managers in distinctive strategies Most of the managers – 45/50 – have launched company. – or close to becoming leading managers – with their own management company, and most The largest source of discretionary managers promising performance, the potential to grow of those have done so in the past four years. Strategies represented include seventeen equity seems to be the large multi-billion managers, assets, and in some cases with scope to further Notwithstanding the Covid pandemic, eighteen long/short; one equity market neutral; eleven such as Millennium Capital Management, develop their strategies as they grow. launched in 2020, and two in 2021, as the industry credit; three activists; three event-driven; two Citadel, Point72, Och Ziff and Appaloosa, though has swiftly adapted to remote working. A few fixed income relative value; two discretionary some managers have emerged from investment Nominations come from our extended network managers are about a decade old but took more macro; one systematic macro; one relative value banks such as Goldman Sachs. One manager, of readers, subscribers and contacts, including: time to develop a higher public profile. equity arbitrage; five CTAs or multi-strategy Tommaso Mancuso of Shikuma Capital, was pension funds; family offices; endowments; A handful of them have launched funds with quantitative; two commodity and one index and previously at pension fund manager Hermes. foundations; funds of funds; private banks and existing well-established firms, such as CIFC event arbitrageur. Another, Bluebell Capital Partners, has morphed wealth managers; insurance companies; prime Asset Management; Serone Asset Management; from running an advisory firm counselling brokers; administrators; custodians; depositaries; Rockefeller Capital Management; Dalton Irrespective of whether managers are discretionary activists to become an activist itself. law firms; accountancy firms; exchanges; Investments and Ambienta SGR. In some cases, or quantitative, many are keen to emphasize their technology providers, and others. these firms have also provided seed capital. factor awareness – and sometimes their factor A handful of managers have worked for managers Alanda Capital Management, and Eduardo Costa neutrality – especially after the violent factor who have featured in previous Tomorrow’s Titans of Calixto Global Investors. The geographic breakdown, with twenty-six Assets, structures and strategies rotation seen in 2020. reports, and there are some serial launches. managers in the Americas, nineteen in Europe, Day one capital, as well as strategic and The report features only four women, which is and five in Asia, is near to the split of industry acceleration capital after launch, comes from TMT equity long/short, and distressed As hedge fund managers are sometimes regrettable, though it is worth pointing out that assets, though we expect Asia may grow its share dedicated seeders, such as Borealis Strategic credit converging with other alternative investment our 50 Leading Women in Hedge Funds report in future based on the buoyancy of launch activity. Partners, Investcorp Tages, Stable Asset Most of the strategies are discretionary. The key strategies, we have an alternative credit which has run since 2009 has showcased several Management and Inception Point (which was strategy clusters of launches include equity long/ group, Alpha Blue Ocean, providing financing hundred senior women including portfolio There is naturally a bias to London and the New itself started by a former Tomorrow’s Titan, short including TMT, and credit, event driven, for smaller public companies, and there is managers and investment professionals. York tri-state area, but in the Americas, we also Keith Anderson). It has also come from hedge special situations and distressed. There is a lot of also some crossover with private equity. One feature managers based in the Bahamas; Miami; fund managers such as Fir Tree Capital and enthusiasm about the post-Covid opportunity set manager, Fabio Pecce, joined a private equity The majority of launches we have tracked are still Baton Rouge, Louisiana; Houston; Nevada and Los Harbert Management Corporation, and from fund for a new distressed debt cycle. Many managers firm, Ambienta, to launch a liquid strategy while all-male; some of the nascent female start-ups Angeles, as well as Montreal, north of the border managers who have become family offices, such integrate ESG into their investment process another, Acer Tree, was backed by a private have not reached a level of maturity, in terms in Canada. In Europe, locations include Athens; as David Tepper. to a greater or lesser extent, and some of the equity firm (Cabot Square Capital). A handful of organization or track record, where we can Amsterdam; Moscow; Lucerne; Stockholm and strategies are explicitly ESG-oriented, including of managers cross over into private equity realistically include them, though we are keen to Vienna. In Asia, the featured managers are in Insurance companies, such as Austria’s UNIQA Ambienta X, Thomist Capital and Longchamp investing, separately from their public markets’ monitor such early-stage managers for the long Hong Kong; Singapore; Mumbai and Perth. Insurance Group, have seeded some funds. A Dalton India UCITS Fund. strategies, such as Christian Vogel-Claussen of term, potentially for this and other reports. 2 3 TOMORROW’S TITANS 2021 defunct after Asbahi identified numerous red structures of companies, banks, sovereigns and liquidity intelligence strategies targeting Andrew Alexander flags including fraudulent accounting practices and asset-based businesses. Exposure is Giuseppe Bivona high Sharpe ratios and uncorrelated alpha. Michael Fine and and nefarious related party transactions. The firm mainly in Europe but also opportunistically in Data science and proprietary AI and machine Chief Executive Officer and Chief Investment manages approximately $150 million through emerging markets and the US. A wide variety and Marco Taricco learning are used to trade across asset classes Alexander Brown Officer the primary long/short fund and a dedicated of instruments, ranging from post-reorg’ – sovereigns, municipals, mortgages, corporate ActusRayPartners Limited vehicle invested in MiMedx. Since inception, the equity to bonds, loans, asset-backed paper and Co-Chief Investment Officers debt, interest rates swaps, single stocks and Founding Partners and Chief Investment Officer Hong Kong strategy has annualized over 24% per year with liquidation claims, can be traded based on deep, Bluebell Capital Partners ETFs – rotating around styles and swiftly and Chief Executive Officer/Head of Research and low correlation to US equities. Prior to founding fundamental bottom-up research. The strategy London adapting to changing market regimes. The Trading Andrew Alexander co-founded ActusRayPartners Prescience Point,