Morning Coffee: Elite hedge fund quant gets $30m job offer. And an M&A guy who hasn’t worked for two years is back in the game

“Hedge fund quant” is a pretty sexy job description, but the reality is not always as glamorous.  Hardly anyone spends their days trying to create new magical algorithms to beat the market.  Instead, there’s a lot of model validation, code optimisation and endless, endless data cleaning.  It’s often joked that as much as 30% of the job of being a quant is just sitting around making adjustments for bank holidays.

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However, at the top of the tree, there really are people who really do spend all day trying to research whizzy new algorithms to beat the market.  At TwoSigma, these secret formulas are called “techniques”, and people like Kan Huang live the dream of working in the intersection of “intellectually challenging” and “incredibly lucrative”.

They’re paid accordingly. Business Insider says Huang is now leaving TwoSigma to go to Cubist Systematic Strategies, and (presumably in a deal full of earn outs and clawbacks, but even so) picking up a rumoured $30m to do so.  It should be emphasized that in this particular part of quant world, it’s really forbidden to take trade secrets from one employer to another, so this $30m is the market price of Huang’s brain alone – the Point72 subsidiary is betting that whatever he did for TwoSigma, he can do for them from a clean start.

That’s one of the reasons that this kind of job move isn’t seen all that often.  When it comes to a bidding war, the incumbent employer has an obvious advantage from the existence of the current “techniques”, plus the fact that the effective gardening leave period is extended by as long as it takes to make new models, plus the risk that someone’s techniques won’t work as well in a subtly different execution and risk management environment.  With that many cards stacked in the deck, it usually ought to be possible to persuade a quant to stay.

But it’s hard not to notice that TwoSigma hasn’t been the most stable of ships recently.  Even ignoring the extremely public recent feud between its partners, there’s been a succession issue on the techniques team itself.  Ken Baron recently stepped down as head of the team in order to “chart his course to retirement”, and Huang was made interim co-head along with Jin Choi. 

The very phrase “interim co-head” has something of a fragrance of office politics to it – being a co-head is bad enough without having your bosses explicitly tell you that you might not be one in a short while.  It’s the sort of situation which often gets bankers of all sorts considering their options, and it seems that superquants are no different from the rest of us.

Elsewhere, congratulations to Miguel Otamendi, who is going to be the new global head of banks coverage at BBVA.  It’s a move which tells us quite a bit about the current state of the hiring market.

According to his LinkedIn, Otamendi was co-head of the EMEA FIG Group for Nomura until 2020, but for the last three years and ten months has been a “Senior Advisor / Consultant, freelance”.  In other words, not necessarily inactive and potentially making money, but probably having quite a lot of Zoom calls in cafes and co-working spaces.

Now he’s turned up in a global job at a respectable mid-tier European franchise where, in the normal run of things he would expect to be part of a team that’s involved at the co-manager level with distribution into Spain, in most of the big and medium-sized capital markets deals in a fairly active sector. 

It's a sweet job, particularly since he will be based in Madrid.  In a normal market, most people would have expected this to be filled by a middle ranking bulge bracket MD looking to move their family back from London or New York.

Instead, BBVA – who have been hiring quite aggressively to rebuild their investment banking franchise – have found someone who has a pretty good resume, but who has been trying to keep his contact book warm for nearly four years.  That might suggest that all the mid-ranking bulge bracket MDs are unwilling to make their lifestyle move right now, because they think 2025 could be a much better compensation year.

Meanwhile …

Liontree seems to want to grow out of its media and entertainment niche and step up to the “big boutique” division. It’s hired Ankur Luther from Morgan Stanley to be its head of tech advisory. (Reuters)

Sharon Yeshaya, CFO of Morgan Stanley confirms that the big areas in which they’re investing are “derivatives on the equities side” and tech. (Bloomberg)

The annual 360-degree review cycle is a strange banking ritual, particularly since it has hardly any effect on bonuses (which are determined by supply and demand in the labour market, we have to remind you).  It’s mainly an opportunity to settle scores and form cliques. (FT Alphaville)

It appears that even the most unbearable people on the trading floor have a limit to what they will admit to buying.  World Liberty Financial (the crypto venture colloquially known as “Trumpcoin”) only attracted 8,500 investors on the first day of its token’s “presale”. (WIRED)

Sometimes a realtor’s press release tells the story of a hedge fund career more eloquently than anyone else could.  Phil Falcone has sold his final trophy house – it was apparently “built to the highest possible standard with little regard for cost and every bell and whistle you could think of”, but “took a while to find a buyer, as there were some repair issues”. (NY Post)

Now that buying your way on to a sports team is considered dangerous, a consultancy run by a former Tiger Management analyst will explain to 11-year olds how they can get into Harvard the honest way.  Step one is to have parents who can afford $200,000 worth of consulting fees, apparently. (WSJ)

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