How times change. An increasing number of Wall Street traders are leaving the demolished wasteland of investment banks for the safety and opportunity of hedge funds. Hedge funds, meanwhile, are taking advantage of the exodus to build management operations that are starting to look more and more like…investment banks. Will it be long before a trading shop diversifies its business by buying an M&A boutique?
The biggest hedge funds are on a hiring binge, taking advantage of cutbacks at investment banks to recruit star traders, senior executives and whole teams to help them expand.
On Monday Goldman Sachs lost Driss Ben-Brahim, one of its top traders, to GLG Partners, London’s second-biggest hedge fund. This follows high-level recruitment from banks by Citadel, Tudor Investment, CQS and other well-known funds.
“The environment in investment banks is such that they don’t feel as secure where they are,” said Peter Clarke, chief executive of Man Group, the biggest listed hedge fund manager. “It is materially helpful to us.”
Many of the biggest hedge funds are still flush with cash, in spite of well-publicised problems for some funds facing investor withdrawals or investment mistakes.
And they look increasingly appealing for staff at investment banks facing falling bonuses, a clampdown on expenses and widespread job losses.
“People who a year ago I couldn’t get two minutes on the phone with, suddenly they are free for lunch,” said Chris Gaunt, a principal at Heidrick & Struggles, the headhunters.
“A lot of the senior executives at the big banks are not going to have much fun and they’re not going to make much money.
“The hedge funds are increasingly well-positioned to hire and to hire very well.”…