One Monday afternoon in New York last month, students wrapped up a statistics exam and scarfed down some takeout before heading over to a macroeconomics class.
For some, the exam had been an easy refresher, while others had spent all weekend cramming.
This may sound like a typical day in college, but these young people are not university students.
They’re the inaugural members of the “Point72 Academy” — a 15-month paid program designed to train college graduates as investment professionals for the fund.
Point72, a family office which manages the assets of its founder Steve Cohen and other employees, manages more than $US10 billion. It trades equities and makes macro and quantitative investments.
The academy program is the first of its kind, and it’s intensely competitive. It launched in August, and only 12 of 400 applicants were accepted for its first year. Spots are already filling up for next year’s class.
“They get to have exposure to companies at a very early age [and to] the senior management at a very early age in ways that, at other firms, the younger people don’t get,” said the academy director, Jaimi Goodfriend.
Typically, a young person hoping to build a career in finance will begin with an internship and a two-year analyst stint at an investment bank before interviewing with and taking a job on the “buy-side” — that is, at a hedge fund or private equity firm.
Analysts undergo rigorous training at the banks, but the work is often uninspiring — and gruelling. A common complaint is that analysts work excessively long hours scrolling through Excel sheets and putting together PowerPoint presentations.
As one hedge fund intern told us, “a monkey” could do the job of a junior banker.
Why would a hedge fund want to pay to teach people?
Buy-side firms begin recruiting from the banks as early as six months into the analysts programs — a full 18 months before they would typically join the firms.
The recruiting process takes up lots of resources — recruiting firms lead the effort and pick up sizable fees in the process — and the hedge funds, for their part, often wind up retraining the new hires anyway.
“I think there’s a big learning curve between when they start at a buy-side firm and when they become really productive,” said Goodfriend, who herself has worked in banking and on the buy-side.
“There are a lot of gaps to fill before you can become productive as an investor, and I think just recruiting out of a two-year bank is not sufficient to become that person.”
The firm is also up against major banks, private equity firms, other hedge funds, and even Silicon Valley for young talent.
According to Point72 president Doug Haynes, the academy “will help us get first crack at the next generation of investor talent before they might go elsewhere.”
What does hedge fund school look like?
The program begins with classes in the fundamentals of finance and economics. Students study accounting, statistics, and economics.
Around four months in, they graduate to more real-world pursuits: company research and modelling.
For about 10 months, they then cover companies in various sectors under the guidance of the academy. Then they get to start rotating across porfolio management teams.
Altogether the program runs about 15 months, but for some students it can be as short as 12 months, depending on their progress.
A job is not guaranteed at the end of the program, but the intention is for most students to get a permanent placement. In the words of Goodfriend: “If we want you, we will find a way to retain you.”
The class Business Insider visited was taught by Point72’s chief economist, Dean Maki, who joined the firm in January from Barclays.
His lecture covered everything from the Fed’s decision not to raise interest rates in September to China’s export and consumption trends.
The students — sporting shirts, slacks, and in some cases matching company fleeces — peppered Maki with questions: Why do people fear deflation? What might the real rate of growth be in China?
They were graduates of Boston College, the University of Illinois, and a handful of Ivy League schools. Several were army veterans, while others had previously worked in finance.
All of the students were male.
A direct path to managing money
One student, Sean Donlon, worked as a research analyst at Point72 for four years before joining the academy. He told Business Insider the program provided him a more direct path to becoming an investment manager, which is his ultimate goal.
Brian Mulvihill, another student, set out along the conventional investment banking route. He did an internship and one year as an investment banking analyst on the industrials team at UBS.
Mulvihill studied at the University of Illinois, where he first met Goodfriend, who lectured and directed an investment banking academy there.
We asked Mulvihill why he didn’t sit out his two years at the bank before jumping to the buy-side, like most analysts do. After all, it could be 15 months before he graduates from the academy and is able to begin working.
His answer: this route offers more of a guarantee.
“It’s really just a matter of, ‘Do I want to join Point72 now — or at least interview for that opportunity now — versus wait another year to try to join a team here?'” Mulvihill said.
He said it’s impossible to know if, two years from now, he might end up with a job at a prominent hedge fund like Point72. The job market, or the firm’s own hiring practices, could change in that time. This way, he is giving himself the best chance of getting a job at the firm.
And though academy classes have only just begun, he said the lifestyle is better than investment banking life.
The nature of the analysis they do is also different: “In investment banking, you’re often scanning the universe for consensus opinions. Here you’re really forced to take a view on — who has the right view? Is consensus right or wrong?” he said.
The work-flow is calmer at the academy than at Mulvihill’s former employer, too, and it’s easier to feel self-motivated to succeed.
That isn’t to say life at the academy is warm and fuzzy. The students are still expected to work hard, and Goodfriend told us the office is purposefully kept cold to keep everybody awake.
As for the pay? Neither Mulvihill nor Donlon would disclose what the academy is compensating them. But Mulvihill said that, next to his bank analyst pay, the academy’s is “definitely comparable.”