In March, Gabe Plotkin's Melvin Capital took a step back from digging itself out of its GameStop hole.

The $8 billion equity hedge fund lost 7% last month, finishing the first quarter down almost 49%, sources told Insider. The average hedge fund, Hedge Fund Research found, made 1% last month and earned just over 6% over the first quarter. Melvin declined to comment.

The firm was the focus of a retail-trading frenzy, coordinated on Reddit messaging boards, of GameStop, a video-game retailer that Melvin shorted. The short squeeze caused one of the best-performing hedge funds of the past half-decade to lose billions in a matter of days, which in turn caused losses at managers such as Maplelane Capital and D1 Capital.

After January, when Melvin lost 53% and received $2.75 billion in new money from Steve Cohen — the founder of Point72 and Plotkin's former boss — and Citadel founder Ken Griffin, Plotkin's firm quickly bounced back with 22% returns in February.

A Bloomberg piece on the firm's February performance reported that Plotkin was taking smaller short positions going forward and had stopped using exchange-traded put positions — which are included in managers' regulatory filings — to bet against companies. He also instructed his data-science team to monitor social media and other message boards for conversations around crowded retail-trading moves, something many funds invested in after the GameStop saga.

Plotkin, who is a minority owner of the NBA's Charlotte Hornets, was one of a few finance big shots to appear before a House of Representatives committee in February to discuss what happened in the last week of January. He said in his testimony that his family dealt with anti-Semitic messages and threats while Reddit traders piled into GameStop, AMC, and other companies he had bet against.

He also made it clear that while his firm received billions in new capital from Cohen and Griffin, the money did not bail out his hedge fund, which is named after his grandfather.

"To be sure, Melvin was managing through a difficult time, but we always had margin excess and we were not seeking a cash infusion," he said at the House hearing.

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After the Reddit-fueled GameStop saga that ensnared funds such as Melvin Capital and D1 Capital, Maverick Capital's founder, Lee Ainslie, told investors that his $9 billion fund was poised to take advantage of the trading landscape.

Two months later, it's clear Ainslie wasn't bluffing.

Maverick is dominating 2021 so far, returning 20% in March alone to fuel a 36% gain for the first quarter, sources told Insider.

The firm did not immediately return request for comment.

It's unclear what moves Maverick made following January's market volatility. Regulatory filings from February for the firm's portfolio show that Facebook, DuPont, and Microsoft were the manager's largest holdings to start the year, and each of those companies have seen their stocks rise, with Microsoft's 17% jump since the New Year leading the way.

Maverick's fifth-biggest holding, manufacturing equipment-maker Applied Materials, has increased by more than 50% since 2021's start.

The impressive March performance comes after Insider reported in February that the firm's top stock picker, Andrew Warford, would be leaving the firm to run his own family office. Warford, a longtime Maverick employee, became a managing partner in 2013 and still owns part of the firm.

Fellow Tiger Cubs — funds founded by people who worked under the legendary Tiger Management head Julian Robertson — did not enjoy March nearly as much as Maverick and Ainslie. Lone Pine, Coatue, and Tiger Global all lost money last month.

Sources told Insider that Tiger Global lost 5.3% last month and is up 0.8% for the year through March. The Chase Coleman-led fund declined to comment. Melvin Capital also fell in March after chipping away its GameStop-caused losses in February.

The average hedge fund, Hedge Fund Research found, was up 1% in March and just over 6% for the first quarter.

The biggest Tiger Cub blowup last month was from a family office, not a hedge fund. Bill Hwang's Archegos Capital lost tens of billions in a matter of days thanks to highly leveraged derivatives trades that went sideways.

Archegos' collapse led to big losses at banks such as Credit Suisse and Nomura, and could be the impetus for the Securities and Exchange Commission to add more transparency to derivatives markets.

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Nomura is reportedly tightening financing for some of its hedge fund clients in the wake of the $20 billion collapse of Archegos Capital.

Japan's largest brokerage is facing an estimated $2 billion loss due to the family office blowup, according to unnamed Bloomberg sources.

The Archegos collapse started when the family office, run by Bill Hwang, used total return swaps to take on leverage and place concentrated bets on a handful of stocks like ViacomCBS and Discovery.

Then a decline in share prices sparked a massive margin call that Archegos was unable to meet, leading banks to liquidate the family office's assets.

The result was combined losses of $10 billion for global banks, according to estimates from JPMorgan.

Now in order to prevent similar blow-ups in the future, banks are taking action to reduce risk associated with hedge fund clients. The Securities and Exchange Commission has also opened an investigation into the matter.

Specifically, Nomura is tightening leverage for some clients that were previously granted exceptions to margin financing limits, Bloomberg said, citing people with direct knowledge of the matter.

The Japanese firm is the second bank to take action after the Archegos collapse.

Credit Suisse said earlier in the week that it will change margin requirements on swap agreements to dynamic from static after the collapse. Dynamic margin requirements force clients to post more collateral as positions move down, rather than setting a fixed margin requirement at the onset of the leverage contract.

Before the Archegos implosion, Nomura had been hitting on all cylinders with net income reaching a 19-year high for the nine months ended in December.

Now though, the bank has been forced to cancel the planned issuance of $3.25 billion in senior notes and share prices are down roughly 20% from March 26 highs. 

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Nomura is reportedly tightening financing for some of its hedge fund clients in the wake of the $20 billion collapse of Archegos Capital.

Japan's largest brokerage is facing an estimated $2 billion loss due to the family office blowup, according to unnamed Bloomberg sources.

The Archegos collapse started when the family office, run by Bill Hwang, used total return swaps to take on leverage and place concentrated bets on a handful of stocks like ViacomCBS and Discovery.

Then a decline in share prices sparked a massive margin call that Archegos was unable to meet, leading banks to liquidate the family office's assets.

The result was combined losses of $10 billion for global banks, according to estimates from JPMorgan.

Now in order to prevent similar blow-ups in the future, banks are taking action to reduce risk associated with hedge fund clients. The Securities and Exchange Commission has also opened an investigation into the matter.

Specifically, Nomura is tightening leverage for some clients that were previously granted exceptions to margin financing limits, Bloomberg said, citing people with direct knowledge of the matter.

The Japanese firm is the second bank to take action after the Archegos collapse.

Credit Suisse said earlier in the week that it will change margin requirements on swap agreements to dynamic from static after the collapse. Dynamic margin requirements force clients to post more collateral as positions move down, rather than setting a fixed margin requirement at the onset of the leverage contract.

Before the Archegos implosion, Nomura had been hitting on all cylinders with net income reaching a 19-year high for the nine months ended in December.

Now though, the bank has been forced to cancel the planned issuance of $3.25 billion in senior notes and share prices are down roughly 20% from March 26 highs. 

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Brevan Howard has hired a chief technology officer for one of its largest strategies as the $13 billion hedge fund ramps up hiring amid a streak of strong returns. 

Gurpreet Singh, formerly the CTO at Point72 Asset Management's Cubist unit, is set to join Brevan Howard's Alpha Strategies fund next week as CTO, according to sources familiar with the matter. Singh departed last summer after more than a decade at Point72.

Brevan Howard declined to comment through a company spokesman.

The hedge fund has been angling to build out the Alpha Strategies unit — a multi-manager, systematic fund with a focus on relative value and directional strategies in fixed income and FX. It made a rash of hires last summer, including hiring a US business development head for Alpha Strategies.

The Alpha Strategies unit, which launched in fall 2018, returned 15.4% last year and accounted for nearly 30% of the master fund's assets, according to a report from Bloomberg.

It was one bright spot among many for Brevan Howard in 2020, as its master fund returned 27.4% — its best mark since 2003, according to Bloomberg. The firm, which saw assets dwindle to $6 billion in 2018, has rebounded the past two years, with assets more than doubling to $13 billion.

Singh's arrival adds seasoned quant technology firepower to the Alpha Strategies fund. Singh held senior tech positions at billionaire Steve Cohen's investment firms for 17 years, most of it in the Point72's Cubist Systematic Strategies division.

He worked at SAC Capital — the predecessor to Point72 before Cohen came under fire from regulators and temporarily converted to a family office — from 2003 to 2009 as director of trading technology. He helped build Point72's quant-trading platform as head of multiquant technology within Cubist up until 2014, when he was promoted to CTO of the unit, according to his LinkedIn bio.

Singh served as interim CTO for the whole firm for a year starting in 2018, and he added oversight of trading and compliance technology to his purview before departing in June 2020.

Longtime Cubist head Ross Garon left last summer for Millennium Partners and was replaced by former PDT exec Denis Dancanet.

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The exodus at Clint Carlson's eponymous hedge-fund manager continues.

The $4.8 billion Dallas-based firm has lost several top executives recently including chief legal officer Joe Brucchieri, head of human resources Nicole Mascera, and deputy chief legal officer Whitney Fogle Lewis. Chief risk officer Jehan Akhtar is also set to retire in May.

Carlson declined to comment. Brucchieri, Akhtar, Mascera, and Fogle Lewis did not return requests for comment. 

The manager has been bleeding assets and talent for years, as previously reported by Insider. The firm's investment headcount has fallen from 61 in 2019 to 36 this year, while firm-wide assets have dropped by $3 billion over the last two years.

The firm also lost its head of equity relative value John McCarthy at the end of last year, sources tell Insider.

The equity relative value strategy has lost roughly $100 million in assets over the last couple of years. McCarthy had been at Carlson since 2006, and took over the strategy in 2014. A source familiar with the firm said a replacement has not been named.

The firm has made a recent hire to add to the investment team, sources tell Insider. Timothy Mulvihill was hired in April as a credit analyst focusing on CLOs, after working at Invesco as a portfolio manager for the Atlanta-based firm's Fundamental Alternatives fund. Tripp Deichmann, who joined Carlson in 2018, also was recently promoted to portfolio manager from analyst covering REITs within the equity relative value strategy.

The firm's two multi-strategy hedge funds, Black Diamond and Double Black Diamond, have seen a significant drop in their assets, as the two funds went from managing a combined $3.6 billion in 2019 to less than $900 million this year. Performance in the two funds in the first quarter this year was 3.3% and 2.2% respectively, as Carlson — which uses low leverage and does not have much beta, if any, in its portfolios — trailed the average hedge fund, which returned more than 6% in the same time period.

Akhtar is the longest tenured of the employees leaving, according to his LinkedIn. He joined Carlson 20 years ago, and took over as chief risk officer in 2019 after his predecessor Michael Palys resigned. A source familiar with Carlson said he is retiring and will be replaced by Adam Lewicki, who is the firm's current head of ESG strategies.

Brucchieri, the firm's chief legal officer, joined Carlson in 2017 after working for then-named Och-Ziff, since renamed Sculptor Capital Management, in London. He will be replaced by the firm's chief compliance officer, Michael Umayam, a source tells Insider.

Fogle Lewis, the deputy chief legal officer, meanwhile had been at Carlson since 2014 and was promoted to her current title in 2018. Mascera, the firm's head of HR, joined the manager in 2016, working out of the firm's New York office, after stints at Morgan Stanley and UBS. 

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• David Einhorn accused regulators of failing to protect investors.
• The Greenlight Capital chief defended the GameStop investor Keith Gill.
• Elon Musk and Chamath Palihapitiya supercharged the GameStop short squeeze, he said.
• See more stories on Insider's business page.

The elite investor David Einhorn blasted market regulators, accused Elon Musk and Chamath Palihapitiya of juicing assets, and praised the GameStop champion Keith Gill in a letter to Greenlight Capital investors this week.

The Greenlight president also highlighted the "Big Short" investor Michael Burry's exit from Twitter and pushed for greater scrutiny of Archegos Capital, the family office that blew up in March. Einhorn's latest letter was obtained by ValueWalk.

Here are Einhorn's 11 best quotes, lightly edited and condensed for clarity:

1. "The Fed wants to be ahead of the curve on the downside to protect the stock market and corporate bondholders the economy. Behind the curve is fine on the way up no matter how frothy the stock market the recovery is."— suggesting the Federal Reserve cares more about stock prices and corporate profits than the economy.

2. "If we swing a little less hard, we should hit more balls."— on his decision to short fewer individual stocks after several of Greenlight's positions were hit during the meme-stock frenzy.

3. "Investors discussing why they think GameStop (or any other stock) should go up or down ought to be encouraged. There is no reason to drag anyone before Congress for making a stock pick."— defending Keith Gill, who goes by Roaring Kitty on YouTube, and his "great call" on GameStop.

4. "The real jet fuel on the GameStop squeeze came from Chamath Palihapitiya and Elon Musk, whose appearances on TV and Twitter, respectively, at a critical moment further destabilized the situation."— Einhorn suggested Palihapitiya had intentionally disrupted Robinhood because it competes with one of his investments, SoFi.

5. "If regulators wanted Elon Musk to stop manipulating stocks, they should have done so with more than a light slap on the wrist when they accused him of manipulating Tesla's shares in 2018. The laws don't apply to him and he can do whatever he wants."

6. "Quasi-anarchy appears to rule in markets. Sure, Dr. Michael Burry, famed for his role in 'The Big Short,' reportedly received a visit from the SEC after tweeting warnings about recent market trends — and decided to stop publicly speaking truth to power. But for the most part, there is no cop on the beat."— complaining that regulators have been defanged and that corporate executives can break the rules with impunity.

7. "Hometown International, which owns a single deli in rural New Jersey ... reached a market cap of $113 million on February 8. The largest shareholder is also the CEO/CFO/treasurer and a director, who also happens to be the wrestling coach of the high school next door to the deli. The pastrami must be amazing."— underscoring the number of questionable companies that regulators are overlooking.

8. "From a traditional perspective, the market is fractured and possibly in the process of breaking completely."— highlighting a dangerous lack of regulation and the risk of casual investors getting scammed.

9. "It was as if Bernie Madoff had been told to pay a small fine and stop ripping off New Yorkers, but to go ahead and have fun with the Palm Beach crowd."— criticizing regulators for slapping the Tether crypto exchange with only a $19 million penalty and a New York ban.

10. "If Congress wants to understand why GameStop stock did what it did, or more recently how the 'Arch-Egos' fund cornered the market in a handful of stocks, it would be better to call to account the absentee regulators and their philosophical backers."

11. "'Arch-Egos' was able to buy up most of the float of GSX Techedu, causing the stock to soar 400% in the face of unrefuted allegations of massive fraud. The SEC has an ongoing investigation of GSX but appears to not have noticed a single fund (or a small group of funds) essentially cornering the market. A traditionalist could say this was market manipulation and transparently illegal."

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Hedge funds have played an instrumental role in this year's rout in the US bond market by selling off more than $100 billion in Treasurys, according to a Bloomberg report.

Investors in the Cayman Islands, a major financial center and a known domicile for leveraged accounts, have been the biggest net sellers of US government debt, offloading $62 billion of sovereign bonds in February and dumping $49 billion in January, with Bloomberg citing data from the Treasury Department.

The sell-off began after the early January Senate run-off elections that were won by two Democrats. The victories gave that party a 51-vote majority in the upper house of Congress, including Vice President Kamala Harris, paving the way for a large new round of government fiscal spending. In March, President Joe Biden signed into law a $1.9 trillion stimulus package that passed 51-50 in the Senate.

The rollout of COVID-19 vaccines also contributed to investors deciding to exit bonds. As bonds sold off, rising yields prompted a return of convexity-type hedging flows, Bloomberg reported.

The bond market sell-off this year drove the widely watched 10-year Treasury yield above 1.7% for the first time since early 2020. The yield has since pulled back to around 1.58%. 

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Here's a rundown of news on hires, exits, and promotions from the past week.  Are we missing anyone? Let us know.

• Michael Daffey, who until March 31 was the head ofGoldman Sachs' global markets division, has joined digital-currency investment firm Galaxy Digital Holdings as chairman, replacing Mike Novogratz, the company announced. Novogratz will remain Galaxy's CEO. In March, Insider broke the news that Daffey was the mystery buyer of Jeffrey Epstein's $51 million Upper East Side mansion, in large part bought with Daffey's proceeds from crypto holdings. Galaxy is reportedly preparing for a US IPO planned for later this year.
• Goldman Sachs' global head of corporate communications, Jake Siewert,is leaving the firm after nine years, according to an internal memo sent by CEO David Solomon and top executives that was viewed by Insider. Siewert will be joining Warburg Pincus where he'll work in a policy role and be reunited with Warburg President Timothy Geithner, with whom Siewert worked at the US Treasury. Siewert also served as the last White House Press Secretary under President Bill Clinton and was a top executive at Alcoa. 
• Goldman Sachs also announced the appointment of Andrea Williams as the firm's head of media relations in a memo sent by Corporate Secretary John F.W. Rogers and viewed by Insider. Williams will join Goldman in May as a managing director from Howard Marks' Oaktree Capital Management, where she led the hedge fund's corporate communications.
• JPMorgan Chase has poached top executives from Goldman Sachs, Google and Wells Fargo to help lead its consumer and community banking (CCB) team, Insider reported.
  • Sonali Divilek, formerly head of product at Goldman Sachs' Marcus, will join the CCB team as head of digital channels and products.
  • Google's Sumit Gupta will join as CCB's new chief design officer, having formerly served as a global director in digital marketing and ecommerce.
  • The CCB team also hired Kaaren Hanson, a Wells Fargo executive vice president in experience design, as its new head of consumer experience and personalization.
• Carlyle named Brian Bernasek as its next co-head of US buyout and growth, Insider reported. Bernasek, who currently head's the private-equity giant's global industrial and transportation team, has been at Carlyle since 2000. He is taking over for Peter Clare, the firm's chief investment officer for corporate private equity and a member of the firm's board of directors, and he will lead the US buyout and growth team with current co-head Sandra Horbach. Clare will remain in his CIO role, and take on a new title as chair of the integrated US buyout and growth team as well.
• In Citigroup CEO Jane Fraser's first major strategy overhaul, the bank is exiting 13 consumer markets across Asia and EMEA (Europe, the Middle East, and Africa) to focus on wealth management. As part of the move, Citi announced new leadership across its wealth management division, Insider reported.
  • Ida Liu, most recently head of Citi's private banking franchise in North America, has been named the global head of private banking.
  • Fabio Fontainha, head of retail banking for Asia Pacific, and Steven Lo, head of the private bank in Asia, have been named co-heads of wealth in Asia.
  • Luigi Pigorini, most recently Citi's head of private banking in EMEA, will now head Citi's wealth management business in the region.
• Citi has promoted Jill Evans and Jolene Han Berg to be global co-heads of client engagement and marketing for securities services, according to an internal memo reviewed by Insider. In their new roles, Evans will focus on the investor client segment — asset managers, insurers, and asset owners — while Han Berg will focus on the financial institution clients — banks, broker-dealers, wealth managers — the memo said.
• Matt Harris, a partner at Bain Capital Ventures, was appointed as a new member of the Federal Reserve Bank of New York's Fintech Advisory Group. The Fintech Advisory Group connects Fed leaders with senior representatives and thought leaders from the finance and technology industries.
• Phil Sieg, currently the head of practice management at JPMorgan Wealth Management, has been named the CEO of JPMorgan Advisors, the firm's group of brokers for high-net-worth clients. The news was announced in an internal memo from wealth management CEO Kristin Lemkau that was viewed by Insider. Sieg, who joined JPMorgan a year ago, has a long track record in wealth management encompassing 30 years spent at Merrill Lynch. Sieg is replacing Chris Harvey, who is moving to a new role at JPMorgan overseeing lead generation across wealth management, reporting to Lemkau. The search for Sieg's successor at JPMorgan is underway, Lemkau added.
• Julia Unger, former Citi head of global cards and unsecured lending, joined Walmart on Monday as its new vice president of financial services. Unger, who spent over two decades at Citi, will report to Walmart's executive vice president and Chief Customer Officer Janey Whiteside. Earlier this year, Walmart poached two executives from Goldman Sachs' Marcus, David Stark and Omer Ismail, to deepen its foothold in the fintech space.
• Bridgewater Associates' people and talent leader Jen Vanderwallis joining Capitolis, a SaaS fintech platform that just raised $90 million in Series C funding led by Andreessen Horowitz. Vanderwall, who was a member of Bridgewater's core management team, will serve as the company's new chief people and culture officer, Capitolis announced on Tuesday.
• KKRappointed two new managing directors to its global infrastructure team on Monday. Energy transition industry veterans Tim Short and Benoit Allehaut join the KKR team from Capital Dynamics, where they both served as managing directors on the clean energy and infrastructure team.
• San Francisco-based venture firm General Catalyst has nabbed Paul Kwan, a top Morgan Stanley tech banker, to support GC's coverage of internet, software, and health assurance companies, the firm said in a press release. At Morgan Stanley, Kwan was most recently the head of west coast technology banking, where he led M&A and IPOs across tech companies, including Livongo's $18.5 billion tie-up with Teladoc Healthlast year. Kwan was at Morgan Stanley for more than 21 years, during which time he's been based in the bank's Menlo Park office.
• Circle, a blockchain-powered fintech unicorn, announced it has hired Dante Disparte as chief strategy officer and head of global policy. Disparte comes to Circle from Facebook's Diem Association, formerly known as Libra, where he served as executive vice president. Disparte, who led engagement with government and financial industry leaders at stablecoin Diem, will oversee Circle's global expansion efforts.
• Smith College announced it is getting its very first chief investment officer. Lisa Howie, a 12-year veteran of the Yale University Investments Office, is leaving her position as director there to lead the Smith College endowment.
• David Ryan, the former head of US CLO Syndication at Deutsche Bank, has left his position after 17 years with the bank, GlobalCapital reported Monday. His new role is unknown.
• Hedge fund Brevan Howard has hired Gurpreet Singh to be its new chief technology officer for Alpha Strategies, Insider reported. Singh joins from  Point72 Asset Management, where he was CTO of its quant-trading group Cubist. 
• Joe Brucchieri has departed Carlson Capital, where he was chief legal officer. Insider reported. His exodus comes as multiple top executives have left the hedge fund recently. Nicole Mascera, head of HR; Whitney Fogle Lewis, deputy chief legal officer; and Jehan Akhtar, chief risk officer, also departed. Their new roles are unknown.
• The head of Goldman Sachs' LIBOR transition efforts and a managing director for corporate treasury, Jason Granet, is retiring, Bloomberg reported Wednesday. Granet, who had been at Goldman for more than 20 years, has been in the top LIBOR transition spot since September 2018 and before that was deputy head of the firm's liquidity solutions team in the asset management sector.
• Wells Fargo is searching for a new head of human resources. In a press release, the bank said that David Galloreese, Wells' head of HR who joined in 2018, is departing on April 23. He'll be replaced in an interim capacity by Kleber Santos, Wells Fargo's head of diverse segments, representation and inclusion, while the bank searches for Galloreese's replacement.
• Melissa Baal Guidorizzi, formerly the senior counsel for policy and strategy in the Consumer Financial Protection Bureau's enforcement division, has joined international law firm O'Melveny, the firm said in a press release. Before spending eight years at the CFPB, Guidorizzi was the COO of the National Summer Learning Association and also associate general counsel at Citi. At O'Melveny, she has joined the firm's financial services and fintech practice. 
• Moran Forman, a managing director on Goldman Sachs' index derivatives trading desk, is leaving the firm, according to efinancialcareers. Forman had been at Goldman for nine years, prior to which she'd worked in index derivatives at JPMorgan Chase. 
• Alex Catterick, formerly the head of alternative investments in the Americas at HSBC, has joined Manulife Investment Management, according to Wealth Advisor. At Manulife, Catterick will now oversee the company's high-net-worth strategy in private markets. Prior to working at HSBC, Catterick was a director in alternative investments at Barclays.
• Jae Yang, previously a vice president at Goldman Sachs, has joined Steve Cohen's Point72 Asset Management as of April to head business development in Japan, according to Hedge Fund Alert. Yang had been at Goldman for more than 19 years.

Reed Alexander, Dakin Campbell, Dan DeFrancesco, Meredith Mazzilli, Alex Morrell, Bradley Saacks, and Rebecca Ungarino contributed to this report.

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2020 was a tough year for quant hedge funds. The performance of giants like Bridgewater, Renaissance Technologies, and Two Sigma sagged amid the coronavirus-fueled market mayhem, while fundamental shops made a killing.

But systematic strategies in the $3.9 trillion in assets arena remain incredibly popular and continue to lure fresh capital from investors.

Quant funds are the most likely to accrue new assets in the first half of this year, according to a report from HFM and the Alternative Investment Management Association.

Funds are increasingly deploying strategies predicated on artificial intelligence and machine learning, and they're beating the broader industry, according to a 2020 report from Preqin.

The market for quant and data-science specialists has perhaps never been hotter. The technologists, researchers, scientists, and traders developing cutting-edge investment strategies and platforms aren't just coveted by hedge funds, of course. 

They're the lifeblood of high-frequency-trading (HFT) firms and proprietary market makers, as well as investment banks building out their systems for electronic trading and execution. They're also coveted by Silicon Valley juggernauts, startups, academia, and the government. People working on hard-science Ph.D.s from top universities can expect the most elite institutions to start wooing them years before they defend their dissertations.

It's a vast industry, with an array of subspecialties, substrategies, and time horizons for making trades. Unlike most areas of Wall Street, there isn't necessarily a bright line delineating the "front office"— with revenue coming from black-box algorithms and automated trades commonly happening in fractions of a second. For some, there's no need for a front office at all.  

A cadre of Wall Street recruiters are at the forefront of this lucrative talent battle, and Insider has assembled a list of headhunters who specialize in the field.

There's a diversity of approaches when it comes to the headhunters that service these hedge funds, banks, and proprietary-trading firms.

Some firms have scale, with dozens of employees focused on a high volume of placements. Other shops have a just a handful of people — or only one practitioner — and chase the less frequent but more lucrative senior appointments. Some help top-tier traders attract seed capital to get more entrepreneurial affairs off the ground.

They earn fees in variety of ways — for example, flat fees, retainers, contingent fees based on a candidate's total compensation, a percentage of trading profits, or an equity stake in a new venture or build-out. (Read more about the secretive world of Wall Street quant recruiting.)

What you won't see on this list are any of the white-shoe legacy recruitment firms — the Heidrick & Struggles and Russell Reynolds of the world are not the dominant players in this realm, where urgency and speed are often paramount and much of the work takes place below the C-suite.

Recruiters closely guard their client lists and protect the privacy of their relationships, which are the essence of their work. For that reason, unless a relationship is publicly or widely known, we typically do not name the financial-services firms these headhunters work with.

But they've handled mandates with many the heaviest hitters in finance and quant investing: hedge funds like AQR, Balyasny, Brevan Howard, Citadel, D.E. Shaw, ExodusPoint, Millennium, Point72, Schonfeld, Teza, and Two Sigma; prop-trading shops like DRW, Hudson River Trading, Jane Street, Jump Trading, and Tower Research; and investment banks like Goldman Sachs and JPMorgan Chase.

Because of the specialized nature of the work — and the fact that candidates could come from a variety of industries across the world — the recruiting market is truly global, and no one firm has a grip on it, which creates opportunities for many firms to grab a slice of the pie.

As such, this list is not exhaustive. It features many of the most respected, successful, and relevant players in the field, according to industry professionals, including veterans with decades of experience and longstanding senior connections, as well as rising stars who are quickly establishing relationships and making a name for themselves. 

These are the talent brokers of Wall Street quant recruiting.

Affinity North: Peter Wagner

Peter Wagner founded Affinity North in 2012 after a two-decade career building trading and risk systems for companies including Tudor Investment, Lehman Brothers, and Morgan Stanley.

A small recruiting boutique headquartered in New Jersey, Affinity focuses on developers, engineers, and researchers for top-tier investment banks, hedge funds, proprietary traders, and fintechs.

For Wagner's clients, the software and research they're producing is their edge, and professionals that crank code, build models, and develop the research are revenue engines, rather than cost centers.

While data science is all the rage in finance, and universities are pumping out graduates in droves, most of the demand, according to Wagner, is for data engineers — the people manipulating the data before any of the "science" takes place.

"The actual data science is the tip of the iceberg. The body of the iceberg is data engineering," Wagner told Insider. "Most of the work in data science is procuring, storing, and serving data. That's a much less sexy part of the job, but that's what we have a massive demand for."

Atlantic Group: Todd Fahey, Todd Hicks, and Charlotte Battisti

Atlantic Group hasn't traditionally been known for quant recruiting — the 15-year-old firm's foundation is back-office accounting, finance, and operations recruiting.

But that's been changing with the arrival of "the Todds"— Todd Fahey and Todd Hicks, a pair of recruiters in Chicago — and Charlotte Battisti, their counterpart in London. The trio have decades of experience in searches in senior systematic trading.

Fahey is an old-guard quant recruiter whose expertise in the field dates back to the late 1990s, when the electronification of markets and model-driven trading was heating up in earnest. Fahey got into Wall Street recruiting after an honorable discharge from the Marines, where he was a crew chief and flew heavy-lift helicopters for the "Phoenix,""Warhorse," and "Wolfpack" squadrons.

Fahey helped build out the quant practice at Options Group, one of the industry's most active players, in the early 2000s, mentoring the current head of that business, Push Patel (see below), according to multiple people who worked at the firm. He went on to found his own search firm, Exemplar, in 2007, which was acquired by Sheffield Haworth in 2011. He joined Atlantic in 2018 to build its capital-markets platform from scratch, with a special focus on systematic trading and electronic markets.

His first hire was Hicks — another experienced recruiter who worked with Fahey at Exemplar and Sheffield Haworth. He then brought aboard Battisti to oversee Atlantic Group's capital-markets efforts in Europe. Battisti has been an electronic-markets specialist since 2005 and founded her own boutique in 2012 before selling it in 2017 to Options Group.

For Battisti and "the Todds," the primary business is in targeted, retained searches. They work across asset classes and investing approaches, typically with hedge funds and proprietary-trading firms but also with banks, asset managers, and sophisticated family offices. They're usually filling roles requiring a decade or more of experience, including quantitative-portfolio managers, researchers, data scientists, and technology professionals.

"I'm a complete Midwest, no BS guy," Fahey said. "I'm not here to be everybody's best friend. I'm here to do what I say I'm going to do."

The quant-trading space has evolved substantially in Fahey's career, and "there is no easy money to be made here anymore," he said.

"You have to have scale, technology, and access to the right data," he said. "It's a constant scrounge for talent."

Axiom Group: Brennan Hughes

Brennan Hughes cofounded Axiom Group in Chicago in 2009 after several years of recruiting technology professionals for Fortune 500 companies.

Axiom started out focused on building out quant and high-frequency-trading groups — which were expanding rapidly post-financial crisis — covering the Chicago market before expanding its reach globally.

Initial success put Hughes in position to help build the team at Vatic Labs, the systematic-trading shop founded by former Jump Trading professionals in 2014. Soon afterward, Hughes sold Axiom, moved to San Francisco and began to work in-house on Vatic's recruitment and expansion efforts full time.

In 2019, he repurchased the Axiom brand and struck back out on his own. Hughes handles senior traders, researchers, engineers, and machine-learning experts, as well as executive-level placements. He's placed more than 250 candidates in his career.

Hughes also works for venture-capital-backed tech companies, not just recruiting for them but also investing in them. He recently placed senior hires at Opendoor ahead if its initial public offering, including Daniel Morillo, Citadel's former head of equity quantitative research, as the digital real-estate company's chief investment officer.

He also placed several senior leaders — including the chief technology officer, chief strategy officer, and head of artificial intelligence — at Tulco before it's AI-tech practice was acquired by Acrisure in the summer for $400 million.

Banyan: Drew Myers

Drew Myers isn't like other headhunters. To take just one example, there's his headquarters: Banyan is not in New York, nor London, nor the Bay Area, nor Chicago. It's in Seattle.

Another is his preferred mode of transportation: In normal times, Myers travels from his home on Mercer Island to his office in Seattle via jet ski across Lake Washington, reducing his commute time by 66%, not to mention avoiding traffic tickets.

And then there's the fact that Myers isn't really even a recruiter anymore — at least not in the traditional sense.

"He's an entrepreneur who happened to start out as a recruiter," one experienced executive-search consultant said of Myers, the founder of Banyan.

While he started out in quant recruiting in the late '90s, Myers' operations these days have evolved beyond conventional search. He still trades in identifying and nurturing relationships with talent and frequently leverages his connections to further their careers or ventures, but his business model is different — Banyan now manages a fund of funds. Myers scouts talented portfolio managers and other quantitative-investment professionals, then helps them raise capital and build out a team. Banyan invests directly in the fledgling ventures, as well. 

For instance, Banyan was an initial backer in Teza Technologies, the propriety-trading fund founded in 2009 by the astrophysicist and ex-Citadel trader Misha Malyshev. He is also said to have worked closely with the HFT juggernaut Tower Research, lifting out the Société Générale and BNP team that formed Tower's lucrative Latour Trading subsidiary in 2009. Banyan in 2014 got in early as an investor in Robinhood, which is now a well-known name for its giant retail-trading platform.

While he's not operating in the same fashion as most recruiting agencies; in quant circles, his name rings out with such frequency and admiration that we'd be remiss if we did not include him on this list.

"He's the most well-connected person in quant trading," another experienced quant headhunter said.

Myers declined to comment.

Campbell North: Will North and Harry Campbell

In 2009, bank trading desks were reckoning with the fallout from the financial crisis, and a slew of high-frequency-trading firms and market makers were emerging to pick up the slack. Campbell North launched the same year to help those firms land the trading and technology professionals they needed to compete.

The firm's cofounders, Harry Campbell and Will North, believed specialized quant talent required a more boutique approach. They handled mandates for UK firms, as well as those expanding into the London market, before increasing their scope to cover the US market.

The London firm, roughly 25 strong, is increasingly helping its trading clients with ambitions to expand in Asia and capture more of that burgeoning market.

Campbell North places portfolio managers and heads of trading or research, as well as specialist programmers and data scientists, frequently pulling people out of Silicon Valley giants for quant-trading firms as well as leading banks, according to North's LinkedIn profile.

But it also counts some top startups and tech unicorns as clients, such as Palantir and Oscar.

Capital Markets Recruitment: Tom O'Cuinneagain

While many quant recruiters work from outside the US, especially in London, given the global nature of the work, Capital Markets Recruitment is the only firm on this list headquartered in Dublin.

For Tom O'Cuinneagain, the lead consultant in the firm's front-office practice, this location has been a boon in the wake of Brexit, as many quant-trading outfits — including Citadel Securities, Hudson River Trading, and Millennium— have opened up or expanded operations in Ireland, which has close economic ties to the US.

But Dublin is only part of the business. O'Cuinneagain's mandates come from across Europe and the US, including from multistrategy funds, proprietary traders, and market makers. He doesn't work much with developers or data scientists and is focused more specifically on traders and researchers dedicated to mid- and high-frequency strategies, agnostic of asset class. 

O'Cuinneagain, a rising star in the field, started out at Paragon Executive Intelligence in 2016 before leaving in 2018 for Capital Markets, a 10-person boutique that historically had focused on investment banking but was looking for someone to expand into front-office trading and research.

Being a quant recruiter outside London or the US in some ways helps distinguish O'Cuinneagain, and he takes a transparent, nontransactional, and long-term approach that resonates with clients and candidates, he said.

Carrington Fox: Struan Pires

Struan Pires' bread and butter is placing senior quant traders and developers at hedge funds.

Pires joined Carrington Fox, a boutique recruiting firm for the financial-services industry, in London in 2004. In 2006, he moved to the US to help open Carrington Fox New York. He became the firm's expert in placing derivatives quants and quant traders in revenue-generating roles in systematic trading, regardless of asset class, and became a managing director in 2007.

"The developers that would be middle or back office at banks, they're considered front office with our clients because the technology is paramount," Pires said.

Pires, along with three other partners, took control of the firm in 2016 in a management-led buyout. The company has about 20 employees who cover a wide variety of front-office roles across sales and trading and alternative-investment firms.

While Pires' expertise is senior quant talent, he doesn't limit himself to elephant hunting and occasionally handles midlevel searches, primarily with hedge funds but also some high-frequency-trading firms. Carrington Fox completes both retained and contingent mandates.

Like others on this list, data science has been a growth area for Carrington Fox's clients in recent years.

Durlston Partners: Dan Franco

With the proliferation of alternative data over the past decade, fundamental hedge funds began clamoring for some of the same technical talent that firms like D.E. Shaw and Renaissance Technologies have been recruiting for decades. But there is a very big difference between hiring traditional discretionary traders and hiring engineers and scientists. 

That's where people like Dan Franco come him. Franco, a principal consultant at London's Durlston Partners, specializes in merging the two worlds, placing data scientists and quant researchers at hedge funds staffing up to capitalize on the boom in alt data. Some fundamental firms in recent years have dedicated significant capital to strategies helmed by data-science specialists.

Franco started in the industry in 2014 with a focus on data science and joined quant finance and the technology boutique Campbell North (see above) in 2017. At Campbell North, he worked to pull talent from big tech firms into systematic-trading firms. He left in 2019 for Durlston, a roughly 20-person firm founded in 2010 with a focus on technology and quantitative finance. 

Franco places heads of data science and other mid- to senior-level revenue-generating roles for hedge funds and proprietary-trading firms, with a blend of contingent and retained assignments. But increasingly, he's drawing mandates from private-equity firms, which in recent years have been looking to get in on the action and build data operations to evaluate and assist their portfolio companies. 

Regardless of the institution, Franco enjoys working on niche, hard-to-fill mandates.

"As a recruiter, that's when you can add a lot of value — when you can map out teams and you need to understand who's who in a given area," Franco said.

The ExecuSearch Group: Adam Harwood and Victor Tang

While the ExecuSearch Group has been around since 1985, the firm has had a broad, cross-industry scope and a sizable temporary-staffing business — Wall Street power players weren't in its wheelhouse. But that changed in 2014, when the firm brought aboard Adam Harwood to build a business focused on front-office revenue-generating finance roles.

Harwood started out in recruiting in 2010 at Carrington Fox (see above), where he worked on mid- to senior-level talent for sell-side firms and hedge funds.

Four years later, he left for the ExecuSearch Group, and Harwood, a vice president, now oversees a team of about 10 front-office headhunters covering the sell side and buy side.

While his group isn't solely focused on the quant space — it works on an array of asset classes and fundamental strategies — about half its placements are systematic. Harwood's team fills mandates for algorithmic traders from the associate level up to managing directors and portfolio managers at investment banks, proprietary traders, and hedge funds, as well as niche players. 

Victor Tang, a managing director on Harwood's team who oversees a handful of consultants, has also built a reputation as a strong recruiter focused solely on quantitative searches across research, trading, portfolio management, and risk.

GQR: Josh Fitzgerald and Joel Sichel

In the early 2010s, GQR — a global recruiting agency founded in London with practices in finance, technology, energy, life sciences, and healthcare — built a substantial quant-finance presence in the US. Like other large headhunting firms, the model favored a high volume of placements for quant funds and electronic market makers on the sell side and buy side, for trading and research positions, as well as development and technology roles. 

The firm's first US office was in Los Angeles, rather than New York, and it was early to capitalize on the opportunity to pull Silicon Valley professionals into finance.

The firm's quant-investment presence has gotten smaller in recent years, but the firm is still active in the space. Josh Fitzgerald, a New York executive vice president who joined in 2015, leads the efforts on the trading-technology side, placing developers, engineers, and researchers.

Joel Sichel, a vice president who splits time between Los Angeles and New York, focuses more on front-office trading roles, placing professionals in roles in systematic and algorithmic trading, execution, and quantitative research. 

Hutton Consulting: Tom Mardon

Tom Mardon, the head of Hutton Consulting, has been recruiting in the quant-finance space for more than 20 years. After a stint with EY as an auditor, he joined the recruiting firm Michael Page in 1998, running its risk, quant, and derivatives team, according to his LinkedIn profile.

He jumped to Hutton in 2004 and took the reins in 2007. His firm now has a stable of more than 15 experienced recruiters.

The majority of their work involves key revenue-generating quant roles — portfolio managers, traders, researchers — for a small roster of hedge funds and proprietary-trading firms. Hutton is also increasingly taking mandates for data-science and machine-learning roles.

The firm has a 90% success rate on completing searches, and 80% of its work is repeat business, according to its website.

While the Hutton is in the UK, it has a global reach, and most of its business is in the US market.

Hutton declined to comment.

Integra Advisors: Peter Friedman

Peter Friedman runs the boutique New Jersey executive-search and consulting firm Integra Advisors, which caters to some of the industry's top-tier systematic funds and high-frequency-trading firms.

Friedman has been in the recruiting world since 1996. He started right out of college with a focus on technologists. In the early 2000s, his gaze shifted toward the Wall Street's systematic space, and he began supplying people with Ph.D.s to leading market makers and hedge funds. He also helped various investment banks identify quantitative and technical talent to build out their electronic trading platforms.

Friedman built a propitious relationship Misha Malyshev, the astrophysicist who led Citadel's high-frequency-trading business until he left in 2009 to start his own proprietary-trading shop, Teza Technologies. Several years later, Friedman joined the firm as its chief talent officer, focused on not just recruiting but also retention and keeping personnel happy at the money-printing high-speed-trading shop.

That tour of duty ended in early 2016, and Friedman then founded Integra, which has just a handful of employees and operates primarily on a retained basis. But it also conducts contingent placements for select firms and occasionally takes equity stakes in startups. The firm has a long-term view of relationships, with both clients and the professionals they help them hire. It works with both proprietary-trading firms and systematic hedge funds, as well as a few tech and venture-capital clients.

But Integra isn't solely an executive-search firm. Building off his experience at Teza, Friedman also counsels quant execs on how to attract and retain top performers and advises on how company policies may be received by personnel. 

Integra declined to comment.

Inventure: Parth Jani and Yvonne Likomanova

A relative newcomer on the scene, Inventure was formed in 2017 with focus on renewable energy and private equity.

In 2019, the firm hired Parth Jani and Yvonne Likomanova from GQR to build a search practice focused on technology and data science for financial-services firms, predominantly with quant hedge funds.

Their bread and butter is plundering top talent from Silicon Valley — developers, software engineers, and AI specialists at places like Google, Facebook, Netflix, and the startup scene — and deploying it to Wall Street to build infrastructure and trading models to capture alpha. 

Jani and Likomanova have strong capabilities with machine-learning mandates, primarily data scientists with expertise in natural-language processing (NLP) — a response to the avalanche of messy alternative data that hedge funds are spending hundreds of millions of dollars on annually.

Is hiring people straight out of Silicon Valley with no background in finance a problem? Not really, as most funds are clamoring for scientists who've worked on cutting-edge technology or who can bring outsider ideas to the table.

"A lot of funds are looking to leverage state of the art NLP research and language-modeling techniques for alpha signals, and candidates could come from anywhere — a small shop, tech, or even a professor," Jani said.

Moreover, poaching from a different industry, including the burgeoning world of autonomous vehicles, is often a fast and effective way to acquire elite talent. That's because other industries have been working for years on thorny problems that investment firms have only recently confronted and because noncompete agreements have gotten so onerous — up to two years in some cases.

"This has led to a lot of hiring from fields and industries which were traditionally seen as different," Likomanova said. "As problems are generally about making sense of large datasets, there is less emphasis on backgrounds within finance and more on onboarding fresh ideas to create a competitive edge."

The small firm — Jani and Likomanova are the whole team — also does work for startups and fintechs. For hedge-fund clients, it's focused exclusively on strategic senior hires, rather than junior-level placements. 

Karbon Agency: Kevin Cassata

Karbon is effectively a one-man band run by Kevin Cassata. The LA headhunter works with some of the largest quantitative buy-side firms in the business, as well as smaller shops with fewer than 60 people. 

Cassata started his career in the mid-2000s recruiting programmers before, like several others on this list, he served a stint at Options Group's quant-trading and research team from 2009 to 2011. After that, he started a hedge-fund-focused recruiting firm with some partners before striking out on his own with Karbon in 2016.

Cassata is always on the hunt for alpha generators, primarily with retained searches for midlevel quants, portfolio managers, and heads of research or trading. He'll also work selectively on a contingent basis with top-level portfolio managers, connecting them with seeders and funds of funds.

Most of his work is for statistical-arbitrage-focused quant funds and HFT firms, which are routinely looking to break into new markets or datasets.

Over the past four years, he's increasingly seen demand from quant firms focused on crypto trading.

"There has been a steady migration of talented programmers, quants, traders, and executives into the crypto space over the past four to five years, many of whom have come from elite banks, funds, and trading firms and are starting their own companies," Cassata said.

Lascaux Partners: Luke Stovell and Luke Williams

In some ways, Lascaux Partners is like other boutique headhunting firms — the firm identifies and recruits high-performing portfolio managers or alpha researchers for their clients, typically for quant and multistrategy hedge funds.

But the firm, started by Luke Stovell and Luke Williams in 2013, has a novel approach to its business model that distinguishes it from others, according to its website and others in the industry. The firm has a robust capital-introduction business. It helps new funds attract seed funding and structures investment agreements.

It's more of a third-party business-development approach, and as such, its revenue model is distinct from a lot of recruiting firms in that it's primarily paid upon a successful allocation.

To date, the firm has structured about $20 billion in capital for portfolio managers, according to its website, whether that's at a multimanager shop or in a fresh launch.

The "Lukes," and their team of nearly 15 at Lascaux, cover liquid hedge-fund strategies broadly, but their sweet spot is systematic traders — they don't do anything in data science, technology, or operations.

Lascaux declined to comment.

Matt Moye Consulting: Matt Moye

Matt Moye has been running a solo-act headhunting operation for more than a decade.

Moye got started in recruiting in 2005 after a brief dalliance in telecom sales. He spent five years with Smith Hanley (see below) in Chicago focused on quant research, trading, and technology before breaking out on his own.

In line with the industry he covers, Moye blends the personal touch needed in a relationship business with a systematic approach to managing the workload — he uses automated software built for sales professionals to keep track of his network of candidates and mine data insights from his reach-outs. 

Moye, who works out of Pittsburgh, has placed more than 300 quants and technologists in his 16-year career, according to his LinkedIn profile, from early-career developers for team build-outs to heads of research and chief technology officers, primarily for some of the top quant funds, multistrategy firms, and HFT companies in the industry. In recent years, he's added startup fintechs to the mix.

He works on a mix of retained and contingent mandates, with some client relationships dating back to the launch of his independent business 11 years ago.

In that time, the value for technologists on the buy side contributing to alpha capture has jumped amid heightened demand from the tech giants like Google and Amazon. While traditional front-office trading and research roles were once better compensated, the landscape has flattened, and technology's influence on the bottom line and revenue generation is more readily apparent.

"Top quant funds always viewed technology as part of revenue generation, but at the same time, there wasn't the same parity," Moye said. "Now with increased competition from FAANGs, that's pushed that up."

Options Group: Push Patel

You don't get too far in the quant-recruiting space without hearing the name Options Group, specifically its top headhunter, Patel.

While the firm has been placing Ph.D. holders and filling quantitative-finance searches since the '90s, Patel was part of the firm's foundation of a dedicated electronic and systematic trading practice at Options Group. He joined in 2004 after stints at IBM and JPMorgan and came up under Fahey, the top quant recruiter at Atlantic Group.

Patel, now a co-chief operating officer and cohead of the firm's buy-side practice, leads one of Wall Street's most dominant and lucrative quant and systematic recruiting operations. The firm is considered to have one of the most extensive networks, and Patel himself has a reputation for placing heavy-hitting portfolio managers and researchers, winning favor with marquee hedge funds and proprietary-trading firms.

But it's not all senior mandates. Options Group, which has a global presence and works across a variety of Wall Street practice areas, handles placements that run the gamut on experience level, including fresh graduates. They also produced closely watched industry reports on compensation trends.

The firm is known for an aggressive work ethic that can be polarizing, including a penchant for pushing hard for retainers.

"They can rub people the wrong way, but they get results," one person at a large hedge fund said.

As one of the pioneering firms in this space, Options Group has a diaspora of recruiters that have gone on to internal roles at hedge funds or lead their own firms — including several names on this list.

Options Group declined to comment.

Preeminence Advisors: Manu Bakshi

Manu Bakshi started Preeminence Advisors in 2020 after nearly eight years on the inside.

Bakshi's headhunting career began at the search firm Harvey Nash in 2006, where he worked with hedge funds. In 2012, he joined WorldQuant, the hedge fund run by the billionaire Igor Tulchinsky, and served on the global recruiting team until 2019.

That year he left to start Preeminence and work on exclusive retainer for another powerhouse hedge fund — Ken Griffin's Citadel, according to people familiar with the matter.

Bakshi is said to focus exclusively on senior mandates for portfolio managers, often systematic but also those focused on credit and macro.

Preeminence declined to comment.

Radley James: Oliver Wherrett

Oliver Wherrett has been working on front-office searches for Radley James, a London boutique with roughly 30 recruiters on staff, his whole career. Wherrett started out in research in 2013 but quickly rose through the ranks and soon was placing traders and systematic portfolio managers at large hedge funds and HFT firms. 

These days, Wherrett, now a director, handles a variety of systematic-trading and technology mandates — primarily buy side but also some banks — and he's leading the firm's Asia expansion. While that involved significant time on the ground in Singapore and Hong Kong in previous years, he's been heading up the effort from the UK in the past year given the travel restrictions from the COVID-19 pandemic.

The industry's top quant-trading firms have been ramping up their presence in Singapore, Hong Kong, and mainland China, the latter being one the most in-demand regions for talent, according to Wherrett.

"The growth in systematic trading in the China markets is biggest trend I've seen recently," Wherrett said. "It's kind of where Europe and the US were 10 to 15 years ago, where there's significant opportunity for arbitrage and all of the big names in systematic trading are trying to get a piece of the action."

He added: "We will continue to see huge build-outs in China over the next few years."

Wherrett has also noticed an uptick in demand for hardware engineers, with high-speed-trading firms plucking engineers focused on field-programmable gate arrays and application-specific integrated circuits from tech giants, as well as from semiconductor, defense, and aerospace companies, as they endeavor to maintain their velocity edge.

"A good hardware engineer can write their own check," Wherrett said. 

Selby Jennings: Ben Hodzic and Ryan Mazza

Selby Jennings has one of the largest quant-recruiting operations in the US. It handles over 100 placements in a given year across the sell side and buy side, including a variety of hedge funds, proprietary traders, and asset managers.

The firm's "Quantitative Analytics, Research, and Trading" operation is led by in the US by Ben Hodzic, who joined in 2014 and built the team from three people to nearly 20 across the country. Selby handles a high volume of transactions, and its wheelhouse is mid-senior-level hires. But it also places analysts, researchers, traders, and technologists across the spectrum, which includes significant work with entry-level placements of people with Ph.D.s.

Hodzic's team — which is led in New York by Ryan Mazza, a director and seven-year company veteran — won distinctions from HFM, a hedge-fund-intelligence firm, for quant recruiting in 2019 and 2020.

The quant team at Selby recently increased its focus on researchers and developers who concentrate on volatility and trade execution, as well as data scientists coming from academia "looking to get their feet wet in finance," Hodzic recently told Insider.

"These types of profiles are increasingly sought-after given their innovative research methodologies, use of newer technologies, and unbiased experience as hedge funds and asset managers try to find alpha in the markets," he added.

Smith Hanley Associates: David Matz, Jud Smith, Rick Wastrom

Rick Wastrom has been luring scientists onto Wall Street since the '80s, when he gained a reputation as one of a handful of recruiters who poached brilliant researchers from Bell Laboratories. 

Wastrom helped found Smith Hanley in 1984, and today he coruns the firm's finance-recruiting operation, where he handles a variety of searches for buy-side investors with a focus on systematic strategies, from C-suite mandates to quantitative portfolio managers. 

Comanaging the team with Wastrom is Jud Smith, who brings more than two decades of experience recruiting portfolio managers and technologists to support systematic-trading hedge funds and investment banks.

Smith — whose approach is a hybrid of retained and contingent searches — has worked across the spectrum of roles in his career. He's placed quant researchers and traders, technical and developer roles, and chief technology officers. Smith has even built out independent quant-trading groups from scratch. 

David Matz, a partner in Smith Hanley's financial-strategies group, also has a strong reputation in the industry. He's placed technology and quantitative-research professionals at hedge funds, private-equity firms, and investment banks. His sweet spot is senior leadership roles, including chief technology officers, heads of trading, heads of research, portfolio managers, and heads of machine learning.

Stonehaven International: Tom Graham

Tom Graham's focus is more on technologists and quant developers than traditional front-office trading roles. But as he and others on this list will tell you, when you're dealing with the largest quant funds, that's where the alpha is harvested — in black-box algorithms and the internal tech platforms that enable and facilitate them. 

"It is such a blurred line these days. If you look at some of the more systematic funds, it's a tech play," Graham, a partner in global technology and data, told Insider.

While Stonehaven's heritage is steeped in financial-services head-hunting across private equity and sell-side banks, Graham focuses primarily on hedge funds these days, placing high-ranking roles, including chief technology officers, heads of trading technology, heads of software engineering, and chief information officers.

He works exclusively on a retained basis and counts some of the largest systematic quant funds as clients.

Originally from the UK, Graham worked at a real-estate-search firm briefly after college before joining Stonehaven, a London firm, in 2008 and moving to its New York City office. He leads the firm's team in the US.

Tardis Group: Vick Tandon

Vick Tandon heads up the systematic-trading business at Tardis Group, a global search firm with a strong presence in Australia, Southeast Asia, and London. 

Tandon, the director and head of US business development, spends the bulk of his time on quant-recruiting efforts in New York but also recruits for portfolio managers and researchers focused on commodities and global macro. He's focused on the buy side. 

His first foray into Wall Street recruiting came at Options Group in 2000, where he made his name in commodities-trading searches and helped grow the company's presence in that arena. After nearly 14 years, he left to join Solomon Page, and he signed on with Tardis Group in 2020.

Among his clients, systematic credit is one area that has increasingly drawn interest.

"Credit has been an asset class that in our mind has taken the lead as a growth area for a lot of 'multistrat' and smaller funds. The majority of our clients have shown interest in building out 'systematic credit,' an area that has eluded a lot of folks, as it can be very data-intensive with current systems, models, and infrastructure not ready to support that level of data," Tandon recently told Insider.

Thurn Partners: Luke Thompson and Alex Wedderburn

A recent launch in the Wall Street recruiting space, Thurn Partners is a boutique run by Luke Thompson and Alex Wedderburn that focuses on bespoke senior mandates in technology and quant trading for buy-side firms. 

Thompson started out at the search firm Radley James in 2010 with a focus on the both the buy-side and the sell-side before moving to Morgan Stanley in 2014, where he managed trading-technology hiring in London. He left at the end of 2017 to lay the groundwork for Thurn.

Wedderburn also started out at Radley James, in 2010, decamping in 2016 for Dore Partnership, where he helped build the firm's quant-finance practice. He reunited with Thompson in 2019 as a codirector of Thurn.

The team of fewer than 10 recruiters in London covers a small roster that primarily consists of hedge funds and proprietary-trading firms, with the majority of the work coming from the US market. Its wheelhouse is senior alpha generators in technology or quant-trading and research roles, but it also handles discretionary portfolio-manager placements. 

Thurn declined to comment.

Trace: Denesh Gnanalingam and Alyesha Sayle

Trace, a boutique within the broader umbrella of the global recruitment agency Oliver James, is focused narrowly on quantitative research, trading, and machine learning. 

From London, Trace's small team of consultants has a global scope and client roster of hedge funds, investment banks, HFT firms, and asset managers. 

Denesh Gnanalingam, the director of the group, has been recruiting quant portfolio managers, traders, researchers, and strategists since joining Oliver James in 2014, and with Trace specifically since it launched in 2019. 

Since then, Gnanalingam has built Trace into a bespoke primarily retained shop handling mandates that skew senior but cut across the spectrum — the firm handles junior hires and greenfield build-outs, but the sweet spot is midlevel and senior-level researchers and portfolio managers. 

Last year, he brought aboard Alyesha Sayle to bolster the firm's artificial-intelligence recruiting. Sayle has been headhunting for data-science and machine-learning roles since 2015, but she shifted her focus to the financial sector in 2020 and will be tasked with expanding the firm's US presence.

Sayle specializes in identifying and engaging the deep-learning and natural-language-processing researchers who are coveted by buy-side quant firms.

"In the machine-learning space, there are many researchers who haven't considered finance," Sayle said. "It's such a fantastic problem set for them to use to advance machine-learning research, given the complexity of the datasets they'll be working with and the unrivaled resources they'll have access to."

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"You're OK that I've recorded this call, right?" 

So said one veteran recruiter who works with proprietary-trading firms before apologizing for his paranoia at the end of a 30 minute conversation. Other headhunters wanted to ensure up front that Insider wasn't secretly recording them (we weren't), and agreed to speak only on the condition of anonymity — that what they said wouldn't be attributed to them or their company. Some would dish about the industry or their competitors, but discussing clients was verboten.

Welcome to the secretive world of Wall Street quant recruiting. 

While secrecy abounds across finance, it's especially prevalent in the world of quantitative trading, where noncompetes in excess of a year, nondisclosure agreements, and lawsuits over defectors are common. When the sophisticated trading models, lines of code, and technology infrastructure can amount to billions in profits — and take years to develop — that's simply the cost of doing business. 

"At the NSA, the penalty for leaking is twenty-five years in prison," Renaissance Technologies founder Jim Simons would tell employees, according to Gregory Zuckerman's book "The Man Who Solved the Market.""Unfortunately, all we can do is fire you."

The recruiters who trade in this world know this all too well, and with millions in fees at stake for headhunting the expensive talent these trading juggernauts rely on, confidentiality is paramount.

While more traditional roles on Wall Street, like investment banking and private equity, have time-worn career progressions and recruiting systems — and plenty of study guides and online forums devoted to navigating them — the quant-recruiting world is comparatively unmapped territory. 

Insider spoke with more than two dozen specialists in quant recruiting to better understand how the secretive field operates and where the richest hedge funds and prop traders are hunting for talent. 

Talent war

Demand for quant and data-science specialists isn't new, but it has surged in recent years as more competitors — from Wall Street but other industries as well — have jumped into the fray.

While some hedge funds have been wagering on algorithms and predictive models to beat the markets since the 1980s — Renaissance Technologies, D. E. Shaw, and Paloma Partners blazed the trail — computing power and data have exploded over the past 15 years, as have the firms and capital dedicated to systematic strategies. 

Even funds with a more traditional pedigree have explored quantitative or quantamental strategies, building out teams to crunch the vast troves of alternative data for insights and trading signals. Some fundamental firms in recent years have dedicated billions in capital to strategies helmed by data-science specialists. 

The engineers, researchers, scientists, and quant traders developing cutting-edge investment strategies and platforms aren't just coveted by hedge funds, of course.

They're the lifeblood of prop-trading firms and market makers — like Jane Street or Jump Trading — as well as investment banks building out their electronic trading and execution systems. They're coveted by universities, research institutions, and government agencies.

And then there are the FAANGs — the catch-all market acronym for the tech behemoths Facebook, Amazon, Apple, Netflix, and Google.

The emergence of these tech giants as the largest, most valuable companies — not to mention, for many years, the "coolest" places to work — created another front in the talent war.

Some of the quant recruiters Insider spoke with recognized early on that poaching from Silicon Valley held promise. You could find not only elite software programmers who could write or implement trading algorithms but also mathematicians and scientists focused on natural-language processing and other machine-learning challenges that, instead of being applied to self-driving cars or optimizing digital advertising, could be leveraged to predict market behavior or optimize trading execution. 

Applications of AI and ML are expanding in hedge funds, and it's not hard to understand why — such approaches beat the broader hedge-fund industry and other systematic funds on a three- and five-year annualized basis through 2019, according to a 2020 Preqin report.

With the tech giants, and the bevy of other unicorns Silicon Valley spawned, you could find researchers with exposure to cutting-edge ideas and avoid the headache of waiting out onerous noncompete handcuffs imposed by competitors.

"This has led to a lot of hiring from fields and industries which were traditionally seen as different," Yvonne Likomanova, a recruiter at Los Angeles' Inventure, said. "As problems are generally about making sense of large datasets, there is less emphasis on backgrounds within finance and more on onboarding fresh ideas to create a competitive edge."

For top quant funds like D. E. Shaw and Two Sigma that cultivate the aura of research labs — the kinds that boast about how many Ph.D. holders and International Math Olympiad medal winners they have on staff — having an investment track record isn't necessarily a prerequisite. 

Systematic hedge funds, as well as proprietary-trading powerhouses like DRW, Hudson River Trading, Jane Street, and Jump Trading, also feast on the best Ph.D. holders graduating each year and have robust internal campus-recruiting operations. It doesn't mean a third-party recruiter can't carve out business in this niche, especially when the demand is so intense, but it's competitive and mandates may stem from smaller or less established trading shops.

"Most of the top firms have smooth and well-established process for hiring Ph.D.s," a recruiter said.

'The nerd NFL'

Multistrategy giants with systematic-trading operations are a different animal. The Millenniums, Citadels, and Schonfelds of the world have dozens of trading teams that function like independent businesses under the same roof. 

They crave traders and researchers with impressive Wall Street track records and fight bitterly over the best quant portfolio managers in the industry.

"The number of people we've seen bounce from places like Point72, Millennium, Balyasny, Citadel — it's been like a pinball going back and forth on a constant basis," one systematic-trading recruiter said. "And they're firing as quickly as they're hiring."

The best traders in the business can earn guaranteed deals that eclipse those of professional athletes, according to senior recruiters — eight-figure packages, and not ones starting with a 1.

Another senior recruiter likened it to the "nerd NFL."

"When you get into the right seat and have the right experience and talent, and heaven forbid you have a personality and can communicate, you're dangerous, and you can make a ridiculous amount of money," one recruiter said. 

A $15 million to $20 million guarantee isn't commonplace, recruiters told Insider, but it happens several times a year. And when it does, it commands attention.

"It's just supply and demand. If you have a high-quality person and multiple firms trying to get them, you just end up in an old fashioned bidding war," an in-house quant recruiter described. "Generally it will be Millennium or Citadel that will win."

A hire like that can translate to enormous fees for headhunters.

The business models

"Recruiters flood us with résumés," a source at a proprietary trading firm told Insider. "Basically incessantly."

While internal recruiters at some top trading firms will find candidates directly at times, they often rely on a pipeline of agency recruiters to source talent. They're not all created equal. 

Elite investment firms may have a roster of dozens of different recruiters they'll work with, but ultimately maintain close ties with just a handful of proven, reliable headhunters, an in-house recruiter described. 

"It is more effective to have good agencies shipping good talent," the internal recruiter said.

There's a diversity of approaches when it comes to the headhunters that service these hedge funds and prop-trading firms.

Some are larger operations with dozens of employees focused on placing a high volume of candidates. They may place some senior roles, but those can take months — or longer — to come to fruition and is a different business model.

"The turnaround times can be so long it doesn't make sense for someone in a high-volume, transactional place to take them seriously," an internal recruiter explained. 

Senior roles are rarer by nature, so there are far more junior and mid-level openings to fill, and those fees can add up to substantial revenues. 

"It's dialing for dollars, an old-school boiler room mentality," one veteran recruiter said."These firms are nonetheless highly relevant, working with marquee institutions and generating substantial revenues."

Other firms have a more bespoke approach, commanding pricey retainers and fatter fees for more senior hires and strategic services.

The fee models vary. 

Retainers, which provide steady, predictable fees in exchange for exclusive attention on a mandate, have a connotation with elite, high-brow recruiting, in part because of the trust and skill-level implied by the relationship. Many Wall Street recruiting firms push hard for retainers.

But they aren't necessarily more enlightened or effective than a contingency placement, and many of the industry's most experienced headhunters do a healthy mix of both. A failed retainer mandate can be counterproductive, several recruiters explained, wasting time and harming your reputation. 

"It's an unusually competitive market. It's not usually in a hedge fund's interest to do a retained search unless it's a very senior search," a recruiter explained.

"The standard portfolio manager has six to seven headhunters hitting them up every week," he continued.

Though it depends on the role and the firm, the difference in fees can be stark. An elite quant hire can command a contingency fee of more than 25% of the candidate's first-year total compensation, which stretches into the millions, according to recruiters. 

Often trading firms will have a fee cap though. The caps vary by firm and role, but recruiters said $200,000 to $400,000 was common but they've seen fees capped at $700,000 or $1 million as well.

More junior hires, or hires further removed from alpha generation, may trigger a fee of less than 25% of base salary rather than total comp — a far more modest sum. 

Some funds will pay flat, six-figure fees based on the role. 

Banks, which hire at much greater volumes than most hedge funds and prop shops and have shorter non-compete periods, more commonly pay on a percentage of base salary, recruiters said. 

A small number of headhunters have evolved beyond mere recruitment and take a piece of the action of the high-powered individuals they place, orchestrating capital allocation, seeding ventures, and earning equity.  

Because of the specialized nature of the work — and the fact that candidates could come from a variety of industries across the world — the recruiting market is truly global and no single agency has a firm grip on it, creating opportunities for many headhunters to grab a lucrative slice of this expanding pie. 

Fast-growing frontiers

It's common at quant funds for a sizable percentage of revenue to come from alpha strategies devised in the previous 12 months, a veteran recruiter explained, highlighting the competitiveness and how quickly alpha can decay. 

Thus these firms are constantly hunting for new markets or datasets to attack — as well as the talent to do it with. 

Systematic credit trading efforts have been ramping up in recent years at places including Renaissance Technologies, Point72, and Millennium, though that has largely revolved around highly liquid, investment-grade bonds.

Several recruiters cited systematic volatility as a hot hiring area, and demand from quant trading firms breaking into crypto trading has also ratcheted up.

"There has been a steady migration of talented programmers, quants, traders, and executives into the crypto space over the past four to five years, many of whom have come from elite banks, funds, and trading firms and are starting their own companies," Kevin Cassata, a headhunter at Karbon Agency, said.

Outside of the trading, private-equity and venture-capital firms are starting to gobble up data scientists and engineers, too. 

Geography, rather than strategy, may represent the most mouth-watering new opportunity.

The industry's top quant-trading firms have been ramping up their presence in Singapore, Hong Kong, and mainland China, the latter being one the most in-demand regions for talent, several recruiters told Insider.

"It's kind of where Europe and the US were 10 to 15 years ago, where there's significant opportunity for arbitrage and all of the big names in systematic trading are trying to get a piece of the action," said Oliver Wherrett, a recruiter at Radley James leading the firm's expansion into Asia. 

"The growth in systematic trading in the China markets is the biggest trend I've seen recently," he added.

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CastleKnight Management hasn't wasted any time since it began trading last October. 

In six months, the David Tepper-backed firm has surged 63.2%, a source familiar with the firm told Insider. In 2021, through the end of March, the manager is up 34% after returning 10.8% last month. The average hedge fund has returned more than 6% in the first quarter of 2021, according to Hedge Fund Research.

The Manhattan-based firm was started with $100 million by former Appaloosa partner Aaron Weitman. He was one of several Appaloosa executives who have started their own funds since Tepper announced in 2019 he would return outside capital to focus on his NFL team, the Carolina Panthers.

Filings from March show that CastleKnight is now managing over $150 million.

Weitman, who worked at Appaloosa for more than 15 years, is Tepper's nephew and rose from intern at his uncle's hedge fund to senior partner. His sector expertise at Appaloosa included housing, chemicals, and industrials. 

It's unclear what generated returns for the new manager, which was planning on investing in equities and credit. Previously, a source familiar with the firm told Insider that the investing style would be a blend of distressed investing, value investing, and merger arbitrage. 

Value companies, which for years has trailed growth stocks, have had a comeback this year, while the pandemic has given distressed investors plenty of opportunities and allocators eager to give them capital to work with. 

The firm declined to comment on its performance. 

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Tudor Investment Corporation's chief technology officer is retiring after 25 years at the firm. 

Miriam Roiter, the CTO at the hedge fund since 2016 and a member of Tudor's operating committee, is stepping away from the firm, according to sources familiar with the matter. 

A Tudor representative declined to comment. 

Roiter has spent most of her career managing the tech and data evolution at Tudor, the $8.7 billion fund managed by billionaire Paul Tudor Jones that employs both discretionary and quantitative strategies. 

She's among a minority of women who hold top technology executive positions at major American corporations. Just 18% of CIO and CTO jobs at the top 1,000 public and private companies by revenue were helmed by women, according to a 2019 study by Korn Ferry. 

Financial services led the way as an industry, with women holding 25% of the top technology roles. 

Roiter joined the firm in 1996 as director of IT Financial Data, according to her LinkedIn bio, and held several technology leadership roles before landing the CTO appointment.

She's the first woman to hold the title at the firm.

Prior to joining Tudor, Roiter worked as programmer analyst for the NASA Goddard Institute for Space Studies.

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The co-founder of London-based hedge fund Marshall Wace is sounding the alarm over blank-check companies, which he said have delivered "awful returns,"Bloomberg reported. The British investor also said he is ramping up short bets against special purpose acquisition companies, or SPACs.

In a newsletter addressed to his investors, Paul Marshall said that the SPAC market is overrun with "perverse incentives". 

SPACs are shell companies seeking to merge with private companies with the intention of taking them public.

"The SPAC phenomenon will end badly and leave many casualties," said Marshall, who, in the past has lost money betting on SPACs. He disclosed to Bloomberg that his hedge fund has around $1 billion of gross exposure to SPACs.

Marshall's firm, which manages $55 billion of assets, owns or has owned "almost every SPAC" on the long side. 

"We have increasing exposure on the short side as the SPACs go ex-deal and the low caliber of the deals, and even the potential for bezzle, becomes apparent,"he told Bloomberg."Bezzle" refers to the period in which an embezzler has stolen money without the victim realizing yet. 

The billionaire's warning comes amid a SPAC boom that has dominated financial markets in 2020 and 2021. 

In 2020, a total of 248 SPACs raised $83.3 billion according to SPAC Analytics. But by the fourth month of 2021 alone, 308 SPACs have raised $99.7 billion, comprising 65% of all IPOs.

Paul Munter, the acting chief accountant at the Securities and Exchange Commission, in April cautioned SPAC dealmakers about the risks and governance issues that come with raising capital through blank check companies. 

In March, the SEC has begun an inquiry into the SPAC craze by seeking voluntary information. The agency requested details on how underwriting banks manage the risks involved with special-purpose acquisition companies.

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The co-founder of London-based hedge fund Marshall Wace is sounding the alarm over blank-check companies, which he said have delivered "awful returns,"Bloomberg reported. The British investor also said he is ramping up short bets against special purpose acquisition companies, or SPACs.

In a newsletter addressed to his investors, Paul Marshall said that the SPAC market is overrun with "perverse incentives". 

SPACs are shell companies seeking to merge with private companies with the intention of taking them public.

"The SPAC phenomenon will end badly and leave many casualties," said Marshall, who, in the past has lost money betting on SPACs. He disclosed to Bloomberg that his hedge fund has around $1 billion of gross exposure to SPACs.

Marshall's firm, which manages $55 billion of assets, owns or has owned "almost every SPAC" on the long side. 

"We have increasing exposure on the short side as the SPACs go ex-deal and the low caliber of the deals, and even the potential for bezzle, becomes apparent,"he told Bloomberg."Bezzle" refers to the period in which an embezzler has stolen money without the victim realizing yet. 

The billionaire's warning comes amid a SPAC boom that has dominated financial markets in 2020 and 2021. 

In 2020, a total of 248 SPACs raised $83.3 billion according to SPAC Analytics. But by the fourth month of 2021 alone, 308 SPACs have raised $99.7 billion, comprising 65% of all IPOs.

Paul Munter, the acting chief accountant at the Securities and Exchange Commission, in April cautioned SPAC dealmakers about the risks and governance issues that come with raising capital through blank check companies. 

In March, the SEC has begun an inquiry into the SPAC craze by seeking voluntary information. The agency requested details on how underwriting banks manage the risks involved with special-purpose acquisition companies.

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Quants had a tough 2020, but Cliff Asness' AQR has been struggling longer than that owing to a long drought for its value-focused strategies. But a person close to the firm said the money manager is turning things around this year.

The Greenwich-based systematic manager, which runs a number of hedge funds and mutual funds, has lost more than a third of its assets — nearly 38% — since the end of 2017, according to a report prepared by consultant Callan for the Marin County Employees' Retirement Association. AQR's assets dropped from $224 billion at the end of 2017 to $140 billion at the end of 2020, the report said. A source familiar with the firm told Insider that assets are still at $140 billion after the first quarter of 2021. 

Performance in several funds has bounced back this year, however. The Absolute Return fund, which is AQR's longest-running strategy, returned 21.6% through March this year, this person said. Since the start of the fourth quarter of last year, the fund has returned more than 34%.

Other funds, such as the Corporate Arbitrage and Global Macro strategies, have also had big first quarters, returning 7.8% and 11.8%, respectively. The average hedge fund has returned more than 6% in the first quarter of 2021, according to Hedge Fund Research.

The struggles of the quant manager have been constant over the past few years. Until recently, value investing — AQR's specialty, which Asness defends vigorously — has not been able to keep up with growth investors who have plowed money into tech stocks that have soared despite their lofty valuations. Last year was hellacious for many quant managers as well, including Jim Simons' Renaissance Technologies, as the pandemic-induced market volatility threw models off-kilter. 

In the fourth quarter of last year, AQR liquidated two mutual funds and merged seven others into similar strategies, according to Institutional Investor. 

The Callan report detailing AQR's asset decline was compiled as the pension was searching for an emerging markets equity manager, and AQR did not progress to the next round of the search, according to Jeff Wickman, the retirement administrator for the California county. He told Insider in an email that the current size of its emerging markets portfolio is $112 million. Callan declined to comment.

Affiliated Managers Group, which owns a sizable minority stake in AQR, said in its most recent earnings call in February that quant strategies accounted for 95% of the firm's outflows in the fourth quarter. While AMG executives did not say how much of the $15.8 billion in outflows came from AQR, the firm is AMG's biggest affiliate. 

"The business is still highly profitable. Several segments are growing, lots of good momentum in fixed income, the tax-managed business, and the ESG capabilities at AQR," said Jay Horgen, CEO of AMG, in an earnings call in October. 

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Two Sigma's expansion into the private markets has added another arm.

Two Sigma Real Estate is the $58 billion quant giant's newest unit and will be led by Tom Hill, the former Blackstone executive who joined Two Sigma in 2019 as a consultant, and Rich Gomel, a former managing director at WeWork who led the firm's real-estate investment platform.

This is the fourth private investing business Two Sigma has built, and second since Hill joined the firm.

He told Insider in an interview that he was tasked with figuring out whether the firm's systematic public-markets strategy could be applied in the private space.

"Taking data, modeling it, and then predicting what's going to happen in the next hour, the next day, the next week," Hill said, describing in simple terms the complex quant firm's process. "Maybe you can look at longer-term signals that can predict three, four, five years out."

The other private businesses at the quant manager, founded by the billionaires David Siegel and John Overdeck, include two units that predate Hill — private-equity arm Sightway Capital and a venture-capital branch — and Two Sigma Impact, which was launched last year. The four private businesses run a combined $3 billion. The firm also has a market-making arm.

Real-estate investing is a crowded space, of course, dominated by the likes of Hill's former firm Blackstone, but he and Gomel believe the existing data infrastructure at Two Sigma — the dozens of data scientists and thousands of datasets — gives the venture a "headstart" on long-time players.

"It's hard to do this, it's incredibly costly to do this," said Gomel, who joined Two Sigma Real Estate as its chief investment officer, of the firm's data-science capabilities.

"There aren't that many firms that have the infrastructure — in public or private markets — to do this. It creates a really high barrier to entry."

The firm, which has hundreds of employees who hold doctorates, has more than 10,000 datasets that Gomel and Hill believe can be put to work in finding the best investments in real estate.

Drew Conway, who has been a senior vice president at Two Sigma since 2019, will be the head of data science for the unit, according to a press release, and there are five dedicated real-estate investors on Gomel's team with plans to hire more.

"Some people and some places are trying to build this out, but Two Sigma is already there," Hill said. He called real estate "ripe for innovation and advancements."

"It's rich in data but no one uses it," he said. "The first-mover advantage is very significant."

Data on migration, employment, and regional credit-card spending can be indicators of where a city or neighborhood's rent is going, for example, Hill said. One project someone worked on recently was building an algorithm to predict which urban areas would get rent-control protections next and when, he said.

At first, the new arm will be looking at opportunities only in the US and Canada, but Hill expects to add Europe and Asia if the strategy proves successful.

The real estate arm has not yet fundraised on its own, but instead has invested capital from Two Sigma. Hill, who is the chairman of all four private-investing businesses, believes it'll be a quick fundraise when the strategies prove successful thanks to the firm's relationship with many large allocators.

"I'm quite confident firms will say 'Let's see if we can't partner,'" he said.

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The market for quant and data-science specialists has perhaps never been hotter. And the technologists, researchers, scientists, and traders developing cutting-edge investment strategies and platforms aren't just coveted by hedge funds.

They're the lifeblood of high-frequency-trading (HFT) firms and proprietary market makers, as well as investment banks building out their systems for electronic trading and execution. They're also coveted by Silicon Valley juggernauts, startups, academia, and the government. People working on hard-science Ph.D.s from top universities can expect the most elite institutions to start wooing them years before they defend their dissertations.

A cadre of Wall Street recruiters are at the forefront of this lucrative talent battle, and Insider has assembled a list of specialists in the field.

Subscribe now to read our full list of more than 30 top headhunters at the forefront of Wall Street's systematic-trading and data-science hiring frenzy

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High-speed quant trading firm Vatic Investments is launching a statistical arbitrage effort, and it has hired a former finance professor who worked at Citadel and D.E. Shaw to lead the charge as its chief investment officer. 

Allen Poteshman joined Vatic Investments, previously known as Vatic Labs, last week to oversee its overarching investments but also to build out a new "stat arb" strategy, according to a statement released on Wednesday.

Poteshman, most recently a managing director in Citadel's Global Quantitative Securities group in 2019, will report to Vatic founder and CEO James Chiu.

"Adding a professional of Allen's caliber deepens an already extraordinary team and will allow us to combine our existing strengths in trade execution with an enhanced focus on research and financial analysis, creating a single system that embraces both short- to medium-term trading," Chiu said in the statement. 

Stat arb is a classic quant strategy that employs mathematical models, troves of data, and algorithms to take advantage of short-term market mispricing or trading errors, often betting that correlated groups of stocks will revert to historic norms. 

Poteshman comes from academia, researching equity and options markets and teaching at the University of Illinois at Urbana-Champaign from 1999 to 2007. He holds Ph.D.s in finance and philosophy as well as a Master's in physics.

In 2007, he left to join D.E. Shaw's equity stat arb group, where he spent 11 years until joining Citadel in 2018. 

Scott Grummon, who worked as in-house counsel at billionaire Steve Cohen's SAC Capital and Point72 from 2001 to 2016, also joined Vatic as general counsel and head of compliance, according to the statement. 

Vatic looks to expand

Vatic Labs was among a slew of systematic, high-speed proprietary trading firms to emerge as the dust of the financial crisis settled. 

Chiu, who worked at prop-trading standout Jump Trading from 2008 to 2013, founded Vatic in San Francisco in 2014. Like other high-frequency shops that rely on cutting-edge technology and sophisticated algorithms to score trading profits, Vatic gained a reputation for secrecy, according to industry insiders. 

But the firm, now based in New York, has been expanding its operation in recent years, taking outside capital and pursuing strategies that scale better than high-frequency trading. Vatic had raised $44 million across 19 investors as of May 2020, according to a Form D filing with the Securities and Exchange Commission. 

It isn't clear how much total outside money the company manages. 

In early 2020 Vatic hired Todd Hohman, a long-time Goldman Sachs partner who held titles at the bank including cohead of global systematic market making and head of global quant vol. He was promoted to president and head of risk management earlier this year, around the same time the firm appointed Dave Handley as chief technology officer. 

Before Vatic, Handley worked as head of research development at Citadel and as co-CTO at PDT Partners.

Chris Grabowski, a former research engineer also with Citadel and PDT, and Alexy Makarov, former head of quantitative research in options market making at Two Sigma Securities, also joined the firm, Vatic announced in February. 

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Hedge fund D1 Capital Partners, run by billionaire Dan Sundheim, is continuing to ramp up its private market bets — having invested in at least 24 private companies in 2021 so far. 

The $21 billion hedge fund has been making private investments in startups since its launch in 2018. Popular among fellow Tiger Cub firms Tiger Global and Coatue Management, private investing continues to take the hedge fund world by storm this year. 

As companies choose to stay private for longer periods of time and the number of public companies in the market has declined, hedge funds are turning to startups as a source of differentiated returns. They have won deals against traditional venture firms by offering startups lucrative 50% to 100% premiums, according to private markets data provider Pitchbook. 

D1, like many other hedge funds, made headlines in January for its losses in the public markets when popular short bets like Gamestop and AMC were pummeled by a mob of day traders. However, D1 was relatively insulated from this downside because, as Insider reported in October 2020, almost one-third of its capital is invested in private market bets, some of which have produced substantial profits.

One of its initial investments, a $160 million bet on cold-storage firm Lineage Logistics, appreciated over 150% during the pandemic. The fund has also invested in widely recognized names such as popular trading app Robinhood, Elon Musk's rocket company SpaceX, and salad unicorn Sweetgreen.

D1 powered full speed ahead in 2021 and we outlined each of the hedge fund's publically-announced investments below by sector with data provided by Pitchbook. Its investments this year so far have coalesced around logistics, enterprise software, e-commerce, consumer tech, healthcare, and fintech.

A spokesperson for D1 declined to comment on the firm's strategy or sectors of interest.

Logistics

Lalamove

Lalamove, a Hong Kong-based on-demand and same-day delivery trucking company, raised a $1.5 billion Series F on January 20 led by existing shareholders such as Sequoia Capital China and Hillhouse Capital. The Series F, raised less than a month after its $515 million Series E, valued the firm at $10 billion. D1 was a new investor in the Series F round, joined by Boyu Capital, Tiger Fund, and others. 

Lineage Logistics 

Michigan-based cold-storage REIT Lineage Logistics raised $1.9 billion in new equity on March 11 from new and existing investors including D1, Oxford Properties, and Morgan Stanley Investment Management's Tactical Value Investing unit. The capital raise follows the company's January acquisition of Cryo-Trans, an owner of refrigerated railcars. 

Enterprise software

Lacework

Lacework, a security and compliance SaaS platform based in San Jose, CA, closed a $525 million Series D growth round on January 7. The round, led by Sutter Hill and Altimeter, featured participation from D1, Coatue, Dragoneer, Tiger Global and others, valuing the company as a unicorn at $1 billion.

Latch

Latch, an enterprise software-as-a-service (SaaS) provider for buildings that is known for manufacturing smart locks, raised a $190 million PIPE on January 26 in conjunction with its announcement that it would merge with TS Innovation Acquisitions Corp., a Tishman Speyer-sponsored SPAC. D1 invested in the PIPE alongside BlackRock, Durable Capital, and SPAC enthusiast Chamath Palihapitiya.

Drivenets 

D1 led the Israeli Infrastructure-as-a-Service vendor's $208 million Series B on January 27. Drivenets, which provides network software, was valued at over $1 billion with the new round. New investors D1 and Atreides Management joined existing investors Bessemer Venture Partners and Pitango in the round.

CCC Information Services

CCC Information Services, a SaaS provider for property & casualty (P&C) insurance, raised a $150 million PIPE on February 3 for its SPAC merger with Dragoneer Growth Opportunities Corp. D1 participated in the PIPE alongside Altimeter Capital Management, Coatue, Franklin Templeton, and others. 

Shippo

Shippo, a shipping software company for e-commerce companies, announced on February 3 that it had raised a $45 million Series D at a $495 million valuation in Q4 2020, buoyed by the e-commerce boom. D1, who also led the company's $30 million Series C in Q1 2020, led the new round, joined by all of Shippo's existing investors.

Squarespace

Squarespace, a website-building and e-commerce platform, raised a $300 million growth round at a $10 billion valuation on March 16. D1 came in as a new investor alongside Dragoneer, Fidelity, and others. The unicorn is set to pursue a direct listing later this year, according to reports. 

Attentive 

Attentive, an NYC-based personalized text messaging platform for businesses to connect with customers, raised a $470 million Series E on March 24 with participation from existing investors—Coatue, D1, Tiger Global, and IVP—along with a new investor, Base10 Partners. The round brought the total Attentive has raised to $866 million.

Ramp

Ramp, a provider of corporate cards and spend management software, raised a $115 million Series B on Apr 8. The funding comprised two tranches, a $65 million investment led by D1 that valued the startup at $1.1 billion and a $50 million investment led by online payments company Stripe which pushed its valuation to $1.6 billion.

6Sense

D1 led a $125 million Series D round for 6Sense, an AI-powered B2B sales and marketing platform, with participation from Sapphire Ventures and Tiger Global, on March 30. 6Sense, which aims to help companies improve revenue results through account engagement strategies, was valued at $2.1 billion after the round.

OneStream Software

Michigan-based OneStream Software raised a $200 million Series B on April 6 at a $6 billion valuation. D1 led the all-primary funding round for OneStream, which provides B2B corporate performance management (CPM) solutions, with Tiger Global and Investment Group of Santa Barbara.

E-Commerce and Consumer Tech

Rivian 

Rivian, an electric-truck startup backed by Amazon and Ford, raised a $2.6 billion Series F on January 19. T. Rowe Price led the round, joined by D1, Fidelity, and Amazon's Climate Pledge Fund. Amazon previously led Rivian's $700 million funding round in February 2019. 

Instacart

Grocery delivery platform Instacart raised $265 million in a Series I round on March 2 from current investors including D1, Andreessen Horowitz, and Sequoia Capital. The Series I round valued Instacart at $39 billion. D1 also co-led the company's previous financing in October 2020 along with Valiant Peregrine Fund. 

goPuff

goPuff, a delivery platform for everyday items, doubled its valuation in five months, raising a $1.15 billion round on March 23 that valued the company at $8.9 billion. D1 founder Sundheim said in the press release that the "company's vision and differentiated model drive industry-leading economics and sustainable growth." D1, a new investor, led the round with existing investor Accel.

Loft

In one of Brazil's largest venture rounds, digital real estate platform Loft raised a $425 million Series D led by D1 on March 23. The company was valued at $2.2 billion after the round, its first after its January 2020 Series C that brought it just shy of unicorn territory in terms of valuation.

Dream11

Dreamsports, parent company of Indian fantasy sports platform Dream11, raised $400 million on March 24, doubling its valuation to $5 billion. The secondary investment round was led by new investors including D1, TCV, and Falcon Edge, with participation from existing investors like Tiger Global, ChrysCapital, and TPG Growth. Dream11's new valuation brought it to the league of India's most valued unicorns like OYO ($9 billion) and Zomato ($5 billion).

Cazoo

British used-car dealer Cazoo raised an $800 million PIPE on March 29 to support its $7 billion announced merger with SPAC AJAX I. The PIPE was led by the AJAX sponsors and D1 and joined by new and existing investors including Altimeter, BlackRock, Morgan Stanley Investment Management's Counterpoint Global unit, and Fidelity Management.

Kavak

Kavak, a SoftBank-backed used car platform that became Mexico's first tech unicorn in October 2020, raised $485 million in Series D funding on April 7 at a $4 billion valuation. The round, led by US firms D1, Founders Fund, Ribbit, and BOND, more than tripled its last valuation of $1.15 billion and cemented Kavak's status as one of the top five highest-valued startups in Latin America. 

Misfits Market

D1 co-led the D2C "ugly" produce delivery service's Series C with Accel. Misfits Market, based in Philadelphia, raised $200 million in the round at a valuation over $1 billion, making it a newly minted unicorn. Existing investors including Valor Equity Partners and Greenoaks Capital also participated in the round, which was announced on April 21. 

Healthcare and Biotech

Inflammatix

Inflammatix, a molecular diagnostics company focused on acute infections and sepsis, raised a $102 million Series D on March 15 led by D1. Existing investors, including Northpond Ventures, Khosla Ventures, Think. Health, and OSF Healthcare Ventures, also participated. 

Rapid Micro Biosystems

D1 led an $81 million Series D1 round for Rapid Micro Biosystems, which provides technology for microbial detection in biopharmaceutical manufacturing, on March 16. Rapid Micro Biosystems had raised $340 million total including the Series D1 round, in which D1 was a new investor alongside BlackRock and T. Rowe Price.

AbSci

AbSci, a synthetic biology and drug discovery company, raised $125 million in crossover financing on March 23. The round was led by existing investors Casdin Capital and Redmile Group and included participation from new investors including D1 and Fidelity.

Inscripta

Inscripta, a digital genome engineering company, raised a $150 million Series E on April 5. D1, a new investor in the round, participated alongside new investor Durable Capital and existing investors Fidelity and T. Rowe Price. Inscripta announced the round in conjunction with its first commercial sale of its genome-editing and analysis platform, Onyx. 

Fintech

HighRadius

HighRadius, an AI-powered fintech enterprise SaaS platform, raised a $300 million Series C on March 30. The company, which automates treasury management processes, was valued at $3.1 billion after the round led by D1 and Tiger Global. 

DLocal

Uruguayan payments platform DLocal raised a $150 million funding round on April 2 at a valuation of $5 billion. The platform connects global enterprise merchants to consumers in emerging markets. Alkeon Capital led the round alongside BOND, D1, and Tiger Global. 

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