Welcome back! If you’re feeling some kind of way about heading back to work, maybe hold off on that social media post. As much fun as it can be to vent, an ex-VP of HR at Microsoft said it’s a fine line.
In today’s newsletter, four massive firms are dominating the hedge fund industry and leaving everyone else to figure out where they fit in.
What’s on deck
Markets: Hudson River Trading had a record year in 2024. Here’s what went so well for the trading giant.
Tech: Hulu’s livestream of the Oscars went dark during critical moments of the awards ceremony.
Business: Starbucks’ CEO is six months on the job. How is he doing? (And what does it mean for your morning coffee?)
But first, don’t even try to compete.
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The big story
The new big four
In the world of hedge funds, there are four big names — and then everyone else.
Millennium, Citadel, Point72, and Balyasny have surpassed their peers by so much it’s reshaping the entire industry, writes Business Insider’s Bradley Saacks.
The fundraising ability, talent recruitment, and strong performance of those four multistrategy funds have made it almost impossible for up-and-comers to break in.
The concentration at the top has several knock-on effects.
For one, it makes an already competitive (and expensive) market for hiring even harder. One estimate last July of 18,600 people across 53 multistrategy firms found more than 71% worked for one of the big four.
And if you can’t attract the best talent, you might have a tougher time raising money from allocators, who are already keeping things close to the vest due to high interest rates.
Those two factors make setting up your own fund a lot more intimidating than it used to be.
Even investors with the highest pedigrees — former Millennium executive Bobby Jain — have faced challenges going out on their own. And besides, the days of a high-profile investor running a fund that attracts billions of dollars in investments are long gone.
At the same time, one allocator told Bradley that Steve Cohen’s Point72 has a $9 billion waitlist, which is larger than most firms’ total capital.
As one person building a multi-strat fund put it to Bradley: “If you’re going to compete with Citadel and Millennium in their own backyard, you’re already dead.”
The end result could mean less competition, as investors might just stay with the biggest dogs on the block.
Funds looking to stay afloat might try to think outside the box, lest they compete directly with one of the giants. That could mean catering to specific regions or focusing on more niche investments the big players wouldn’t bother with.
Still, the rise of the big four could be an opportunity for smaller players. With firms like Millennium and Citadel looking more like big banks, being nimble could be an asset.
Specifically, using AI to help streamline work that a high-priced human might typically do could narrow the gap (and improve their margins).
News brief
3 things in markets
1. Goodbye, WallStreetBets. Hello, investing influencers. With Roaring Kitty’s rise in the rearview, there’s a new set of retail-investing influencers guiding thousands of followers. Three told BI their strategies, explained why they left the WallStreetBets subreddit, and shared some personal Hall of Fame trades.
2. HRT’s monster 2024. Hudson River Trading’s net trading revenue hit nearly $8 billion last year, an all-time high, according to people familiar with the matter. Roughly half of HRT’s trading profits still come from its high-frequency trading business. But the firm is also expanding into more hedge-fund-style trading strategies that require more capital and come with greater risks.
3. The US economy’s big bogeyman: stagflation. Fears of higher inflation and slow economic growth are creeping back into the picture. Kansas City Fed president Jeff Schmid and Apollo chief economist Torsten Sløk both issued warnings in remarks last week.
3 things in tech
1. This dating app wants to be like Pokémon Go for finding love. Left Field launched for New York daters last week, and it’s the latest startup aiming to mitigate swiping fatigue. The app wants to introduce a more passive way to date. Instead of swiping, Left Field sends push notifications of a potential match in the area if a user has location services on and crosses paths with another profile.
2. Inside the exclusive LA tech conference where VCs, royals, and legendary athletes mingle. The Upfront Summit is an annual invite-only event that aspires to be #not-like-the-other-tech-conferences. This year, Prince Harry, Serena Williams, and Kamala Harris were all in attendance, and AI excitement — and unease — was a dominant theme.
3. Hulu crashed during the livestream of the Oscars. On Sunday, some fans were left disappointed and unable to follow along in real time for some of the biggest awards of the night. It was the first time the platform has streamed the awards live.
3 things in business
1. The secret of business success. A study of 50 million American companies tried to crack the code, finding the amount of financing and its source are key indicators. But venture capital’s mostly white, mostly male bias led BI’s Adam Rogers to this succinct conclusion: “Be a tech bro who gets money from other tech bros.” The study also gives clues about a more interesting question — why today’s startup culture looks so different from before.
2. Meet DOGE’s acting administrator. Amy Gleason’s career has combined interests in nursing and technology. One former colleague described her as “superhuman” when it comes to work, adding that she earned the nickname “the green dot” for being on the work messaging system late into the night and then early in the morning. The ex-colleague also described her as apolitical and unflappable and predicted she would “crush it” in her new role.
3. Checking in on Brian Niccol’s ‘Back to Starbucks’ plan. Since September, the new CEO has been focused on rebranding the coffee chain to win back its customer base. Niccol’s goal is to turn Starbucks into a cozy local coffeehouse customers can hang out in — and he’s instituted several changes to do so. It’s still early, but marketing and retail experts think Niccol is moving in the right direction.
In other news
What’s happening today
- Paris fashion week begins.
The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Grace Lett, editor, in Chicago. Ella Hopkins, associate editor, in London. Hallam Bullock, senior editor, in London. Amanda Yen, associate editor, in New York. Elizabeth Casolo, fellow, in Chicago.
