Weekly update

Point72 limits inflows as assets hit record $33.2bn

Point72 Asset Management recently raised about $3.8 billion, reaching a new high of around $32.3 billion in assets. Founder Steve Cohen's involvement accounts for a significant portion of this total. Despite this success, Point72 is now limiting new investments to prioritize existing clients' returns according to Bloomberg. Too much money in a strategy can sometimes hinder performance.

Cohen, also the owner of the New York Mets, managed to attract these funds despite challenges in the hedge fund fundraising landscape. Since 2020, Point72 has gathered nearly $12.8 billion, including investments from banks serving wealthy clients. While some other hedge funds have closed to new investors, Point72 has a history of intermittently suspending or limiting new investments, with the last move in July 2020. These pauses in fundraising can be flexible and are often driven by market conditions. Point72's decision to restrict new investments aligns with similar moves made by other large multimanager funds like Citadel and Millennium Management.

Hedge funds investing in credit are in demand

For the second year running, asset allocation firms are showing a strong preference for hedge funds that focus on credit investments over other strategies. This demand for credit-focused hedge funds, which deal with things like company debt and structured credit, follows a good performance in both bonds and stocks last year, as stated in the 2024 Hedge Fund Industry Outlook by Goldman Sachs.

According to the report, capital allocators saw an average gain of 6.4% from their hedge fund investments between January and November 2023, a big improvement from a 0.9% loss during the same period in 2022. The report gathered responses from 358 allocator firms worldwide, managing over $1 trillion in hedge fund assets, and 302 hedge fund managers, collectively managing over $1 trillion.

The report highlights that hedge funds focusing on credit strategies are particularly favored this year, with 44% of investors planning to increase their exposure to such funds, while only 3% intend to decrease it. On the other hand, interest in other strategies like discretionary macro and multi-strategy funds has cooled down. Distressed credit and long-short credit remain the most sought-after sub-strategies for hedge funds, similar to last year.

Goldman Sachs trader at hedge fund Millennium amasses $8m bonus within months

Naveen Choppara, the former co-head of EMEA emerging markets and FX rates trading at Goldman Sachs, reportedly made $40 million in March by betting on the devaluation of the Egyptian pound. This profit could potentially earn him a tax free bonus of around $8 million according to efininacial. Choppara joined Millennium in Dubai after spending 11 years at Goldman Sachs in London.

He is not the only recent hire from Goldman Sachs' rates team at Millennium, as the fund also recruited Urvashi Chahal, among others. While Millennium has a reputation for generous compensation to attract talent, not all departures from Goldman Sachs to Millennium are permanent, as evidenced by the recent departure of Dan Avery, a former Goldman delta one trader. In contrast, Goldman Sachs has been replenishing its ranks, such as hiring Antonio Belgioioso from Brevan Howard in February. Millennium, which opened its Dubai office in 2020, now has eight employees there, excluding Choppara.