tug of war

Hedge funds and private equity firms are no longer staying in their lanes and are increasingly jumping between public and private markets.
The convergence of hedge funds and private equity has led to fight for talent as both sides try to pitch prospective employees and investors that they are all-encompassing alternative-asset managers.
It comes as the starting pool for talent in finance continues to dwindle and Silicon Valley siphons Wall Street professionals away.
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As massive companies stay private longer and money pours into the private markets, private-equity firms are booming. Now hedge funds that have traditionally focused on the public markets are getting in on the action.

That’s creating fresh competition for talent as the lines blur between the alternative-asset managers.

Private equity and hedge funds, especially the biggest firms, are looking more like each other. Stock-picking hedge funds like Third Point Management, Tiger Global Management, and Coatue Management have invested in private companies like SoFi, Peloton, and Instacart, for example.

Traditionally, hedge funds have been more liquid and short-term-focused than their private-equity peers, with investors able to pull their money out at the end of each quarter. Private-equity investors are more patient, with the expectation that the strategy will take years to play out.

But a JPMorgan survey of institutional investors suggests that hedge funds’ biggest investors — pensions, endowments, and foundations — are comfortable locking their capital with a strategy for years. More than half of endowments and foundations are comfortable with a lockup of three years or more, the survey said, while 40% of pensions are.

See more: Billionaire investor Druckenmiller says there should be only ‘200 or 300’ hedge funds, not thousands, and he expects a culling

IDW Group founder Ilana Weinstein said some funds are “changing their stripes” to transform their strategy to focus on what their strengths are, she said, even if it means giving up some of what it means to be a hedge fund. Some long-short managers, Weinstein said as an example, are giving up on shorting and running long-only books.

The added performance pressure from more players in the alternatives space has hedge funds “having a ‘come-to-Jesus’ on what they are best at,” Weinstein added. Meanwhile, private-equity firms have been running credit and special-situation funds that often cross into hedge funds’ territory.

Historically, hedge funds have recruited from large private-equity firms’ associate programs. But with the hedge-fund industry’s recent struggles, 2019’s hot …read more

Source:: Business Insider


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The booming private market has some hedge funds spreading into private equity’s domain. Now a tug-of-war has broken out over talent.

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