Point72, Balyasny Vets Launch Firm That Only Wants Alpha
Using blockchain, a start-up aims to mine talented portfolio managers and leave behind the generic beta.
Veterans from Point72, Balyasny, Goldman Sachs, and Morgan Stanley are launching an asset manager that aims to scour the industry for talented managers and scrape off the alpha they produce for institutional investors. The new firm, called Alpha Innovations, strives to be an alternative to high fees for beta and sub-benchmark performance.
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Alpha Innovations will hire mostly external managers but is also looking to bring on internal trading teams. The firm, which requires all managers to trade within a separate account, will consider all types of investment strategies.Tomorrow we'll link to the II story I was actually going for.
“I just want to see you produce consistent alpha. We want to deliver to institutions as close to pure alpha as possible,” said Lawrence Newhook, president and CEO of Alpha Innovations, who previously oversaw hedge funds and the due diligence group at Point72, founded by Steve Cohen of SAC Capital.
“Institutions hate paying for beta. If they can get beta for almost free, it makes no sense to invest in a manager that is incredibly correlated to the S&P and then pay high fees,” said Nicole Biernat, chief operating officer who previously worked in Goldman Sachs’ prime brokerage group. “We’re creating all these parameters within which the portfolio manager needs to trade to be able to isolate alpha to the greatest extent possible,” she added.
The trading parameters are the job of Mark Antonio Awada, chief risk and data analytics officer. Awada’s systems identify the different factors that make up managers’ return streams and determine how trading strategies need to be modified to generate only alpha. Awada has a background in theoretical physics and built quant desks for a number of Wall Street firms.
Identifying alpha isn’t easy. “Quant tools can help but there’s also art to this,” Newhook said....MORE
