Hedge fund managers discussed Monday how to create a great hedge fund firm by investing in people.
Gideon Berger, senior managing director and head of technology and risk management at Blackstone Group, said at a Milken Institute Global Conference panel that hedge fund managers need to ask themselves “what are you trying to build?”
Kenneth Griffin, founder and CEO of Citadel, said a fundamental decision is whether a firm wants to build a large organization or stay small. Once people are in the door, Mr. Griffin said firms should “coach your stars.” Getting 10% more out of your top performers means a lot and is the best use of time, he added.
“People need to take on new challenges” to rekindle their passions and a culture of continual learning has helped them be successful, Mr. Griffin said.
Jason Karp, CEO and chief investment officer at Tourbillon Capital Partners, said people have more options than any stock he had ever purchased and firms should invest in them.
Tourbillon has three types of candidates, Mr. Karp said: excellent, dangerous and nuisance. Dangerous hires are the most brilliant. They are “impervious to pain” and “reckless,” Mr. Karp said. He added that when looking for people, the firm administers a “three-step personality exam. … Openness to change” is the single most important factor they are looking for, with “grit” being second.
Alexander Klabin, managing partner and co-CIO at Senator Investment Group, said, “Culture is very important.” He added, “Your assets go down the elevator every day.”
Mr. Klabin said the best way to keep people is to give them “responsibility, opportunity and autonomy.”