About a year before Sanjay Valvani's wife found him dead inside his Brooklyn Heights home, the star money manager learned he was under investigation for insider trading.

Valvani drove profits at Visium Asset Management, an $8 billion New York hedge fund that had been on the rise.

He was insistent about his innocence from the start. He hired one of Wall Street's top defense attorneys and told friends that he'd be fine — that the government could not bring a case against him.

Then, in June of this year, the charges were filed.

The indictment, which landed on June 15, a Wednesday, said he deserved as much as 85 years in prison.

The news media — including Business Insider — jumped all over the story, reporting on the indictment against Valvani and his apparent conspiracy with a former senior Food and Drug Administration official. News photographers snapped pictures of him as he left the courthouse in downtown Manhattan — all fairly standard for a white-collar case.

Valvani was advised that the negative press coverage would blow over in about a week and that an eventual trial would be his chance to defend himself publicly.

But he didn't make it through. On Sunday — June 19 — Valvani, 44, celebrated Father's Day with his family, including his two daughters. The next evening, he was found dead.

The police arrived at about 6 p.m. and found Valvani's body facedown in a bedroom, a note and a weapon nearby. The medical examiner ruled it a suicide.

Why does a man who thinks he is innocent do this?

Valvani, who had pleaded not guilty in court, repeated his claim of innocence in the note he left behind, according to two people who said they had seen it. The note is not in court records relating to his case.

He also had a support network. Several of the people who knew him said they thought the government's charges were weak, especially since the standard by which prosecutors need to prove insider trading is in flux. Valvani's lawyer, Barry Berke, is considered top notch and just last year had gotten insider-trading charges dropped for SAC Advisors' Michael Steinberg.

So, friends and colleagues who spoke with Business Insider say Valvani's death came as a shock.

He was meticulous and thought through every action, according to one colleague. There were times when he lost millions of dollars but wouldn't flinch, the person said. The colleague and another friend describe Valvani as levelheaded and said he didn't drink alcohol.

"He was too smart to not have thought through all of this ... I don't believe he did anything wrong," the colleague said. "Everybody was mostly just hurt that he didn't get to defend himself."

Most of his friends and colleagues asked not to be named in this story because of professional relationships or, in one case, out of deference to his family. Valvani's wife, through Valvani's attorney, declined to speak with us, and his father — in a brief conversation — said he couldn't bring himself to speak about the situation.

But the people who did speak revealed that Valvani was under pressure on several fronts. His relationship with Jacob Gottlieb, Visium's founder who once was a mentor to Valvani, had shifted. Partly out of loyalty to Gottlieb, who had made Valvani's career, he may have felt like he couldn't leave Visium, even though he was notably underpaid and most likely would have succeeded on his own, colleagues said.

And later, like many accused of white-collar crimes, he was being professionally isolated and he worried about the impact that the charges would have on employees of Visium if the fund would have to shut down as a result.

That last part, his friends say, was the kind of thing that defined Valvani's character. But his death has forced people who knew him to contend with a narrative of his life that they hadn't previously considered.

"I've known him since 2010, and after a while you can read somebody," said Shibani Malhotra, a friend and professional contact.

A few weeks before the government announced the indictment, Malhotra met Valvani for coffee. He told her he didn't think he had done anything wrong.

"I could read how sure he was," she recalled. "It was so emphatic."

A few days before Valvani died, she sent him a text — a silly Bollywood song.

"He seemed really chirpy," she said. "It's not like he didn't respond or sounded bad." He didn't mention the case.

Coverage of Valvani's death, Malhotra believes, was colored by the assumption that it was confirmation of his guilt.

"He was presumed guilty, and then when he committed suicide, it wasn't written so directly, but presumed that he did it," Malhotra said.

Malhotra and the other people who spoke about Valvani for this story say they did so to counteract this narrative.

Stresses of an indictment

Valvani's life had been full of successes. From humble beginnings — raised in Kalamazoo, Michigan, by immigrant parents — he had become one of Wall Street's best healthcare investors by age 44. The fall from grace hit him hard.

In April, it was reported Valvani was the target of a federal insider-trading investigation, and Visium put him on leave. That's when colleagues and professional contacts started retreating. Compliance reasons prevented some of them from being in contact, Malhotra said.

In June, two days after Valvani was charged and pleaded not guilty, Visium — a business he had helped build — announced it would shut down.

The idea that it would result in colleagues losing their jobs weighed on him. Visium employed some 170 people with headquarters in New York and offices in London and San Francisco.

Visium remains under investigation, according to FBI sources.

Something soured in 2015

Valvani was a star portfolio manager on Visium's healthcare fund. He generated massive profits that enriched him and Gottlieb, the hedge fund's founder, and helped Visium build its reputation.

His death has raised questions — and, at times, produced conflicting accounts — about his legacy at the fund.

What is clear, however, is that Valvani was a significant player managing the healthcare fund, which racked up industry awards for performance over the years. Visium, which also included other funds, grew to managing $7.8 billion at the start of this year, a 20% increase from the year before, according to Hedge Fund Intelligence.

Gottlieb, a trained medical doctor and Visium's chief investment officer, was the firm's public face and a frequent speaker at industry conferences. And while some of Visium's investors thought Gottlieb was running a portfolio, he didn't trade, according to two people who worked at Visium.

Valvani and Gottlieb had worked together for more than a decade. They were both at the hedge fund Balyasny Asset Management, and Gottlieb helped give Valvani his big break, bringing him over as an analyst in 2003. Valvani eventually was promoted to portfolio manager, a top hedge fund job, according to a profile by Duke's Fuqua School of Business, his alma mater.

Before then Valvani had worked as a sell-side analyst, covering companies and publishing research used by portfolio-manager clients. Running his own portfolio was a huge step for him.

In 2005, Gottlieb, Valvani, and others on the Balyasny team spun out to form Visium.

"In the beginning, I really had to convince Jacob Gottlieb that I was hungry to join his hedge fund," Valvani said, according to the Duke profile. "But I believed in myself, my education, and my experience."

Valvani felt indebted to Gottlieb and had a close, reverential relationship with him, according to two people who worked with them.

At the same time, Valvani, along with other Visium managers, was paid below market rate. Valvani was one of the firm's partners, but that title did not equate nearly as much financial upside as at other firms — a sore spot for the partners each year, according to two people who worked at Visium. Being a partner was almost meaningless. Technically, the term meant there was a pool of money that the partners could access each year, but there usually wasn't much in it, the people said.

Earlier this year, the firm improved its compensation structure for its investment staff. Portfolio managers would keep about 12% of their performance gains, whereas previously they kept as low as 8%. Still, that compensation paled in comparison to that available at other funds, which pay out as high as 18% to 20%. If a Visium manager is generating $100 million in profit a year, a few percentage points of difference could mean millions left on the table.

Gottlieb and Valvani's relationship soured last year, according to one of the colleagues and a separate professional contact. The reasons aren't completely clear, but some details have emerged.

Usually a star performer, Valvani saw his returns drop last year as he was caught up in healthcare trades that went the wrong way, according to the colleague. He had been behind Visium's position in Valeant, the controversial drug company that plunged in value, the colleague said.

Valvani was also considering leaving Visium last year, either to start his own firm or to work for someone else, according to the professional contact.

In the end, Valvani stayed put.

"Valvani was indebted to Jake because he moved from the equity research side to being an analyst at a hedge fund," the Visium colleague told Business Insider. "He'd never have been as successful if Jake hadn't given him a shot."

A family affair

While Gottlieb was the public rep for Visium, speaking at hedge fund conferences and accepting awards, Valvani was the backbone to the firm, managing as much as $2 billion at Visium's biggest fund, two people who worked at Visium said.

Valvani's and Gottlieb's personalities were different, and in the months after Valvani's death, contrasting versions are emerging about their legacy at Visium.

While two colleagues say Valvani drove the profits at Visium's high-profile healthcare fund, Gottlieb disputes this, according one person close to him.

Gottlieb was known as someone who sought bargains in his personal life as much as in his professional. He negotiated a prenuptial agreement with his now ex-wife 12 times, each time offering something lower, according to court papers relating to a case between them.

He has said he kept salaries at Visium low to make up for the lower fees the firm charged its investors, according to a person close to him.

But that was little solace to those who worked there, staff members said. Private fund documents show that Visium charged investors the industry standard: 2% for management fees and 20% of investment performance.

"All Jake wanted was to become a billionaire," one staffer said.

Gottlieb employed family members at Visium, including his brother, Mark Gottlieb, and brother-in-law, Stefan Lumiere, a former portfolio manager who was charged — in a separate case from Valvani's — in June with mis-valuing Visium's credit fund. Lumiere has pleaded not guilty to those charges.

Lumiere was fired in 2013, after Gottlieb filed for divorce from Lumiere's sister in August 2012. Lumiere learned of his firing when a security guard told him his key card wouldn't let him into Visium's midtown Manhattan office building, according to three people familiar with the matter.

Gottlieb doesn't dispute the manner of Lumiere's dismissal but describes it as a resignation rather than a firing, according to the person close to him.

'Obama-like'

Valvani is described as kind, soft-spoken, and humble.

"He'd be meeting with the chairman of Pfizer and give that same level of respect to the janitor cleaning the toilets at Visium," a colleague said. "You don't find people like that in this industry."

Valvani joked with a colleague that after Wall Street he would have liked to one day become mayor.

He was a gifted speaker, the colleague said. "He had a way with words. When you think of politicians, it was an Obama-like level," the person said.

Valvani was also charitable, endowing his alma mater and donating to local causes, according to a Bloomberg News profile in June.

Malhotra, who worked with him professionally as a sell-side analyst, described Valvani as respectful even when their views on a stock diverged.

"I once had a sell on a stock that Visium owned," she said. "Typically, hedge fund managers can get aggressive, but Sanjay would always listen and would say, 'I disagree, and here's why.'"

Toxic

Other factors bore down on Valvani.

The intense media coverage of the indictment upset him, according to Malhotra.

"No one tried to see it from his point of view. That was hard for him," she said. "He was presumed guilty."

He "couldn't handle that his integrity was being challenged," Malhotra added. "Once you're accused on Wall Street, even if you win your case, you're toxic. No one will talk with you."

This was also the first time Valvani faced the realm of failure, according to a close colleague.

Family was everything to him, according to those who knew him. He spent weekends taking a daughter to squash tournaments around the Northeast, and his girls often came to visit him at Visium's Manhattan office.

Post-suicide struggle

Friends and family have been grappling with his death for months. Malhotra said she mostly tries to pretend it never happened.

Valvani's death has left those who knew him seeking answers. Some blame the government for bringing what they view as baseless charges. Others blame the culture at Visium.

Trying to make sense of the chaos is only human.

"When someone kills themselves violently out of the blue, we don't have a narrative for it," said Benyamin Cirlin, the executive director for the Center for Loss and Renewal in New York. "There's no foundation. There's no narrative hint."

Valvani's death also leaves many unanswered questions.

"Part of being human is learning to live with some painful mysteries," Cirlin said. "Part of the long-term healing is learning how to live with ambiguity and a plot line that doesn't end neatly."

Over and over, Valvani's friends and colleagues said that they wish he would have fought the charges. It is possible that more information could come to light, because the FBI is still investigating Visium, according to two people at the agency. Visium and Gottlieb have not been accused of wrongdoing.

Dealing with the shame and stigma of being accused is not easy, especially since there is no certainty of how long a trial will last, nor what its outcome will be, those who have been through it say.

"This is the hardest part, every second of every day before you have clarity," said Justin Paperny, who spent 18 months in prison for securities fraud and now provides consulting through his company, White Collar Advice. "Everything is on hold for you."

"When someone is indicted for a crime, they think the worst, and they think their life is over," said Jeff Grant, who served time in prison for a committing fraud as a lawyer before starting a ministry helping people accused of white-collar crime and their families.

"It's not true. Their life is going to be different, and in many cases, it's going to be better," he said, explaining that the pressures those people had could be lifted.

"But it's never going to be what they think it's going to be."

Grant also said that marriages rarely survive the pressure. Two people said Valvani was facing issues in his relationship with his wife, though their accounts of what was going on varied.

Alone, but not alone

A day before Valvani's memorial, Malhotra sent an email requesting notes for the family. She said she received 27 responses — some from competitors at other hedge and mutual funds, and CEOs and CFOs of healthcare companies.

"Don't believe the media," one of the notes to Valvani's children said. "This is not your father, and this is not how you should remember him."

Valvani's contacts got short notice for his memorial. At the private Brooklyn club where it was held, some 200 people packed in.

"He died feeling alone," Malhotra said, "and he wasn't alone."

SEE ALSO: Behind the closure of Visium, an $8 billion New York hedge fund

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Steve Cohen is expanding his recruitment program outside the US.

The legendary hedge fund investor is expanding his Point72 Academy for recent college grads in London and Asia.

Students spend a year learning how to pick stocks, with courses on financial modeling and research. The program launched in the US last year.

Coursework also includes data science so that the young recruits can learn to incorporate alternative data into their models, Matthew Granade, Point72's chief market intelligence officer, told Business Insider Wednesday.

The "decision to further invest in the Academy Program by recruiting students internationally supports our aggressive growth strategy in Asia and Europe and helps us to capture multicultural talent that is critical to adding diversity of thought,” Marc Desmidt, CEO of Point72’s international business, said in a statement.

Cohen's family office, Point72 Asset Management, manages his billions of personal wealth. Cohen was banned from managing outside money until 2018 following charges of insider trading at his predecessor firm, SAC Capital.

The expansion of the academy follows the firm's recent growth in London, Hong Kong, Singapore and Tokyo.

Point72 launched its academy last year, at which point Business Insider took a look behind the scenes. Its current class includes 12 full-time participants, including two women, up from zero in the first class, according to a Point72 statement.

Few women work in the investment profession, particularly at hedge funds, one of the last industry's with a significant gender gap.

SEE ALSO: Inside Steve Cohen's groundbreaking 'Academy' poaching young talent from Wall Street

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The news isn't getting any better for the biggest hedge funds.

Assets at the largest funds have dropped sharply, according to a new survey by industry data and news provider Hedge Fund Intelligence.

The twice-annual Billion Dollar Club report, released on Thursday, showed a decline of nearly 7 percent, or $132 billion, to July 2016 from a year ago. 

The survey attempts to tabulate all Americas-based firms that manage at least $1 billion in traditional hedge fund assets. Together, 302 firms ran $1.84 trillion as of July 1, nearly two-thirds of the entire hedge fund industry, often estimated to manage about $3 trillion.

Assets for the Billion Dollar Club have fallen over the last two six-month counting periods, the first consecutive drop since 2009, when hedge funds reeled from the global financial crisis.

Funds that lost the most assets over the first half of 2016 include:

• Och-Ziff Capital Management Group LLC;
• BTG Pactual Asset Management, York Capital Management;
• Pershing Square Capital Management, and;
• J.P. Morgan Asset Management 

The data provides another sign of struggle in the industry, with investment returns lackluster at many well-known firms. The HFI Americas Composite Index, which tracks a range of strategies, gained 3.35 percent this year through August. That compares to a 6.21 percent gain for the S&P 500 Index and a 4.22 percent gain for the iShares Barclays Aggregate Bond Fund over the same period.

To be sure, some firms consolidated their power in the industry. Top asset gainers by dollar amount were systematic behemoth AQR Capital Management, credit-focused Centerbridge Partners, quantitative pioneer Renaissance Technologies, technology stock specialist Coatue Management and macro-focused Element Capital Management, according to HFI.

Bridgewater Associates retained its spot atop the list of the largest hedge fund managers, with $103 billion as of June 30, down just 1.15 percent since the start of the year. Bridgewater, a macroeconomic specialist based in Westport, Connecticut, manages approximately $150 billion overall, including non-hedge fund products.

Hedge funds, which are only open to qualified individuals and institutions, typically charge management and performance fees, offer investors their capital back within a year, and bet on the price of securities both increasing and decreasing, so-called longs and shorts.

Big Losers

The largest decline in assets came at Och-Ziff, one of the few publicly traded hedge fund managers. The New York-based firm has struggled with a gain of just 0.36 percent in its flagship multi-strategy fund this year through August, according to a filing with the U.S. Securities and Exchange Commission. That followed a small loss last year.

Och-Ziff, still the fourth largest as of July 1 with $39.2 billion, has also attracted unwanted attention because of a U.S. investigation into alleged bribery of African officials and an anticipated guilty plea and $400 million fine. A spokesman for Och-Ziff declined to comment.

BTG Pactual suffered the most dramatic decline, with assets falling 83 percent since Jan. 1. The former chief executive officer, André Esteves, of the Brazil-based investment bank and money manager was arrested late last year on obstruction of justice charges, which he has denied.

BTG asset management CEO Steve Jacobs said assets in its flagship emerging markets-focused macro hedge fund fell to $150 million from $5 billion because of that "external crisis." But assets for the fund have since tripled from the low point on the back of positive performance since March, according to Jacobs.

Representatives of the other firms declined to comment or did not respond to a request for comment.

(Reporting by Reuters' Lawrence Delevingne)

SEE ALSO: Behind the life and death of a star money manager accused of insider trading

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Och-Ziff Capital Management has agreed to settle charges of bribery, paying nearly $200 million to the Securities and Exchange Commission.

The hedge fund's CEO, Dan Och, agreed to pay nearly $2.2 million to settle the charges with the SEC, as did the firm's CFO Joel Frank.

"Och-Ziff engaged in complicated, far-reaching schemes to get special access and secure significant deals and profits through corruption,” Andrew J. Ceresney, director at the SEC enforcement division, said in a statement.

Och-Ziff was accused of illegally paying "the Libyan Investment Authority sovereign wealth fund to invest in Och-Ziff managed funds. Other bribes were paid to secure mining rights and corruptly influence government officials in Libya, Chad, Niger, Guinea, and the Democratic Republic of the Congo," the SEC said.

SEE ALSO: Behind the life and death of a star money manager accused of insider trading

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Hedge funds are starting to pull business from Deutsche Bank, amid mounting concerns about the struggling German lender. And one analyst this morning sent a note to investors calling the company "Douche Bank." 

Bloomberg News reported last night that about 10 hedge funds have moved to limit exposure to the bank and have withdrawn funds, fearing that the bank could collapse under the weight of a proposed $14 billion fine from the US Department of Justice. The news sent stock plummeting in the US and again this morning in Germany.

The hedge funds pulling business include $34 billion Millennium Partners, $4 billion Rokos Capital Management, and the $14 billion Capula Investment Management, according to Bloomberg. These funds clear transactions through Deutsche Bank — basically relying on it to act as a middleman for trades — but have taken business elsewhere.

These funds are just a handful of Deutsche's 800 hedge fund clients but the move will do nothing to reassure already jittery investors. Shares fell to 30-year lows earlier in the week amid concerns over the bank's ability to withstand the proposed huge fine for misselling of mortgage-backed securities in the run-up to the financial crisis.

Deutsche Bank CEO John Cryan was forced to send a memo to staff Friday morning reassuring them that the bank is OK and published the memo publically too in a bid to reassure investors as well. He blamed "ongoing rumours" for the bank's share price woes. (You can read the full memo here.)

US shares in the bank fell over 6% to a new low after the hedge fund withdrawals story broke and shares opened down over 7% in Frankfurt on Friday morning.Shares fell as much as 8%, breaking the psychologically important €10 mark to hit €9.98, but have recovered slightly since Cryan's memo was published.

Here's how shares look at 10.55 a.m. BST (5.55 a.m. ET) in Frankfurt:Michael Hewson, chief market commentator at CMC Markets, says in an emailed statement on Friday morning: "While these firms [the hedge funds] represent a fairly small part of the banks clients, as a weather vane in the current febrile environment, it doesn’t exactly represent a vote of confidence either, and sent the US-listed shares of the bank to a record low."

Mike van Dulken, head of research at Accendo Markets, dubbed the lender "Douche Bank" in a note on Friday morning titled "Douche Bank taking a bath." (That's a reference to the French word for shower, but it has an obvious pejorative meaning in English, too.) Van Dulken says that Deutsche Bank's woes "only adds to already dampened risk appetite as investors came to realise what an OPEC ‘deal’ actually means."

Deutsche Bank provided the following statement to Bloomberg and the Financial Times in response to the story:

"Our trading clients are amongst the world’s most sophisticated investors. We are confident that the vast majority of them have a full understanding of our stable financial position, the current macroeconomic environment, the litigation process in the US and the progress we are making with our strategy."

Deutsche Bank this week reassured staff in an internal memo, obtained by Business Insider, that it has "no current plans to raise capital" and is a "much safer and stronger bank than it was before the financial crisis."

However, the eye-watering $14 billion fine the US Department of Justice has proposed for mis-selling of mortgage-backed securities is more than the bank's market capitalisation. This has led to reports in Germany that Berlin is preparing a bailout for the lender as a final backstop, although the government has repeatedly denied this.

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A college dropout is prepping his own hedge fund.

Julian Marchese, 20, left New York University last year to focus on his business, Marchese Investments.

"NYU is extremely expensive," Marchese told Business Insider. "I felt that the next three years that I would have spent at school I could have spent on building [investment] strategies."

Becoming an entrepreneur fulfills a lifelong dream, he added.

"I like making my own hours," he said. "I can work as hard as I want to. There's no office I have to go to."

For now, that's truly the case. He has been working from his family's home in suburban Toronto before he moves back to Manhattan early next year, where he rents a shared office space on Wall Street, he said.

A handful of industry vets have helped him set up his operations, and he plans to eventually hire some programmers and even an intern.

Marchese said he manages about $1 million since launching last October, and expects another $3 million or so to come in over the coming months.

Hedge funds don't have to disclose much information, particularly tiny ones, so Business Insider hasn't been able to verify the amounts independently. But we heard about Marchese going out on his own from a person in the industry.

Marchese declined to identify the investors, but said they weren't his family members.

"I don't come from much money," he added. "Most of it went to NYU."

Rather, investors got to know him as he gained publicity as an investing whiz kid. He says one investor expressed interest after Business Insider profiled him during his freshman year, when he was setting up shop in his dorm.

"When I was younger, it was all about me building my name and my brand," said Marchese, who has had numerous articles written about him over the years. "Now that I'm running a business, it's about me being a professional."

Marchese invests using quantitative strategies — which use computer programs — to trade stocks and exchange traded funds. He has returned about 14% net of fees since launching last October, according to a performance record he provided.

It's far from common for investors to launch funds in their 20s, let alone without a college degree — though a recent exception is Jamie Sterne, a 28-year-old Harvard grad.

Technically, Marchese's firm is not a hedge fund, which pools capital in one structure; he's starting out managing investors' money in separate accounts. But he said he plans on launching a commingled hedge fund in the coming months.

So why start off on his own rather than head to one of the established funds to work on his craft?

"I believe I have an investment philosophy that adds value on its own," he said. "I don't want to share that intellectual property with anyone because I think it's best serviced to my investors."

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Point72 Asset Management, billionaire Steve Cohen's family office, recently brought on Matthew Granade to oversee big data.

Granade oversees data ranging from sell-side research to alternative data that is then incorporated into the firm's quant and fundamental investing strategies.

Point72 manages $11.6 billion, the bulk of which is Cohen's fortune.

Business Insider caught up with Granade, the firm's chief market intelligence officer, last week at the investment firm's New York offices. What follows is an excerpt from the conversation, which Business Insider has edited for clarity and length.

Rachael Levy: Walk me through how Point72 views quant investing.

Matthew Granade: Our longest-serving quant portfolio manager has been here 21 years. And the reason I mention that is there has been a very, very long-standing commitment to quantitative-style investing here. We're very known for our discretionary investing, but Steve has been doing quant investing for a very long time. Cubist, which is run by Ross Garon, is a standalone business. It operates separately from the discretionary long-short business, but quant more broadly, increasingly quant techniques and quant ideas, are infusing themselves everywhere.

Cubist is doing very traditional quant, like stat arb [statistical arbitrage] and using traditional quant data sets. This idea of building equations and using machine learning and breaking your process down, you're starting to see that pop up in the discretionary side of the house as well.

But the difference is the discretionary folks take a very company-centric view of the world. So an analyst on the discretionary side will cover 40 or 50 stocks and will know each of those companies really well, whereas a quant trader will trade 2,000 or 3,000 stocks — they tend to know like a data set or a technique, whereas our discretionary investors really, really know the companies.

But what we're increasingly finding is that data and some of the techniques you can apply to the data are very powerful in the discretionary investment process.

Levy: Would you qualify that as "quantamental"?

Granade: I try not to use the quantamental word because it's sort of more obscuring than clarifying sometimes, but yeah, I think that's exactly right. Sometimes, people present themselves as quantamental and they're not really doing anything that different. It's sort of a different name on old-style quant. But I do think there's a new thing forming, which is fundamental company understanding, quant techniques, alternative data all sort of being done by one person or one team. If you want to call that quantamental, that's my definition of quantamental.

It was funny, I was using "quantamental," but I started encountering more and more people using "quantamental" and not really meaning what I meant, and so then I just stopped. So now I encounter people here and they say, "Isn't that what we call quantamental?" Right now, I don't have a good term.

Levy: So quant techniques using alternative data. You mean using algorithms to parse through this alternative data. The quant techniques were there already. So is the only thing that's new the alternative data?

Granade: I'd say the data is new and the other thing that's new is bringing it all together. Let's say if you go to our most traditional long-short discretionary investor. Most of what they did or do is talk to the companies, get some data from them usually through major releases, talk with the sell side, and the major thing they get from them is models, and then they have an analyst that builds their own model. They might do some more conversations and tweak that model.

Whereas now, what you might do if you're trading Chipotle, let's say, you'd look at the credit-card [data]. Well, that requires a tremendous number of machine-learning techniques to make that data useful and a tremendous number of data science and statistical techniques to make it insightful, and then you get to your financial model and you couple that maybe with geolocation data or some other thing. So that's the new thing.

Traditionally you didn't have someone on a long-short fundamental team who had anywhere near the skills to do this. They were Excel experts and that was the end of it. Whereas now, we have a lot of teams with data scientists on them.

Levy: So is it the case that you have people that are all in one or do you have a sidekick that is going to help me parse through this Chipotle data that would take me years to go through?

Granade: It's kind of both. This team out here, they're building products that everyone on the platform can access. The second thing, instead of hiring an analyst, we are hiring a data scientist. In that case, they're accessing the data directly and building their own models. And the third thing you're seeing is more and more portfolio managers train themselves, with our help sometimes, but also sometimes on their own on all the statistical understanding you need to have to be able to appreciate and use this data well.

Levy: Is it is possible to find the all in one package?

Granade: No, I think it's different things. What you see now is you have a data-science-track-type person, and you have a fundamental-analyst-type person who worked in private equity or investment banking and then came here. And then that person got a masters or Ph.D. in statistics and then went to a startup and came here.

If I think of the portfolio managers of the future, for 10 years from now, I think there's a very good chance that what they do is they have some education in computer science or data science, they then have a job like here in Aperio for three years as a data scientist, then they have some more training as a fundamental analyst and then they start transitioning to be a portfolio manager.

In a seven- to 10-year time frame, the portfolio managers at the top of these things are going to have been trained in all the different pieces, but right now we're still in more of a transition period where we have these two tracks.

Levy: So how does it work if you work here? Do you get training?

Granade: We do data training, statistical training, computer-language training. You have to think the level of the person. If someone is a senior analyst, it's not the right thing to train them to be a programmer — but they do need to understand these data sets and the statistical techniques that can be applied to them.

For our younger analysts, like in the academy, we do teach Excel modeling and a programming language, and we teach statistical techniques and how to do a company interview with the CFO. Those are our 22-year-olds. With our 28-, 30-, 32-year-olds, we do slightly more targeted things.

Levy: How much of quant is just a fad?

Granade: I think quant is a great business. It doesn't come overnight. Steve has been building that business for 21 years. Do I think it's a passing fad? I think people are rushing to the thing that is performing better than other things now — but very few people have the staying power to stay in it. It takes a long-term commitment. You can go look up and see how long DE Shaw and Renaissance [Technologies] have been around. They've all been around since the '90s.

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The US Supreme Court is about to hear a major insider-trading case that could settle a long-standing Wall Street legal stand-off.

The case is Salman v. United States, and the court is set to hear it Wednesday.

Bassam Salman was convicted of trading on confidential information that came to him from an extended family member who had a brother who worked at Citigroup.

Salman never paid the family member for the tips, and at issue is whether his actions met the definition of insider trading. The government says they do because Salman knew where the information came from and the three people involved benefited from a close family relationship.

"As a matter of finally clarifying a very murky area of the law, it's going to have a huge impact," said Brad Bondi, a partner at the law firm Cahill Gordon & Reindel. "What is meant by 'personal benefit'? Do you have to have something of value, or is it enough that you just have a close relationship? And if it's enough to just have a close relationship, what does that relationship resemble?"

It is the first time in two decades that the Supreme Court has taken up a case involving insider trading, a crime that Congress has never defined, leaving the courts and the Securities and Exchange Commission to shape.

Salman was convicted of conspiracy and securities-fraud charges arising from insider trading and sentenced in 2014 to three years in prison.

The court is expected to decide the case in the next year, potentially as early as January, said Derek Cohen, a partner at the law firm Goodwin Procter.

Potential outcomes

There are a few potential outcomes, Cohen added. The court may decide that the tipper has to receive some kind of financial benefit, or it could adopt a broader standard in which prosecutors wouldn't have to prove an expectation of money but just a personal benefit. Another option, he said, could be that the court adopts components of each.

The case is expected to affect high-profile insider-trading cases, such as those of Galleon Group cofounder Raj Rajaratnam and former Goldman Sachs director Rajat Gupta, who are appealing their convictions on related grounds, Bloomberg reports.

The decision, either way, could also be a big boost for US prosecutors, who in 2014 lost ground when an appeals court overturned the cases of Todd Newman, a hedge fund manager at Diamondback Capital, who was accused of trading on information he heard fourthhand, and Anthony Chiasson.

The New York-based 2nd US Circuit Court of Appeals held that, to be convicted, a trader must know that the source received a benefit in exchange and that such a benefit was "at least a potential gain of a pecuniary or similarly valuable nature."

The ruling forced prosecutors under Preet Bharara, the Manhattan US attorney, to drop charges against 12 other defendants out of 107 people charged under his watch since 2009.

After the Supreme Court declined to review that case and that of Chiasson last year, Bharara said it created an "obvious road mad for unscrupulous investors," according to a Bloomberg News report.

The Supreme Court justices in January agreed to review Salman's case, over which a federal appeals court in California had issued a potentially conflicting ruling.

High-profile cases

Salman argued that his trading was not illegal, as no proof existed that his brother-in-law, in tipping a family member who in turn tipped Salman, received anything beneficial in exchange.

The San Francisco-based 9th US Circuit Court of Appeals rejected that argument, saying that requiring a tangible benefit in such a circumstance would allow insiders to tip their relatives so long as they got nothing in exchange.

Prosecutors are hoping the Supreme Court adopts the 9th Circuit's view and rejects the 2nd Circuit's narrow interpretation, which authorities said could result in some people avoiding charges and could affect investigations.

Prosecutors have brought other high-profile insider-trading cases this year. In September, prosecutors filed charges against Omega Advisors' Lee Cooperman, who has said he is innocent and prosecutors are waiting to decide whether to file criminal charges until the Supreme Court's ruling.

In June, prosecutors filed charges against Visium Asset Management's Sanjay Valvani, who was later found dead in an apparent suicide. Valvani had maintained his innocence, and friends and colleagues told Business Insider he was stunned when the government brought charges against him.

SEE ALSO: Behind the life and death of a star money manager accused of insider trading

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The Supreme Court sounds like it will make it easier to prosecute insider trading, in a highly-watched case that could affect hedge fund managers and other traders.

U.S. Supreme Court justices indicated on Wednesday they could issue a ruling that would make it easier for prosecutors to pursue such charges.

Several justices hearing arguments in the case of Illinois man Bassam Salman appeared critical of his position that he could not be convicted for trading on tips about deals involving clients of Citigroup Inc, where his brother-in-law worked.

Alexandra Shapiro, Salman's lawyer, argued that prosecutors in insider trading cases must prove that an alleged source of corporate secrets, like the brother-in-law, received a tangible benefit such as cash in exchange for any tips.

Justice Elena Kagan urged caution, suggesting that adopting Salman's position would overturn decades of legal principle that had helped protect the interiority of the stock markets.

"You're asking us essentially to change the rules," Kagan said.

Prosecutors have said requiring such proof would make pursuing insider trading cases tougher, potentially preventing charges against executives who tip friends or relatives without receiving a tangible benefit in return.

Despite appearing likely to reject Salman's appeal, several justices indicated an interest in drawing some line to clearly establish what types of disclosures of corporate information could be prosecuted.

Salman is asking the Supreme Court to throw out his 2013 conviction on conspiracy and securities fraud charges arising from insider trading. He was sentenced to three years in prison.

The Supreme Court in January agreed to hear Salman's appeal amid seemingly conflicting rulings by federal appeals courts in San Francisco, where his case was heard, and New York, where a wave of insider trading prosecutions has been pursued by federal prosecutors recently.

The case is Salman v. United States. Salman was convicted of trading on confidential information that came to him from an extended family member who had a brother who worked at Citigroup.

Salman never paid the family member for the tips, and at issue is whether his actions met the definition of insider trading. The government says they do because Salman knew where the information came from and the three people involved benefited from a close family relationship.

It is the first time in two decades that the Supreme Court has taken up a case involving insider trading, a crime that Congress has never defined, leaving the courts and the Securities and Exchange Commission to shape.

Salman was convicted of conspiracy and securities-fraud charges arising from insider trading and sentenced in 2014 to three years in prison.

The court is expected to decide the case in the next year, potentially as early as January, Derek Cohen, a partner at the law firm Goodwin Procter, told Business Insider earlier this week.

DON'T MISS: The Supreme Court is weighing in on a closely watched insider-trading case

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Paul Singer, the billionaire founder of Elliott Management, is ramping up his feud with the most powerful family in South Korea, the Lees. They own Samsung.

In letter to investors filed on Wednesday, Singer outlined what he sees are problems at Samsung Electronics, the crown jewel of the family business. He thinks the cell phone maker is undervalued by almost every measure — price-to-book value, price-to-earnings, what have you. And so he thinks a demerger from the parent is in order.

He also says that its rumored that the Samsung family may want that itself.

Rumored.

To get that, though, the Lees will need 2/3rds of shareholders support.

The get that, he wrote in a letter, the Lees will have to address the complicated way the business is structured. Which is to say, the problem is the Lees themselves. 

"We believe that an appropriate resolution to the current uncertainty surrounding a possible restructuring of Samsung Electronics and its affiliates is needed. We foresee obvious sustainable benefits for all Samsung Electronics’ stakeholders of unlocking the value of Samsung Electronics’ significant treasury shareholding and forming a strong and stable corporate structure for the Samsung group, which the Samsung Electronics Value Enhancement Proposals are designed to achieve."

Samsung Electronics is organized within a business structure native to South Korea. It's called a chaebol — a large conglomerate held by prominent families in the country (the number two chaebol and South Korea is held by the family that owns LG).

Last summer, Singer led a campaign against the Lee family and their plans to split their chaebol. He didn't like the plan because it was designed to keep the majority of the company in the hands of the family at the expense of shareholder value.

But he narrowly lost that fight. 

That outcome wasn't surprising. The Lees possess an incredible amount of power in their home country. This is a family whose scion, Lee Kun-hee, acknowledged he had a $200 million slush fund on hand for the sole purpose of paying off politicians and judges in 2008. He also pleaded guilty to embezzlement and tax evasion. He was then pardoned by the president of South Korea and returned as chairman of Samsung in a year.

Here's Singer's whole presentation.

The Goldman Sachs retirement plan is pulling about $300 million from Leon Cooperman's Omega Advisors in the wake of insider trading charges, Bloomberg News is reporting.

Omega and Cooperman were charged with insider trading last month.

Cooperman confirmed the information with Bloomberg, and said: "Bottom line is that we have done nothing wrong and this will be proven in a court of law. We are disappointed that they couldn’t make an independent decision. They are rewarding the government for bad behavior."

In a phone message for Business Insider, Cooperman said that Omega "beat every relevant index in the history of the relationship" and that "we are going to win the case because there was no insider trading. I'm very disappointed in Goldman, but that's life."

Cooperman has previously vowed to fight the charges, and last month said that the charges were baseless. 

Cooperman is a Goldman alum, and spent a quarter of a century there before founding Omega in 1991, according to Omega's website. He was chairman and CEO of Goldman's asset management group.

To read the full Bloomberg report, click here >>

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Keita Arisawa, who oversaw TPG-Axon Capital Management's Hong Kong office, is in the early stages of setting up a new hedge fund with the backing of his boss.

The launch comes after TPG-Axon Capital – a one-time $13 billion hedge fund firm – announced it is scaling back and closing the Hong Kong office.

"I think Keita is very talented, and I'm enthusiastically supporting/backing his fund launch," Dinakar Singh, founder of TPG-Axon Capital, said in an email to Business Insider. "Keita and the Asia team are very talented, and had very solid performance, so I think they will be very successful."

In 2014, TPG-Axon brought Arisawa over from its Tokyo office to Hong Kong to lead the firm's entire Asia business, according to a Bloomberg article at the time. Arisawa declined to comment for this story, saying that he was restricted from doing so because he is still employed at the firm.

TPG-Axon has recently consolidated its offices, announcing earlier this year that it would shut down its 10-person Hong Kong office and end its presence in Tokyo, and focus on its offices in New York.

TPG-Axon managed approximately $1.6 billion in assets at mid-year, which is down from $2.4 billion in July 2015 and about $13 billion in early 2008, Reuters reported.

TPG-Axon Capital is separate from TPG Capital, the private equity firm. Both firms have small passive ownership stakes in the other. 

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The hedge fund world is a little like a dog show.

Breeds are distinct and judged separately from one another: You can be a macro guy, a fundamental type, a quant.

And as with dog breeds, certain kinds of funds can come in and out of fashion. Occasionally, a crossbreed emerges that captures the imagination and becomes the latest fad.

These days, the new hybrid breed everyone is into is something called "quantamentals."

And yes, as with the cockapoo, not everyone is fond of this name, either.

Quantamental managers combine the bottom-up stock-picking skills of fundamental investors with the use of computing power and big-data sets to test their hypotheses. For example, while a look at financial statements and a visit to a retailer's outlets might help predict future profits or ability to repay the company's debt, a portfolio manager could also test a theory with algorithms that crunch through data on millions of credit-card accounts.

"Big data and quantitative analysis can help identify those items, but so can, and so will, fundamental security analysis," Steve Einhorn, the vice chairman of Omega Advisors, told Business Insider last month. "There will always be, in my opinion, an important place for the traditional analyst and portfolio manager, but over time it will certainly be complemented by these quantitative approaches."

(Einhorn's comments were made before Omega's founder, Leon Cooperman, was charged with insider trading. Einhorn hasn't been accused of any wrongdoing.)

Quantamental investing has been driven in part by the rise of so-called alternative data. Fund managers can now study everything from social-media data (to predict footfall in a location or sentiment around a new movie) to the number of cars in a mall parking lot.

The number of data sources doesn't stop there; it's endless, with new possibilities coming out all the time and making the constant influx unlikely to become commoditized.

That said, a lot of the new data doesn't have a long history or enough info points that computers alone can draw from.

While that may hurt pure quant strategies, those that use a human element to parse through the info will have better luck, some say.

"The main skill set that human can bring to the table, which quantitative trading strategies can't really perform, is the ability to reason based on small data sets," Manoj Narang said at The Trading Show conference in New York on Thursday.

Narang, who made his name in high-speed trading before launching the hedge fund Mana Partners, called the mix of quant and discretionary strategies "one of the most exciting growth areas."

New 'masters of the universe'

Even if 10 analysts were to parse through the same data sets, they'd all come up with different predictions based on it, according to Gene Ekster, who advises hedge funds on how to use fresh data and believes he was the first to coin the term "alternative data" two years ago.

"Your kings of the universe are no longer the folks wearing suits and going to galas," Ekster said. "It's the folks that are crunching Python," the programming language, "and going to meet-ups," Ekster said. "These are becoming the new masters of the universe."

Getting the staffers to crunch through the numbers is one thing — sometimes this requires data scientists who command a premium salary. Gathering the data is another, and it grows more expensive depending on how niche the request.

"This alternative data approach is in a way making the hedge fund industry less sexy, not more sexy," Ekster said. "It's decreasing the margins of the bigger operations."

At the same time, there's a disconnect between the type of people needed for these jobs and the applicants in the market. Quants — those who use computer-driven models to trade — have become a hot commodity in the hedge fund world, recruiters say.

And some legendary hedge funders, like Paul Tudor Jones and Steve Cohen, are expanding units focusing on algorithmic trading.

Business schools haven't caught on yet as much as needed.

"Data scientists and computer science students are learning data science but not about Wall Street or investing," said Michael Gantcher, the head of sales at RS Metrics, which sells data based on satellite and aerial photographs, among other things.

At Cohen's multibillion-dollar shop, Point72 Asset Management, recent recruits are getting schooled in programming alongside fundamental stock picking. Older analysts are getting classes on data science and stats that they can weave into traditional financial modeling, Matthew Granade, Point72's chief market intelligence officer, told Business Insider.

A decade from now, a hedge fund portfolio manager will look very different, with a background in data and computer science, Granade said.

"In a seven- to 10-year time frame, the portfolio managers at the top of these things are going to be trained in all the different pieces," he said.

That doesn't mean that everyone will be a genius in all the subsets of skills needed, though.

"You're probably not going to have a person on top of this who is a whiz at programming and a whiz at Excel modeling," he said. "But I do think in the timeline we're talking about, they can have a deep appreciation of company fundamentals coupled with an understanding of how this data works and how statistics work and how to think of all these data sets."

Ekster, the hedge fund consultant, said he was recently contacted by a University of Michigan professor looking to revamp the curriculum, a sign of a slowly shifting tide. For the analysts at the fundamental hedge funds, it'll mean doing the same job and learning how to weave in the fresh data into models.

"I wouldn't say that it's taking away from the fundamental approach," added Erik Haines, the director of data and analytics at Guidepoint, which provides funds with data. "It's just becoming another tool within the toolkit."

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Billionaire hedge fund manager Carl Icahn is still backing Donald Trump in the US election, despite the Republican candidate's denigrating comments about women.

Icahn, 80, reaffirmed his support for Trump in a phone interview with CNBC Monday:

"Over my years I've listened to a lot of salacious talk in locker rooms, bachelor parties, etc., by a lot of high-level people, some of whom are now supposedly so outraged," Icahn told CNBC.

"All I can do is refer to that great quote, 'Let he who has not sinned cast the first stone.'"

A 2005 audio tape surfaced on Friday, in which Trump boasted about groping and kissing women without their consent, ignited a firestorm over the weekend.

Icahn has been a vocal supporter of Trump for months. He has argued that Trump would reduce regulations for US companies and referred to Democratic nominee Hillary Clinton's economic plan as a "mishmash of contradictions."

Donald Trump has said that if elected, he would make Icahn Treasury secretary. Icahn initially declined the offer, but has since tweeted that he would accept the offer.

Read the full story over at CNBC »

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(Reuters) - St. Jude Medical Inc warned on Tuesday that some of its implanted heart devices were at risk of premature battery depletion, a condition it said had been linked to two deaths.

News of the issue surfaced late on Monday when short-selling firm Muddy Waters tweeted a copy of a physician advisory on the matter from St. Jude, which agreed in April to sell itself for $25 billion to Abbott Laboratories.

The letter said problems with the lithium batteries that power the devices were rare and could be identified by patients using tools for monitoring battery levels at home.

Patients should seek immediate medical attention as soon as they get a low-battery alert from the monitoring devices, the U.S. Food and Drug Administration said, adding that St. Jude Medical had initiated a recall of the defibrillators.

St. Jude's shares were down 2.4 percent at $79.35 in premarket trading on Tuesday, while Abbott's were down 1.7 percent at $42.75. A spokesman for the drugmaker said it still expected to close the St. Jude deal by the end of the year.

The advisory comes as St. Jude is defending itself against unrelated allegations that its heart devices are riddled with defects that make them vulnerable to fatal cyber hacks.

Those claims were made by Muddy Waters and research firm MedSec Holdings. St. Jude has denied the allegations and sued both firms.

The FDA said on Tuesday its investigation into the cyber security vulnerabilities of the devices, including the Merlin@Home monitoring system, was continuing.

"Despite the allegations, at this time, the FDA strongly recommends that the Merlin@Home device be used to monitor the battery for these affected devices because the benefits of continued patient monitoring and the life-saving therapy these devices provide greatly outweighs any potential cybersecurity vulnerabilities," the FDA said in a statement.

Small risk

St. Jude said that out of nearly 400,000 devices manufactured through May last year, it had identified 841 failed implanted cardioverter defibrillators with lithium clusters, which can form after a device delivers electricity to the heart.

Lithium clusters sometimes cause battery power to deplete quickly, rendering devices unable to deliver doses of electricity when needed, St. Jude's vice president of quality control, Jeff Fecho, said in a physician advisory.

"There have been two deaths that have been associated with the loss of defibrillation therapy as a result of premature battery depletion," Fecho wrote in the letter.

Cowen & Co analysts said in a note that while such letters were never a positive, they were common in the industry and there was little risk to St. Jude's business.

St. Jude advised physicians to replace devices with damaged batteries immediately, but cautioned against swapping out devices that were operating normally because of the potential for complications.

"While this risk is very small, we have provided doctors with information so that they can discuss the most appropriate course of action for each individual patient," St. Jude's chief medical officer, Mark Carlson, said in a statement.

St. Jude advised patients to check its website for details on which devices were affected.

The site tells patients how they can monitor battery activity, look for vibrating alerts when batteries are low and connect to the Merlin.net remote monitoring service.

Battery-depletion advisories have issued in the past by Boston Scientific Corp and Medtronic Plc . 

(Reporting by Jim Finkle in Boston and Ankur Banerjee and Natalie Grover in Bengaluru; Editing by Paul Tait and Ted Kerr)

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Buffalo Wild Wings is shaking up its board two months after an activist investor publicly ripped apart the company.

On Tuesday, the company announced it was appointing three new independent directors, with appointments effective immediately — a move that "deeply disappointed" Marcato Capital, the hedge fund that previously publicly criticized Buffalo Wild Wings' management. 

With the new members and the retirement of two directors, Dale Applequist and Warren Mack, Buffalo Wild Wings is increasing the size of its board to nine people from eight.

James Damian, the chairman of Buffalo Wild Wings' board, said in a statement on Tuesday that Applequist and Mack's decision to "retire early upon our identification of three new, highly qualified directors demonstrates their commitment to enhancing Buffalo Wild Wings' governance through refreshment."

The new members are CBS Radio president Andre Fernandez, eBay executive Hal Lawton, and Levi Strauss & Co. CFO Harmit Singh.

The shake-up comes two months after Mick McGuire, the founder and CEO of Marcato Capital who has been called a Bill Ackman "protégé," released a harsh letter to Damian.

The letter accused Buffalo Wild Wings management of ignorance and inaction, and it demanded new board members. McGuire called for "interested shareholders"— like Marcato — to be consulted in adding new board members, calling independent changes "a hostile act of entrenchment."

Marcato, which has a 5.2% stake in Buffalo Wild Wings, said in a statement on Tuesday that the company is "deeply disappointed" by the new appointments. 

"Rather than working collaboratively with its investors, Buffalo Wild Wings has opted to exercise poor judgment, taking entrenching actions to create the illusion of change without showing any real openness to new voices and desperately-needed new ideas," the statement reads. 

Along with the letter, McGuire released a presentation in August that the hedge fund reportedly shared with Buffalo Wild Wings executives in June. Here are the slides:

Two former staffers at Izzy Englander's Millennium Management are launching a new hedge fund.

The New York-based investment firm, Carbon Investment Partners, is scheduled to launch November 1 with $10 million under management.

Lee Bressler, the new firm's portfolio manager and CIO, and Brandon Bradford, the president and CEO, are behind the launch.

The stock-focused hedge fund is investing in the industrials sector with a focus on bottom-up fundamental analysis, and targeting a net return of 8% to 10% per year, according to marketing documents viewed by Business Insider.

Acorn Growth Partners, an Oklahoma City-based private equity firm focused on aerospace and defense, is backing the new firm, alongside Rick Nagel, Acorn's managing partner. Acorn plans to add more capital to the new fund later this year, Bressler said.

Bressler and Bradford managed money together at $34.3 billion Millennium from 2012 to 2013, Bressler said. Bradford was a portfolio manager for the materials/industrials sector managing $750 million, and he currently is a partner at Acorn, according to the marketing materials. Bressler said he was a senior analyst.

Bressler was also a vice president and sector head for industrials stocks at hedge fund Sterling Ridge Capital Management from 2014 to 2015, he said.

Sterling Ridge, which has since shuttered, was founded by Rich Schimel, the cofounder of Diamondback Capital. Schimel now heads up Citadel's Aptigon stock trading unit, which made headlines earlier this year when it poached a team of portfolio managers from fallen rival Visium Asset Management.

Bressler also worked as an analyst at Balyasny Asset Management and as an associate at private equity firm Harvest Partners, according to the marketing materials.

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David Tepper, the CEO and founder of the hedge fund Appaloosa Management, is not one for mincing words.

And in a wide-ranging interview with CNBC's Scott Wapner on Monday, he had some choice words for one of the presidential candidates.

"You have one person with questionable judgment, and the other person that may be demented, narcissistic, and a scumbag," Tepper said. "I'm not saying which one is which. You can make your own decision on that."

Tepper, who is well known on Wall Street for his blunt manner, has historically leaned toward the Democratic Party, though he has supported candidates on both sides of the aisle. This year, he said, he has not financially supported either candidate for president — Democrat Hillary Clinton or Republican Donald Trump.

And now, the market

Of course, the market is waiting for the outcome of this election. For now, Tepper is "pretty cautious on the market, not outright bearish." He's invested his fund mostly in the bond market and has gone into cash.

"We're pretty light in the stock market," he said. "I just don't see the market having the ability to move up that much."

Here's how he looks at the potential outcome of the election: If the Democrats take the Senate as well as the White House, we'll see a more highly regulated environment — "highly anti-bank" and "anti-pharmaceuticals," Tepper said.

If the stock market goes down based on this situation, Tepper said he thinks the Federal Reserve may become more dovish and push off raising rates. This, he believes, it would do at its own peril.

"A steeper yield curve is better for all of these economies," he said, referring to Germany, the UK, and the US. Higher yields would help banks — especially ailing banks in the EU — and state pension funds, for example.

Wapner asked Tepper if this view means that he's shorting bonds.

"I'm not long them," Tepper responded.

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Hedge funds are having a rough time.

Several storied managers are posting dismal performance, while others are closing shop entirely.

At the same time, the industry is known for being lucrative, turning a fortunate few into multi-millionaires – and even billionaires. 

Not that it's easy to find a job.

We asked a handful of hedge fund recruiters what it takes to find an investment role these days. Some common themes came up:

• There's a strong demand for analysts with quant backgrounds, which should come as little surprise – funds are incorporating alternative data into their strategies and trying to figure out how to outsmart the competition.
• Analysts need to be flexible, meaning they need to learn new skills or be willing to start at a small, start-up fund with less pay, since a lot of the bigger funds aren't hiring.

You can read the recruiters' advice in full below.

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Graham Smith, partner at Options Group

"The biggest trend right now is for hedge funds to be looking for talented quants of all levels to support their business. Gone are the times when it’s only the high frequency and systematic firms looking at hiring talented quants. We are seeing hedge funds of all strategies realize the value of big data and statistical analysis.

What's your advice for job seekers?

"Have a STEM (science, technology, engineering, math) degree from a top university, read up on topics/subjects beyond your core field of study, and be flexible as you may need to re-skill when you join a fund."

Richard Risch, CEO of the Risch Group

"The biggest trend today is how the industry is being reshaped as a result of poor performance industry wide. The big guys are seeing redemptions at a record rate, so hiring in that sector is non-existent or extremely limited. Today I would (and do) tell candidates looking in the hedge fund space to focus on the emerging manager segment. It is also the only segment of the industry we are seeing search work from today.

"Base pay is always lower at emerging managers, but could very well include equity. In one case a few years ago, an emerging manager took off, was sold and a couple of people received an eight-figure payout. As far as strategy, it seems the only ones consistently receiving net new institutional flows are systematic equity market neutral funds."

Adam Kahn, managing partner at Odyssey Search Partners

"Right now, the biggest trend in the hiring market is that the larger, more stable firms are really using this environment to pick off top-tier talent. Many of the larger multi-manager firms have been on a yearlong hiring spree. We don’t see them slowing down anytime soon.

"As for strategies, there seems to be much more demand in fixed income versus equity strategies."

What's your advice for job seekers?

"Level your expectations. Candidates should not expect guarantees or repayment of deferred comp.  This is a buyers’ market and if you decide you want to take a look at other opportunities, you need to understand that."

Credit Suisse traders are prepping one of the biggest hedge fund launches this year.

Qube, a quantitative-oriented hedge fund owned by Credit Suisse, has just opened its doors for business.

The fund, which is led by Pierre-Yves Morlat, started approaching investors about raising funds in the last few months and now has $800 million committed to the fund, according to people familiar with the matter.

It started trading at the start of this month with a little less than half that, or about $375 million, according to the people.

It is planning to take on the remaining sum of committed capital at the start of November, one of the people added. The fund is expected to manage as much as $1.2 billion by early next year.

Qube was incorporated in the UK in November 2015 as Credit Suisse Quantitative and Systematic Asset Management Limited, a regulatory filing shows.

Laurent Laizet is listed as chief investment officer, with Sean Rhie as chief operating officer and Christina Wilgress as chief risk officer. Morlat is CEO.

A second fund owned by Credit Suisse, QT, is prepping a launch slated for the first quarter of next year, according to one of the people. That fund is led by Nick Branca in New York, and will target $600 million. Together with Qube, the strategy is expected to manage around $1.8 billion by early next year.

The two funds are trading in quant strategies with a focus on equities, a person close to the matter said. Quant trading has become one of the biggest trends in hedge funds, with investors increasingly allocating capital and funds hiring fresh talent. Established firms like Paul Tudor Jones' Tudor Investment Corp., for instance, have contemplated using more systematic strategies, while traditional analysts are incorporating more algorithmic models to parse a new world of data.

Credit Suisse will be backing and wholly owns both funds, and the funds will be open to a very small number of investors, according to the people familiar with the situation.

The launches are a culmination of the bank's decision last year to start moving Morlat's team, the systematic market-making group, out of Credit Suisse's global markets unit and into its asset management arm.

That was partly as a result of regulation after the 2008 financial crisis, and is one tactic the bank used to retain proprietary traders.

Morlat headed SMG with Branca.

Morlat joined Credit Suisse in 2009 as the head of proprietary arbitrage trading for Europe and Asia, and before that was the global head of equity derivatives trading at Societe Generale. Branca joined the bank in 1997 in equities and sales trading.

A spokesman for Credit Suisse declined to comment.

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