Jain基金被Millennium收购：高成本致净收益仅8%

Let's get more on this story, Isabelle, and bring in hedge fund reporter Hema Parmar. Hema, the details of how much money they made pre Millennium deal, what does that tell us about why they maybe even made the deal to begin with? Yes. So what this shows is really just how expensive it is to run a multistrat. They made $1,800,000,000 in trading profit, but that's before you take into account all the expenses. The 1.4 1,800,000,000 translates to about 41% gross returns on called capital.

What that actually spells for investors when you take into account of all the expenses is really more like an 8% gain. So you see that spread between a 41% gross profit, gross return and that 8% net return. 8% is what investors are walking away with, and that just shows the incredible costs that are associated with launching a multistrat, which is incredibly complicated. This is not a traditional long shoot equity funds.

So what does this tell you about the economics of the business? And this Millennium may be becoming the venture capital, the hedge fund world? It is. So, you know, Millennium is sitting in this interesting spot where they are both a hedge fund, and they're increasingly an allocator of capital. And so they've really spawned this movement to, invest in other third party hedge funds, a hedge fund investing in another hedge fund and seeding them with money.

And what that means for that individual manager is you get consistent capital from one investor. You get to rely on the infrastructure you get from Millennium. Some of the, trading assistance or data or AI help or whatever you want, but it can it can increase, the capability of the fund to be a little bit more cost effective, but you have one investor. So if that investor pulls or if that investor changes their mind, you have a little bit more concentration risk.

That that's exactly what I wanted to ask about because one of the interesting and and albeit cutthroat features of the pod shop model is that if you do well, you get money. Mhmm. If you don't do well, lines are cut off. Do you do we know if that model stands for when it's an outside hedge fund? Are they is the money as fickle as it is within the pawnshops? Yes. So it can be. For some of these external managers, you do face the same sort of we call them risk controls, where if you lose five percent, your fund is cut down a little bit.

If you lose 7% and closer to 10%, you could be fired. And so if you are an external pod, you may face those same constraints. Bobby James Fund is less of an external pod as it is an external business, which is a really interesting movement we're seeing from Millennium, which is now incorporating whole businesses into your firm or maybe not incorporating, but using them as an external fund versus just one individual PM and his his business.

So, Bobby James firm has seven different business lines, has 400 employees. It's a ginormous firm to integrate in some way even though it runs independently to, involve it with Millennium. It's a fascinating model that we're seeing take place in this industry at this point in time. How is it viewed in the industry? Is it more about is it more like Jane waving a white flag, or are they both viewed as winners and this is a great deal?

Is it mutually exclusive? Or I'm I'm just curious how it's viewed. No. So it's it's fascinating because on one side, you know, Bobby was able to produce decent returns on the gross side of things. But because costs were such an impediment, he would then had to rely on Millennium as, like, an opportunity to keep going. And so I think a lot of people did view that as, like, showing just how difficult it is to launch a hedge fund, especially Bobby's idea was to launch a multi shot all at once, fully formed with all the different parts.

And his thesis was in doing that, all the parts talk to each other. You can better then set up the firm to be optimized in that way. But part of the struggle with that is then you have to, get all the talent in place, make sure you can deploy the money in a quicker fashion, but it took them twenty months to deploy the capital, and that's, a bit of a lag on returns too. So it's viewed also as him sort of coming back home because he came from Millennium.

He's now coming back home to Millennium. I think it can be viewed as a smart way to keep the business going in the environment that we're in. It's a bit it's a complicated matter. Definitely complicated. And it's such a cutthroat industry. Hema. Thank you for keeping us updated with all things hedge fund.