Looks like an AMAZING opportunity to get a glimpse into the OG fundamental equity franchise.
Home of the GOAT, S.A.C.
Founder of Canvas for internal channel checks.
Starter of the PM incubation program, Launchpoint.
And the original training Academy.
My two cents is it’s a better ROIC to put in place a multi year training program for large cohorts of Analysts and widely it down to PM’s then it is to pay $50 MM to buy out a “proven” PM.
- I can’t think of another industry where so much money is paid for a person or business using unofficial due diligence metrics.
- In baseball the scorecards are public,
- in M&A, the numbers are audited and/or verified with tax information.
- In pod land, each firm has their own way to get comfortable with the “deal”….some PM underwriters (BD teams) use a combination of excel sheets, “channel checks” with teammates, I’ve heard of Polaroid’s being used, scare tactics, day long personality interviews, psychometric assessments.
- Some candidates voluntarily provide their tax returns (the can’t ask anymore).
I’ve spent time with a dozen+ MM HF BD teams, and the practices vary widely. On one end of the spectrum, a firm might only underwrite quantitatively based on provided, unaudited, historicals for say 2 years at over a 1-1.5x sharpe at a flat capital level, true apples for apples. At the other end of the underwriting spectrum there are pure qualitative process that don’t rely on external numbers and instead use historical track record and personality assessments to gauge potential. [These are general industry comments.]
- for an industry based on data, this part is very inefficient.
Plus, the non-competes are getting so long, internal training is really the best longterm option.
Happy Hunting.
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