- Balyasny Asset Management runs a 12- to 24-month training program called Anthem that is designed to convert senior analysts into portfolio managers.
- It's a small and demanding program: since analyst training began four years ago, only 22 PMs have successfully surfaced.
- The apprentices can manage hundreds of millions in assets while overseeing small teams of their own analysts.
- Bill Wappler, Balyasny's director of research who runs Anthem, gave Business Insider a rare glimpse into the program.
- You can find more stories on the Business Insider homepage.
At Dmitry Balyasny's $ 8.3 billion hedge fund manager, ambitious senior analysts both inside and outside the company had a clear path to becoming portfolio managers: the four-year-old Anthem program.
The program, run by Bill Wappler – named after an Ayn Rand book – can run from 12 months to two years. So far only a few participants have made the cut.
Only 10 people have completed the program since its first cohort of analysts in 2016. A total of 37 have joined, 17 remain in the program, and 10 have left the Chicago-based company in total.
"They usually join the program for one reason: They want to have their own portfolio," said Wappler, research director for the firm that runs the Anthem program. Previously, he worked for billionaire Steve Cohen's SAC Capital as assistant director of research and was responsible for the training and development of analysts.
Wappler views the program as a success as it has produced multiple graduates who manage hundreds of millions in assets for the company. In addition, the program has welcomed an increasing number of participants each year since it began training analysts four years ago.
At the same time, Balyasny's performance in its flagship fund outperformed multi-strategy competitors for the first seven months of the year, posting 20.5% according to Bloomberg.
Current PMs in training are located in locations around the world, from Hong Kong to London to the United States. Wappler guided Business Insider through selecting candidates, how the company will get them to make their own money, and what will determine who will ultimately make the cut.
Learn to trust
The most important thing to teach a senior analyst is not how to invest, but how to trust.
Everyone who participates in the Anthem program is a successful investor, Wappler said, and the company is looking for candidates with at least six to seven years of buy-side experience. The biggest change in portfolio manager, however, is managing people, not money.
Senior analysts have been known to review each number and assess its results airtight. When the same people are responsible for a team, they have to give others the responsibilities they once handled themselves.
See more: Steve Cohen's Head of Professional Development at Point72 explains how to move from college graduate to portfolio manager for the $ 16.3 billion hedge fund company
"You have to help these people trust their analysts," said Wappler.
"The difference between a portfolio manager with a smaller portfolio, say $ 200 million, and an analyst and a portfolio manager with a portfolio of $ 1 billion and a team of five is usually not their investment skills or their research process The difference between these two people – they are both good investors, they are both good at research – the difference between these two people is their ability to lead the team, to scale, and to make efficient use of the people they work. "
It's a story that can be applied to almost any industry – a micromanaged boss who is untrustworthy to his own employees.
"If every time your analyst gives you an analysis, model, or work product, he thinks you have to re-examine every fact or figure, this is number 1, you are not going to get leverage so you defeat . " The purpose of having an analyst. And number 2, the analyst will sit back and say, "Wow, this guy isn't really fun working," he said.
"This is where analysts in the Anthem program often run into problems."
On the investment side, you are in constant communication with not only Wappler – with whom each trainee meets personally once a week – but the rest of the company. Wappler said the trainees will meet with Balyasny's portfolio manager development team to learn how best to build a portfolio and manage risk, as well as global equity chief Jeff Runnfeldt and the company's founders: Balyasny, Scott Schroeder and Taylor O & # 39; Malley.
A high stakes program
The boss is not looking over your shoulder in this program – the senior analysts who have already worked for Balyasny and have been promoted internally to the program are leaving their team to focus solely on building their own portfolios and teams.
And Anthem trainees get control of portfolios and people. With portfolios ranging from $ 200 million to $ 250 million on initial allocation – some of which grow to around $ 400 million by the time the program completes – trainees also hire one or two analysts and are budgeted for the data and Technology infrastructure.
See more: How Cornell's Investment Banking Program trains MBA students to think like analysts before hitting Wall Street
In the first few months, they have about 10% of their original allocation – which is roughly between $ 20 million and $ 25 million – so they can gradually get used to the training software, Wappler said. In their first period of earnings, Anthem apprentices have roughly half their allocation and climb rapidly thereafter.
"I don't want to see fat-fingered flaws," he said, but when they do occur it will be a $ 20 million book instead of ten times the size.
Not everyone makes the cut
Some senior analysts might come into the program with lofty goals only to dash those hopes if they can't prove they have PM chops.
A total of 37 people were hired for Anthem, but only 10 graduated over the four years.
Eight people were hired for the Anthem program in 2016 – only three graduated and five remain. Two years later, in 2018, six people were hired; three graduated and three left.
16 people were hired in 2019, 13 of whom are still in training. And this year five have been hired, although not all have started, Wappler said.
See more: Billionaire Bill Ackman says Pershing Square is more of a private equity business than a hedge fund when it comes to hiring people
Ultimately, that's 17 people who are currently in training, 10 successful graduates and 10 who have left Balyasny in total.
Of the 13 remaining in the program as of 2019, it's not clear how many will become full-fledged portfolio managers, but Wappler said he – and the company's founders – are watching candidates closely for a specific warning sign.
"If we get the feeling that an Anthem PM has plateaued at any level, it could lead us to make the difficult decision of removing them from the program," he said.
"Dmitry firmly believes that to stay relevant in this business, you have to keep evolving and looking for ways to improve."
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