Yahoo Finance Point72's hedge fund university overcomes the 'lack of talent' on Wall Street
Wall Street and Silicon Valley are in a war for talent
Hedge fund mogul Steven Cohen is cutting out the middleman to recruit top talent for his firm, Point72 Asset Management. Friday, the fund launched its inaugural Sophomore Summit to introduce an elite group of 20 college sophomores to the business of stock picking.
The summit is the first step in a new approach to training asset managers. After successfully completing a summer internship and earning an undergraduate degree, entrants into Point72’s “hedge fund university” go through an intensive 15-month program. At the firm’s Stamford, Connecticut, headquarters, the small class learns to develop and implement investment ideas, working with veteran traders at the firm.
The program cuts down the time a college graduate spends learning to become a portfolio manager. The typical career path toward attaining the coveted position requires a two-year stint at an investment bank. The problem is that Wall Street is having a tough time competing with Silicon Valley for the best and brightest—so much so that Cohen recently said, “Frankly, I’m blown away by the lack of talent.”
Wall Street and Silicon Valley are in a war for talent
With the rise of electronic trading in the early 2000s, Wall Street was able to attract top programmers and physicists. Hedge funds and brokers trained them to code lucrative, high-frequency trading algorithms. But with the second tech boom in full swing, the tables have turned, and Silicon Valley is luring elite graduates away from Wall Street. In addition, most hedge funds have underperformed the S&P 500 every year since the financial crisis and face increasing competition from strategy-based ETFs.
Friday’s summit was a success for both the students and Point72. The firm’s president, Doug Haynes said, “The caliber of candidates was extremely impressive. We struck gold." Jonathan Jones, Head of Talent Development agreed, saying, “The participants were engaged and asked incredibly insightful questions. This was a talented group.” According to a survey completed after the summit, all of the 20 students said they are more likely to consider a role at Point72 as a result of the experience.
Three things to prepare for a hedge fund career
Point72’s screening criteria are extremely stringent, with the average student boasting a GPA of 3.8 and an SAT score of 2280. The firm accepted only 5% of the 379 applicants this year, but it does not discriminate based on major. One student said of the experience, “I felt very well prepared for the event. Even though I did not have a finance background, I never felt overwhelmed.”
Despite the tight entrance standards, Jones says there are three things a budding “hedgie” can do to get a leg up. He says prospective portfolio managers should read some of the numerous books about trading and investment, join an investment club (or start one if there isn’t one in the area), and also open a personal trading account to wade into the markets. For those without the funds, Jones says, “Even if you don’t have any money lying around to do that, you can open a paper portfolio.”
