Seeding tomorrow's Trading All-Stars
Throughout the growth of the managed futures and alternative investment industry there has always been a push to find the next great group of traders. From the days of Commodities Corporation, that would seed emerging commodity trading advisors, to advisors like Dunn Capital Management that would bring in emerging traders and share resources and help raise capital, there was always a push to find new talent.
That is especially needed today as greater regulation due to the credit crisis and the twin debacles of MF Global and Peregrine Financial Group has raised barriers to entry.
This summer proprietary trading company HC Technologies LLC and Tudor Investment Corporation announced the formation of LaunchPad Trading LLC, a joint venture established to actively seek the next generation of trading talent.
Initially the plan is to recruit discretionary futures and forex traders, provide them capital and groom them to eventually manage customer assets.
The joint venture plans to initially seed five traders but the end goal is to have those traders on the Tudor platform where they can possibly manage customer assets.
In a release Paul Tudor Jones highlighted the need for finding fresh talent. “Through LaunchPad Trading, we are going to broaden our search and try to select a set of traders from a pool of candidates that we didn’t focus on in the past,” he notes. “There are fewer options open to traders who want to learn trading skills and manage capital at the start of their career.”
LaunchPad is headed by two former Tudor employees: Joe Niciforo, managing member of HC Technologies and Nancy Skiest Andrews, CEO of LaunchPad, who previously was an investment manager at Global Asset Management as well as working with Tudor.
The need is clear as LaunchPad has received more than 200 resumes from traders in the first week-and-a-half since announcing the project. And they are not the only venture out to find the next wave of traders (see “The next wave,” right).
Candidates “range from portfolio managers, strategists, market makers, prop traders, analysts, career switchers to college graduates. These candidates are coming from banks, prop shops, existing hedge funds [and people] that manage their own capital,” Andrews says.
“Our first decision is to get the five people on in global macro and make sure everything is running smoothly and then we will have discussion with our partners at Tudor to keep on seeing qualified candidates,” Niciforo says. “Our interest is to find very good candidates and get them on the platform. We are being methodical with it.”
While LaunchPad has set a benchmark of five managers who will receive an allocation, on average, of $10 million. According to Andrews, the idea is not a one-time beauty pageant but to continually assess new trading talent and build a long-term pipeline of traders.
“It is fair to say that we will always be looking for talent. We will always be talking to candidates whether or not there is a spot at that time,” Andrews says.
They are looking for traders with at least two years of trading experience. They will not consider those trading individual equities and will have a bias towards discretionary traders.
“[Initially] we are looking for discretionary global macro,” says Niciforo, but he adds, “It is a tough question because the way the world has gone, what is systematic? If it is fully automated with no human intervention [we would not consider it] but if it is someone that has [a mix of systematic and discretionary] we would consider that person.”
While the initial five allocations will be based purely on qualitative measure, as they add more traders to the mix with an ultimate end game of getting on the Tudor platform, those metrics may shift.
“Initially we are looking for five traders who have proven global macro trading experience. We are not looking to build a team of traders from a portfolio point of view at this stage,” Andrews says, while adding, “We will monitor each trader and make recommendations to Tudor on which of the LaunchPad candidates should be considered for the Tudor platform. Then we hand it over for Tudor to decide how they want to evaluate that trader to potentially join their platform. “
Andrews will take the first look at the candidates and then pass them over to Niciforo before they go to a six-person selection committee at Tudor. Candidates interested in learning more are encouraged to visit: firstname.lastname@example.org, where some of the criteria for selection are listed (see “Punch list,” below).
“One of the things we want to evaluate is ‘are these traders’ strategies scalable, meaning can their strategy handle more capital.’ We anticipate that traders will have the ability to increase their capital as they progress on the platform,” Andrews says. “It is not our job to evaluate whether they make sense for the Tudor platform. The trader has the ability to either evaluate for Tudor or spin off the platform and start their own fund. If they are a trader we think could be successful in the future, we would consider seeding them with LaunchPad capital.”
While the long-term potential for traders getting a LaunchPad allocation is to be able to go on the Tudor platform and manage customer money, the start they get from LaunchPad can lead to multiple opportunities.
“If a trader comes off of our platform with a good track record, it is in everybody’s interest for him to grow over time,” Niciforo says. “Between $10 million and going on the Tudor platform, there are various steps along the way to discover if some of these strategies are scalable. It will be a dynamic process where the better they do, the more capital they get and at a certain time they will be at a capital level where Tudor will have the option to move that person onto their platform.”
The first step is finding quality traders and providing them capital to trade.