New Amsterdam will be home to eight to 10 equity sector specialists with no overlapping strategies, and will complement New Holland’s existing Plum Island business, which houses the firm’s event driven, credit relative value, and commodities strategies.
New Holland Capital is preparing to start an investment platform to lure stock traders exhausted by what it sees as the high pressure and siloed culture of giant multistrategy hedge funds.
The $7 billion firm has joined forces with industry veterans John Gisondi and Mark Walker to launch a unit that will offer traders more freedom to make bets and flexibility to raise capital or branch out on their own. Dubbed New Amsterdam Principal Strategies, the business will be home to eight to 10 equity sector specialists with no overlapping strategies.
“If you could lock portfolio managers in a jail cell and force them to run only your money for as long as they’re breathing and generating alpha, that would obviously be ideal — but it comes with negative consequences,” New Holland CEO and co-CIO Scott Radke said in an interview. “So we’ve structured things so people have the ability, under certain conditions, to go out on their own or even, while they’re still here, raise capital from other sources.”
New Amsterdam will offer traders equity ownership, greater autonomy to trade and tap into a diversified pool of capital. New Holland’s clients will allocate initial capital to the traders who will be allowed to take separately managed accounts from external investors as additional sources of cash. They will also have the flexibility to take their track record and spin out their businesses.
The arrangement sits between multistrategy hedge funds that have become the default destination for portfolio managers and those facing the daunting task of starting out on their own.
Constant churn at the biggest hedge funds has made some traders, particularly those whose trading strategies come into conflict with multistrats’ tight risk limits, reassess their next career move.
“I like to say it’s the ‘carousel of love’ — I went to Citadel, I went to Millennium — and that pretty much encompasses my view of pod exhaustion,” Walker said in the interview. “People are constantly moving and a lot of the drivers of your future are outside your control and that’s where people start looking for something different. We are a natural home for them.”
Those comments drew a response from Citadel, which defended its record for attracting top tier talent.
“Perhaps Mr. Walker’s view of ‘pod exhaustion’ has been shaped by the tier of investors he’s met over time, but Citadel isn’t a pod shop,” a representative for the firm said in an emailed statement. “For more than 35 years, exceptional investors have gravitated to Citadel to build extraordinary careers, working alongside and learning from the leading professionals in the industry.”
Founded by Radke in 2006, New Holland began by managing money for Dutch pensions and later opened to other clients. Gisondi spent two decades at GLG Partners, while Walker was most recently the president of multi-manager platform SummitTX.
New Amsterdam, due to be launched in the next couple of months, will complement New Holland’s Plum Island business launched last year. Led by Omar Qaiser, Plum Island houses the firm’s event driven, credit relative value and commodities strategies and has about 10 portfolio managers.
Multistrategy hedge funds have emerged as the dominant force in the hedge fund industry, reshaping the competitive landscape through their ability to attract capital and deliver mostly consistent returns. They operate with a ruthless talent management culture characterized by aggressive hiring but also rapid culling of underperformers, even for single digit losses.
That culture is a function of scale. Strict exclusivity and limits on collaboration exist because managing vast amounts of capital requires tight control over capacity, correlation and risk.
Still, while that serves to generate steady returns for the multistrats, it can be stifling to some portfolio managers, creating an opportunity for newer or smaller platforms to offer greater flexibility to attract talent.
The new initiative plans to recruit traders from the networks of its founders to cut talent acquisition costs and ensure like minded individuals join the team, the firm said.
“The negative cultural attributes at the very largest multistrats aren’t because they’re vindictive or thoughtless,” Radke said. “They have a very real business purpose. It’s just one we’ve been prepared to concede on by running things at a smaller scale.”
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