Balyasny Asset Management

Last updated

Balyasny Asset Management L.P.
Company type Private
Industry Investment management
Founded2001;23 years ago (2001)
Founders
  • Dmitry Balyasny
  • Scott Schroeder
  • Taylor O'Malley
Headquarters River Point, 444 West Lake Street, Chicago, Illinois, U.S.
Products Hedge funds
Alternative investments
Growth equity
AUM USD 21 billion (August 2023)
Number of employees
1,100 (May 2022)
Website www.bamfunds.com
Footnotes /references
[1] [2]

Balyasny Asset Management is an American investment management firm headquartered in Chicago. Outside the U.S., it has additional offices in Canada, London and Asia.

Contents

Background

Balyasny Asset Management was founded in 2001 in Chicago by Dmitry Balyasny, Scott Schroeder and Taylor O'Malley. [2] [3] [4] It traded mostly long/short equity which, as of 2020, accounted for 70% of the firm's risk. [3]

For the first 16 years of its existence, it rarely lost money and delivered an annualized return of 12%. [3]

However, in 2018, the firm experienced unprecedented significant difficulty, posting large performance losses, its assets under management dropping by half from $12 billion to $6 billion and client investors withdrawing their money from the firm. [2] [3] [4] Balyasny himself sent out an email to the firm's staff with the subject line "Adapt or Die" that bluntly stated that "we are getting our butts kicked" and the firm's performance "sucks". [2] [3] [5] In the email he also stated he didn't feel a "palpable sense of urgency" on the trading floor and mentioned that investors were wondering if staff joined the firm "so they can enjoy not working too hard". [2] [3] [5] This email wound up in the hands of Kenneth C. Griffin, the founder and CEO of Citadel LLC. Balyasny Asset Management and Citadel LLC were hedge fund rivals as they were both based in Chicago at the time and spent a lot of money in a talent war where they would both try to poach each other's employees. [2] [3] [5] Griffin used this email in an internal town hall meeting for employees, telling them this was an example of what happens when a firm has poor culture. [2] [3] [5] Balyasny Asset Management then cut 125 jobs which was around 20% of the firm's workforce. [2] [3] [4] Balyasny has stated the mistakes in 2018 were caused by undue caution and a tough environment for long/short equity. [2]

Since then, the firm underwent some significant changes including hiring a lot of new staff, changing the firm's risk management approach and transitioned to having more institutional investors as clients rather than high-net-worth individuals. [2] [3] [4] [5] By 2019, the firm was back into profitability. [2] [3] [5]

In February 2022, Balyasny stated the firm has been investing in private startups, a trend done by other hedge fund peers such as Tiger Global Management and Coatue Management. [6]

In March 2022, the firm announced it would create a new equities unit called Corbets Capital with offices in New York and Greenwich, Connecticut. [7]

In May 2022, the firm had $15.7 billion assets under management and 1,100 employees which include 470 investment professionals. [2] As of August 2023, the firm had $21 billion assets under management. [8]

In 2023, Balyasny opened an office in Dubai. [9] That same year, the firm switched to longer "lock-ups" for investors' capital, ensuring a minimum of two years for withdrawals. [10]

In June 2023, the firm released its own version of ChatGPT to its employees, and in January 2024, it was reported that the hedge fund was building an AI equivalent of a senior analyst. [11]

In December 2023, the company said that more than half its assets under management were diversified into strategies including early stage investing, commodities, and macro. [12] In 2023 and 2024, the firm added new partners. As of March 2024, it had 23 partners. [13] [14]

Insider trading

In November 2009, Balyasny Asset Management ran an internal investigation focused on a former analyst at the firm who was suspected of passing on insider information about EMC Corporation to a hedge fund manager who pleaded guilty in the Galleon Group case. The firm sent a letter to investors reassuring them that no improper activity had been discovered, and that it had decided to close the satellite office and terminate the individual involved. [15] [16] In 2010, it was reported that Balyasny Asset Management had been added to a group of firms being examined in a wide-ranging investigation into insider trading led by the government, relating to the Galleon case. [17]

Mark Adams, an analyst at the firm, was suspected of passing on insider information about EMC Corporation to Steven Fortuna, a money manager who pled guilty in the Galleon Group case. [18] [19]

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References

  1. ↑ "Form ADV" (PDF). SEC. Retrieved November 25, 2022.
  2. 1 2 3 4 5 6 7 8 9 10 11 12 "Dmitry Balyasny's Firm Roars Back From Depths of 2018 Retreat". Bloomberg.com. May 12, 2022.
  3. 1 2 3 4 5 6 7 8 9 10 11 "The Curious Case of Dmitry Balyasny". Institutional Investor. Retrieved November 25, 2022.
  4. 1 2 3 4 "Balyasny gains in first half after losses prompted reorganization in 2018". Reuters. July 15, 2019. Retrieved November 25, 2022.
  5. 1 2 3 4 5 6 "Inside the Chicago hedge fund turf war between billionaire Ken Griffin and Dmitry Balyasny". Business Insider. Retrieved November 25, 2022.
  6. ↑ "Balyasny chief pushes hedge fund deeper into private start-ups". Financial Times. February 14, 2022. Retrieved November 25, 2022.
  7. ↑ "Hedge Fund Balyasny Plans Hiring Spree for New Unit in Equities Expansion". Bloomberg.com. March 7, 2022. Retrieved November 25, 2022.
  8. ↑ Agnew, Harriet; Aliaj, Ortenca (August 23, 2023). "Are hedge fund pioneers facing the end of a golden era?". Financial Times.
  9. ↑ Jafar, Bilal (July 24, 2023). "Balyasny names Abu Dhabi Investment Authority's Tarek Rizk as Mena head in Dubai push". Financial News.
  10. ↑ Burton, Katherine (June 13, 2023). "Hedge Fund Balyasny Joins Rivals in Locking Up Client Capital for Longer". Bloomberg.
  11. ↑ Chan, Bianca (January 22, 2024). "How $21 billion Balyasny is building an AI equivalent of a senior analyst". Business Insider.
  12. ↑ Butcher, Sarah (January 22, 2024). "Hedge fund Balyasny is diversifying, and hiring". efinancialcareers.
  13. ↑ "Balyasny makes seven partner promotions". HedgeWeek. January 12, 2023.
  14. ↑ Butcher, Sarah (March 6, 2024). "Hedge fund Balyasny Asset Management announced three new partners. Two are in commodities". efinancialcareers.
  15. ↑ Barr, Alistair (November 13, 2009). "Balyasny reassures investors on Galleon case". MarketWatch.
  16. ↑ Kouwe, Zachery (November 16, 2009). "Balyasny Says Inquiry Found Nothing Improper". New York Times.
  17. ↑ "Hedge Funds Raided in Probe". Wall Street Journal. November 22, 2010.
  18. ↑ Barr, Alistair. "Balyasny reassures investors on Galleon case". MarketWatch. Retrieved November 25, 2022.
  19. ↑ Ovide, Shira (November 23, 2010). "Meet the New Hedge Fund in the Insider-Trading Probe: Balyasny". Wall Street Journal. ISSN   0099-9660 . Retrieved November 25, 2022.
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