Ask hedge fund manager Dmitry Balyasny what keeps him up at night, and the answer isn’t a long list of worries about fund concentration, market contagion, monetary policy, or geopolitics. It’s one word: People.
“People issues tend to be a lot more difficult and time-consuming to solve than market issues,” he says. “Market issues? You could just exit a position.”
That focus on “people issues” has made Balyasny the rare hedge fund leader who has the ability to merge his trading acumen as a former day trader with the people skills that have made him one of the most effective and popular leaders in an industry known for ruthlessness.
Given the surge of interest in multistrategy funds in recent years, Balyasny Asset Management, the $27 billion multistrat firm that the 53-year-old co-founded, has become a brand name in hedge fund circles. It’s also punching above its weight. Launched in 2001, BAM, as it is called, is going toe-to-toe with bigger and older firms such as Israel Englander’s $72 billion Millennium, Ken Griffin’s $65 billion Citadel, and Steve Cohen’s $37 billion Point72.
The secret sauce?
“Dmitry leads first and foremost through positive reinforcement, which means that the firm’s culture is really characterized by encouragement and support, not fear,” says chief risk officer and partner Alex Lurye, who previously spent 16 years at Citadel. Lurye isn’t the only top BAM executive who also worked for a competitor. In the talent wars among multistrategy hedge funds, Balyasny has drawn a number of stars away from his rivals. Five of the eight members of BAM’s current investment committee previously worked at Millennium, Citadel, or Point72.
“It’s a far more familial culture he is trying to build,” says David Holmgren, who is the former CIO of Hartford Healthcare and was a longtime investor in BAM’s hedge fund. “You go into Dmitry’s office, and it’s like they’ve got a person there to do yoga lessons. There’s a recommended book. You pick up books on the front desk while you’re waiting. Everybody’s out to earn return, but he definitely takes a little bit of a calmer path to get there.”
For his part, the hedge fund manager says his style is part philosophical and part competitive calculation. “We’ve always just tried to treat people in the way that we would want to be treated,” Balyasny says in a Zoom interview from his office in Jackson Hole, Wyoming, where he now lives. The hedge fund executive splits his time between there and New York, where BAM has its largest office, along with visits to its 16 other offices around the world, including Chicago, its original home.
“When we started out, we had a very small amount of capital,” he says, noting that his top-three competitors were ten years older and each running $1 billion or more. “Having a culture where I would say it was a bit more supportive, a bit more team-oriented, more collaborative, more of a partnership type of environment, was very helpful in attracting and retaining talent. We certainly couldn’t give people more capital or pay them more.”
And now, he says, “we regularly win recruiting situations with less money,” particularly in terms of the up-front pay and guarantees. “I think culture is a big part of that, and the runway, the opportunity to really build a business together where incoming people feel like they have an opportunity to really build something jointly and eventually be a partner here.” And unlike some other hedge fund owners, he means partner in the literal sense: Nineteen partners own equity in BAM today.
You can read the full profile of Dmitri Balyasny at Institutional Investor:
https://www.institutionalinvestor.com/article/hedge-funds-have-reputation-ruthlessness-dmitry-balyasny-took-different-approach
Michelle Celarier 