After suffering a $4 billion asset axe from losses and client withdrawals, Dimitry Balyasny is being forced to chop heads at his hedge fund.
The Chicago-based firm, Balyasny Asset Management, which opened the year with $11.3 billion in assets, thinks it will begin 2019 with $7.3 billion. So it has let go 13 equity teams (about 40 investment professionals) from its roster, but the cuts didn’t end there. At least 125 employees, one-fifth of the total staff, are expected to be exiting to help stop the bleeding, with more to go before the year’s end, reports Bloomberg.
While performance-based cuts and the occasional batch of sudden layoffs are the norm at hedge funds, this case is unusual.
In 2016 and 2017, the firm was aggressively hiring, plucking staff from investment banks. Last year, it nearly doubled the size of its London division, and the average salary received a 24% raise. Times were good, then the markets shook.
First, London-based workers exited, some by choice, most not. Now it seems recent equity market shocks, which Bloomberg says generated the most losses in 2018, have created further departures.
Pre-layoff, the hedge fund employed about 272 people, who ran roughly 80 internal divisions. It featured a swath of strategies from credit and global macro to quantitative systematic and equity trading.
In November, Balyasny’s Atlas Global fund dropped 3.9%, and a leveraged variant slipped 5.7%. Atlas’ year-to-date losses are at 5.3%, while the leveraged version’s losses are down 7.9% for the year.
Balyasny, the fund’s chief and founder, nevertheless expresses optimism about the situation. The business has hired several investment professionals due to start next year, and Bloomberg reports that Balyasny is expecting to improve performance despite the loss of capital.