Inside billionaire Izzy Englander's massive 2020: Millennium's blockbuster performance, hiring spurt, and fundraising drive

  • Billionaire Izzy Englander’s Millennium had its best year since 2000.
  • The firm’s annual letter went out to investors last week.
  • In the note, Englander reviews the firm’s personnel and fundraising activity. 
  • Visit the Business section of Insider for more stories.

Eurekahedge called last year the best stretch for hedge funds in over a decade and billionaire Izzy Englander wouldn’t argue with that assertion.

Millennium, with its nearly $50 billion in capital, made 25.9% last year, and made money on 72% of trading days in 2020, surpassing the 10-year average of 62% at the manager, according to the firm’s annual letter which was sent to investors last week. The firm’s dozens of portfolio managers didn’t rest on their hands either — the firm trades on 150 different exchanges now, and thanks to last year’s volatility, the number of average daily transactions was up 35%.

Englander wrote that the firm’s risk management team — which he credited for keeping March losses muted and allowed investors to make money in the months following the pandemic’s start in the US — “now actively analyzes more than 300,000 positions and produces extensive daily, weekly, and monthly reports.”

“Diversification was a fundamental factor in our 2020 performance. Over the course of the year, we saw positive returns across all four of our strategies and all three of our global regions – US, Europe, and Asia,” he wrote. 

The firm has worked to diversify its talent pool by building up a deep roster of portfolio management teams — known as pods — across the world.

The letter states that Millennium ended the year with more teams — more than 265 — than it ever has had in its history, despite only hiring 1 out of 100 candidates. More than half of the 70-plus teams hired last year are based outside of the US, and the hires this year also focused on strategies like macro, commodities, and capital structure that are less correlated with Millennium’s core fundamental equities and rates strategies. 

See more: Former Millennium portfolio manager Seth Turkeltaub is launching his own fund. Here’s what we know about Concentric Capital Strategies.

“In the simplest terms, the reason for creating such a diversity of managers is the ability to spread risk so that we can manage our exposures to any one market, asset class, or geography,” Englander wrote.

“But what is also critical – and this relates directly to our view of dynamic risk management – is the ability to deploy more potential earnings power without proportionately increasing risk.”

The pods are getting bigger, personnel-wise, also: The number of teams with ten or more people on it has tripled since 2016, the letter reads. 

Englander wrote a big part of growing the firm’s talent is showing potential hires that Millennium’s infrastructure — its risk management platform, technology, trading teams, and more — will allow them to make more money working for Englander than on their own, and several big-name managers like Hutchin Hill founder Neil Chriss have joined the firm instead of launching their own fund. 

See more: Inside the alumni network of billionaire Israel Englander, the founder of $46 billion hedge-fund behemoth Millennium

But another critical part Englander identified is the stickiness of the firm’s capital, which has been a focus for the firm for years. In 2018, the New York-based manager created the 5% quarterly share class, which only lets investors take out 5% of their investment per quarter, with the goal of having more long-term capital.

“In what can be a volatile industry, few firms can offer the stability of our capital structure. Many portfolio managers have lived through experiences at other firms where uncertainty of capital availability may have proven to be a distraction from the investment process,” Englander wrote.

The firm raised an extra $3 billion in commitments in this share class this summer that it can call on at any point over the next three years, a private equity-like structure that Englander believes is reflective of investors’ trust in the firm.

“The introduction of a commitment class within a multi-strategy fund again broke new ground in the hedge fund industry. We believe that its adoption is, in part, a reflection of how our investors view Millennium,” he wrote. 

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