Multi-Manager vs Single P&L Hedge Fund

When going through hedge fund interviews, it is important to distinguish between a multi-manager hedge fund model vs. a single P&L hedge fund model.  A multi-manager hedge fund consists of multiple specialized hedge funds.  Each specialized fund has its own P&L in which it is allowed to invest across different sectors and markets.  The theory is founded on a premise that not all investment managers are good in all markets and not all managers are successful at all times.  Spreading the investment across different Portfolio Managers allows the fund to achieve diversifications and reduce risk.  A single P&L hedge fund model is a typical hedge fund; the fund has one P&L and a fixed number of Portfolio Managers.

Multi-manager hedge funds were popularized by Steven A. Cohen at SAC Capital.  Cohen (the street calls him “Stevie”) employs anywhere from 70-90 portfolio managers who have a designated AUM.  Other popular multi-managers include:

  • Millennium Partners (SAC spin-off)
  • PioneerPath Capital (part of Citadel)
  • Surveyor Capital (part of Citadel)
  • Diamondback Capital Management (SAC spin-off)

Arguably the most popularized single P&L model was formed by Julian Robertson through Tiger Management, one of the earliest hedge funds.   Many of the analysts and managers that Robertson employed at Tiger Management went out on their own and are now running some of the best-known hedge funds, called “Tiger Cubs.”  Popular tiger cubs include:

  • Blue Ridge Capital
  • Shumway Capital Partners
  • Lone Pine Capital LLC
  • Tiger Asia Management LLC
  • Touradji Capital Management LP
  • Viking Global Investors LP
  • Maverick Capital Ltd