How to Succeed as a Hedge Fund Manager

How does a 33-year-old afford the $12 million home formerly owned by Lloyd Blankfein, head of Goldman Sachs?

The Financial Post recently tried to answer that question as it looked at the meteoric rise of Bryce Markus, a senior portfolio manager with BlueMountain Capital Management LLC. BlueMountain is a privately owned hedge fund sponsor, which is similar to a fund of funds manager.

Was it family money? Hedge fund profits? Connections? Turns out, it was all the above and more. Markus started out with a pedigree in finance. His father was an investment banking vice president in municipal finance at Goldman Sachs. His wife worked at Credit Suisse. After graduating from Wharton, Markus also joined Goldman, where he rose to vice presidents of Goldman’s Fixed Income Currency and Commodities Division. His current profile says he traded corporate debt and credit derivatives at Goldman.

While at Goldman, Markus met Alan Gerstein, a senior portfolio manager at BlueMountain, perhaps opening the door for his move into the hedge fund world.

At BlueMountain, Markus has managed structured credit strategies, a flagship investment vehicle at the firm. According to a description from HedgeWeek, BlueMountain manages US$4.5 billion across eight different absolute return funds and US$1.4 billion across three collateralized loan obligations.

Since portfolio managers take home a small percentage of the total funds managed, having a large portfolio like BlueMoutain’s means more money at the end of the year for managers. Markus is also involved with the firm’s risk analytics, capital allocation and balance sheet management. More responsibility like this typically means greater compensation.

So it’s simple. To afford a $12 million home at age 33, it helps to 1) have connections 2) work at Goldman Sachs 3) be a portfolio manager at a fund of funds. And work hard. Any questions? Add your comments below.

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