Dmitry Balyasny, founder of the $20bn multi-strategy hedge fund Balyasny Asset Management, has overseen the overhaul of the firm’s equities division in response to underperformance in 2023, according to a report by Business Insider.
Known for its stock-picking prowess, the firm has shifted its focus toward deeper research and long-term investments, moving away from excessive trading.
The reports quotes Balyasany as explaining during an interview at the firm’s London office in Mayfair, that his equities teams had been “trading too much and not investing enough.” The “top-down philosophical” shift emphasises rigorous research and longer investment timelines, prioritising ideas that can play out over several months or quarters, an adjustment that has led to lower portfolio turnover and steadier performance.
The results are already apparent. By the end of November 2024, Balyasny’s firm posted an 11.6% return, a significant rebound that positioned it competitively within its peer group.
The equities team’s challenges were partly attributed to the industry’s reliance on alternative data, such as credit card transactions and email receipts, which has become standard across hedge funds. According to Senior Portfolio Manager Steve Schurr, who was promoted to the equities leadership team in mid-2023, the firm had become overly focused on short-term “quarter calls,” a strategy he believes offers diminishing returns.
Schurr, a former protégé of legendary short-seller Jim Chanos, has led efforts to revamp the firm’s research processes. Under his guidance, Balyasny introduced Telescope, an internal AI-powered research database, and hired a 15-person research team comprising data scientists and journalists. These initiatives have completed over 120 projects this year, emphasising primary research to deliver a “durable edge.”
“We’re back to the basics of being good investors,” Schurr said, emphasising that equity selection now accounts for 80% of a portfolio manager’s opportunities.
Unlike many industry titans who have stepped back from direct trading, Balyasny has resumed managing his own portfolio. This hands-on approach aligns with his belief that trading alongside employees fosters connection and mentorship.
Peter Goodwin, another key leader, is set to launch Longaeva Partners, a new internal equities unit named after the bristlecone pine, one of Earth’s oldest tree species. Goodwin’s team aims to hire portfolio managers who align with the firm’s research-driven philosophy.
Balyasny’s firm has evolved significantly since its 2018 struggles, when it cut 20% of its staff and lost $4bn in investor capital. Today, equities account for 40% to 50% of the firm’s risk, compared to 90% in 2018. Additionally, institutional investors now make up 70% of the firm’s client base, providing a more stable capital foundation.
