- Michael Graves, a portfolio manager for Steve Cohen's quant arm, will start his own fund — the third launch of his career.
- Graves was one of the top portfolio managers for Cubist, Point72's quant arm, and at least four members of his former team will join him at his new fund.
- Quant funds struggled last year, losing more money than the rest of the hedge fund industry on average, according to data from Hedge Fund Research.
A former top quant manager at Steve Cohen's firm is launching his own fund.
Michael Graves, who was a portfolio manger at Point72 Asset Management's Cubist unit for nearly a decade, resigned from the firm in 2018. Now, he's starting his own quant-focused hedge fund and asset management firm, a source familiar with the new venture told Business Insider. At least four analysts and developers from Graves' team will join him, a source said.
The quant-focused fund will launch in the middle of the summer with a fundraising target between $600 million and $750 million. Paloma Partners, which helped launch quant giant D.E. Shaw in the 80s, is one of Graves' investors.
Sign up here for our weekly newsletter Wall Street Insider, a behind-the-scenes look at the stories dominating banking, business, and big deals.
The potential launch comes at a rough time for hedge funds. The average fund lost more than 4% in 2018. Quant funds performed even worse, declining more than 5% for the year, according to data from Hedge Fund Research.
The number of hedge fund launches also slowed in 2018, though big names like former Millennium star trader Michael Gelband were still able to raise money. According to Hedge Fund Research, last year ended with four fewer hedge funds that it began with in January, falling from 8,335 to 8,331.
Graves' new hedge fund, which doesn't have a name yet, will be able to use the track record that he and his team developed at Cubist.
Graves joined Point72 in 2010 after working as a quant for years at firms including the former- Credit Suisse First Boston and BNP quant subsidiary Cooper Neff. Fortress Investment Group bought the first two hedge funds he founded, FountainHead Capital and Area51, and made Graves a managing director in 2006, where he worked until he left to found Tesseract Capital. He left Tesseract in 2010 to join Cubist.
“We appreciate Michael’s contributions to the firm over the past nine years and wish him the best in his new endeavor," a statement from Point72 stated.