Ex-Citadel Top PM: Deep Dive into His Investment Process

Long/Short Investment Process Deep Dive

Today, we are taking a deep dive into the investment process of a very successful long/short portfolio manager.

He grew up in the early Citadel days, where he had a long, successful run and was mentored by Holocene Advisors’ CEO and Founder, Brandon Haley (who went on to become Head of Global Equities at Citadel before starting Holocene in 2016).

His time at Citadel and mentorship under Haley were extremely formative, especially back when Citadel was a smaller, growing business with far fewer PMs. It was also when much of the foundation for the current Citadel was being laid out, particularly the creation of the elaborate risk management and portfolio construction infrastructure that defines the current MM model (Citadel was well ahead of peers at the time). That period had a huge influence on his investment process and style.

His investing embodies the low-net/market-neutral approach and encapsulates the concepts we talk about weekly. I personally love his well-rounded process - a balanced mix of marrying the short- and long-term, a catalyst focus, meticulous probabilistic thinking and quantification and rigorous portfolio construction and position management.

We go over the core frameworks behind his idea generation process - how he balances short-term vs long-term thinking, probability-based decision-making, active position management and more. Save this write-up for future reference. Even if you take just a few mental models and incorporate them into your own process or thinking, that’s a big win.

Previous write-up (read here): Contribution Margins: The Top L/S Equity Analyst’s Secret Weapon (Incremental and Decremental Margins: UBER example).