Morning Coffee: Hedge fund manager on $28m resigns claiming overwork. Citi people aren't feeling the simplification

Nicolas Monaghan, a Monaco-based macro hedge fund manager, and Thibault Cons, his analyst, weren't badly paid at hedge fund Garda Capital Partners. Monaghan joined in April 2019 and received $27.5m in pay over a five-year period. Cons joined in 2021 and was paid $3.27m over a two and a half year period. Neither paid any tax after relocating to Zug, Switzerland, all expenses paid, with Garda in 2022. Both were presumably rich, happy Swiss hedge fund managers. Or not. 

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Two years after moving to Zug, the two men were disgruntled. They informed Garda that they had been "unlawfully overworked" and were therefore leaving the firm. Unfortunately, they weren't free to do so, having signed up to non-compete agreements that elapse in 2026 with Garda when they moved to Zug. 

Then they joined hedge fund rival Schonfeld instead. 

Garda is not happy about this. Bloomberg reported yesterday it's filed a case in the New York Supreme Court accusing Schonfeld of "trampling" on its rights and poaching one of its finest portfolio managers who was contractually forbidden to move. Monaghan generated $250m in profits during his time there. 

Garda says Monaghan and Cons generated "sham" claims of overwork to enable their move to Schonfeld. It also says the two men were in "control of their own working time' while they were there and that some of their "purportedly excessive working hours" were spent preparing to move to Schonfeld. 

Monaghan and Cons aren't defendants in the case, but it's worth noting that their contracts state that their "working hours and additional hours should not exceed 45 hours per week." Equally, though, the two men received salaries of 'only' $255k and $153k respectively, suggesting an incentive to toil harder to receive their $1m+ bonuses. 

While the case may not entirely be about hedge fund managers' working hours, it does raise the question whether you can expect to earn $5.5m a year while working a 45-hour week. Some claim to do it, and hedge fund working hours are reputedly better than those in private equity, but $2.5k an hour might be a bit steep.

Separately, this time last year, Citi simplified its ranks and cut management layers from 13 to eight, making over 5,000 redundancies in the process. 12 months later, things don't feel much less complex. 

Bloomberg reports that Jane Fraser sent a memo to Citi staff last week observing that an internal survey has revealed that many of them "say they have yet to feel the full benefits of our efforts to simplify.” It's not clear when those benefits will be forthcoming, but Fraser also said it's "a journey" and that there will be "more ups and downs," so patience. 

Meanwhile...

Filippo Gori, co-head of global banking and chief executive for Europe, the Middle East and Africa at JPMorgan recalls his early career without fondness. “When I was an analyst 25 years ago, I was 26 — a little older than others — and the expectation was that the analyst doesn’t leave until the associate has left, the associate doesn’t leave until the VP has left, the VP doesn’t leave until the managing director goes… it drove me mad... Even at a young age, I could recognise it was not a good way to work. Even now, we still see some of that behaviour embedded in the culture.” (Financial News) 

Technology talent suddenly wants to work in the finance industry. BNY Mellon is luring candidates with Nvidia chips and "meaningful" problems. (WSJ)  

McKinsey's 200-person partner team is half as large as usual. (WSJ) 

European ECM bankers are feeling excited about 2025. “There’s undeniably a tricky macroeconomic picture to navigate for IPOs next year, but the need for sellers, and in particular private equity sellers, to be recycling capital back to limited partners will likely trump everything else.” (Bloomberg)  

US bankers are excited about 2025 too. “Since the election results came in, my phone hasn’t stopped ringing. Clients who’ve been sitting on the sidelines for the past four years are suddenly eager to explore deals — even the challenging ones. It feels like deal activity is about to take off in a major way.” (Financial Times) 

Banker Ian Hannam actually named the Barrick Gold and Randgold deal ("British Rail") but he didn't get paid anything at all. “I did not need Ian Hannam’s help to do a merger.” (Financial Times)  

Not all private credit funds are thriving. At its peak, Alcentra it managed about $43bn of assets, according to Fitch Ratings. It now has about $32bn. (Bloomberg) 

UK Chancellor Rachel Reeves says the UK doesn't want to become Singapore on Thames and that EU countries should give their companies greater access to London markets. “The UK has deep global capital markets that can fund the growth that economies across the continent need. Openness to each other’s markets is a source of strength, not weakness.” (Financial Times) 

The proportion of overall UK gilt market transactions done by hedge funds had risen from close to 15 per cent in 2018 to almost 30 per cent this year. (Financial Times) 

These are fine times to be a bedroom investor. A hypothetical portfolio holding equal amounts of bitcoin, gold, Gamestop and DraftKings returned 62% in the first 11 months of this year. (WSJ) 

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