Inside the academy: How Point72 shapes future investors

(upbeat music) Hello everyone and welcome to another episode of hedge fund huddle with me, Jamie McDonald. Now before we get started, I wanted to say thank you listeners for your growing and continued support. I'm thrilled to announce that we won yet another award. A Grammacy Institute 2025 Financial Content Market Award. So I think we can now officially say that we are multi award winning. And if the producers are listening, maybe that gives us the green light to start selling some merch. But we'll look into that. Okay, enough humble bragging. Today we are very lucky to have on the show Jamie Goodfriend who is head of development at point 72 and head of the point 72 Academy, which is what we are gonna be talking about today. So Jamie, welcome to the show. Thanks for having me, appreciate it. And congratulations on your multiple awards. Thank you very much. Yeah, we try to squeeze in the award celebration when we can. So Jamie, right off the bat, I wanted to just make a distinction about the different programs that you have. Because I know that you have the summer internship program. There is a full program for upcoming graduates and there's one for more experienced professionals. So I thought maybe could you just walk us through the distinction of the difference between those programs. And I think which ones are offered in the UK and which in the US? Sure, well, first again, thanks for having me today and it's pleasure to be here and honor to be here. We do have multiple intake opportunities depending on really where a person is in their career and in their college career even. So for those who are still in school and exploring what opportunities they might have interest in after graduation, we offer an internship program during the really the penultimate year summer. So they have a chance to have sort of a miniature version of our experience, can see what it's like to really have life on the desk for us, working with a team in a shortened condensed time frame over the summer so that they can make the best decisions that they can when they grow, you know, before they graduate and whether or not this is a career day that they want to explore full time. I always kind of think about this because the choices employers come to students now earlier and earlier. Even since, you know, I started, you know, in this part of my career, gosh, now more than 15 years ago. And so we think it makes sense to offer people a chance to kind of dive in to see what it's really like to be an analyst at our firm to educate people to make the best decisions possible since all this information is coming earlier and earlier to them in their college careers. But we don't stop there because, yes, so for example, if you are a graduate, just fresh out of college, we offer opportunities full time for those who just graduated college. But even if you've started down a different path and have been in a different career and it could be in finance or it could be outside of finance, we offer the opportunity to come in as an experienced academy higher. In other words, you've had some relevant work experience or importantly not relevant work experience, but we can still pivot your career towards being an investor upon graduation. And so we do offer all three of these opportunities in the UK and beyond. So we're excited to have applications from people no matter where they are in their career journey. So I wanted to, before we dive in, just get a little bit more of a background about yourself. You said you've been in this world for a long time. I think you're an analyst yourself. You've been a university lecturer. Can you just give us a quick background about yourself? Yeah, sure. So I started in banking, potentially as some of your listeners may have as well. I did mergers and acquisitions, fresh out of college. I was not a business major. So for me, there was a big learning curve getting up to speed to learn how to do that analyst role. And I went from there to sort of the typical period of time when people are junior analysts. I went from there to the cell side back then, way back then. It was not typical that people would go directly to the cell side from banking. Sometimes you had to go back and get your MBA or your master's first. But for me, I was able to secure a position at a firm to do cell side research directly after banking. And then I went to graduate school to then pivot to the buy side. And so I went to the buy side, worked at a couple of our competitors. But ultimately, I've always wanted to be a teacher. And my calling, I think, in life. And it took me 10 years to be honest with myself about that. And I think that if I could give advice to people, don't wait 10 years if you don't have to. But on the other hand, I learned a lot so that I could then teach something back. And so 10 years later, I became a university professor at a couple of universities, built programs at those universities to help bring people who didn't necessarily have easy access to US Wall Street to Wall Street. And I loved doing that. And then I was given the opportunity to build that at this firm. And so I joined 0.72 full time in 2015 to launch the 0.72 Academy. So let's talk about the building of the Academy back in 2015. I like to use sports analogies every now and again. So apologies in advance for that. But I'm kind of a kid of the '90s in the UK. And most notably, it was matched to United who had this YTS scheme. And I think really what came to them was it's very expensive to buy stars from other clubs. And what better is to bring them up when you see young potentials. So what was the real initial idea? Was it more sort of we see so much young potential? We want to bring people on board earlier. Or we hiring portfolio managers from other firms is very expensive. Why don't we just sort of grow our own, expand a little bit about the thinking behind it. I think ultimately, we look back today. It's not an either or situation. We get to do both because of what we built. We both grow our talent. And we hire talent laterally. And it comes from the fact that there's this big war on talent in the industry. Hedge funds are assets and people. We are blessed with the situation where we don't have an asset issue. But the world in our space has a talent problem. And so being able to tap into an organic pipeline, while also being attracted to experienced hires, I think gives us an advantage. And we've been at this now. The Academy program, as you mentioned, we've been at it a while. We've been 10 years this year, which I'm super excited about and feel really lucky to be a part of the whole time. And so we benefit from the experience and the track record. But we don't have to solely rely on it, like you said. And so we try to be opportunistic about both approaches. When you hire an experienced person, you pay for past performance. But it's not necessarily an indication of what they're going to do in the future. And so with homegrown talent, we get to know who they are, what they're capable of. And we can make more informed decisions about what's best for the firm with that talent. I always think Steve's like an intellectually curious and restless person. And he never rests on his laurels. And so I think that mentality flows through our entire culture. And so if you're not trying to develop your next great talent, you're falling behind. And that's probably what really drove the investment that we've made in this program. I was listening to your Academy podcast. I should say to listeners that it's really a good listen, because I mean, Steve gets interviewed himself. And there's a moment where he says, I like to climb to the top of the mountain. And when I get there, I realize there's nothing there. I'm looking for the next mountain. I think that was a good insight into how he thinks. He's always looking for the next big thing. And congratulations on the Academy. Thank you. So I wanted to ask a kind of the million dollar question, because there'll be people listening who think, well, does my degree or what I'm studying matter to try and get into the Academy? Like I like finance, but I'm doing something in a different area. So Jamie, to you, what do you look for? What are the qualities do you look for? Is there a business major help? Does it not help? Can you give us a little insight? Yeah, about half the people we hire come from business backgrounds. I think it's really important for listeners to know that we are not-- I don't focus on the type of degree that you have. I care far more about what I call the on-teachable qualities. No, your critical thinking skills, your work ethic, ethical behavior, are you commercial? And these things can be applied to any degree. I love hiring history majors, computer science majors, music majors, psychology, neuroscience. I myself was not a business major. So I think that really helped me actually understand why it was possible and how it would be possible to bridge people who really have no experience whatsoever in finance to become great investors at our firm. I do think that passion for the markets, though, is important, because with that comes a drive and determination to learn and make that bridge happen for yourself. Yeah, for those listening, you probably would know that I worked at .72 myself, and it was a fantastic place to work. But I really did see the people who succeeded just really loved what they did. And I think just-- obviously, that goes for any profession. But a real passion for markets and fascination with business and what makes good companies work was really integral to watching people succeed there. So a question about the process and about you attracting talent. Back in the day when I was at university, we had to think of the milk round in England where the big companies, the UBSs, Goldman Sachs, mainly sales side firms, would come around to the universities like Oxford and Cambridge and look for new talent. So do you actively go to universities looking to recruit or is it more of a passive thing where the applications are online and anyone's willing to apply? Yes, Anne. It's all true. We both go to universities. And we source from over 75 universities in the world. Wow. No, we can't go to that many universities. We're a small team. We try to be lean and we try to be thoughtful about how to deploy resource. But we have on campus events. And I have heard of milk rounds myself. That's not what we call it in the U.S. But I'm like, oh, that's a cool serve. I don't even know why it's called the milk round, actually. I should look that up. I asked somebody once. I thought it was like, we call them coffee chats in the U.S. I assume it's similar. But in addition to that, we also have online experiences, you know, webinars. We have insight weeks. We invite people to our offices to engage in experiences. And we do host that in the UK annually for students. We offer case competitions. So all of that is available in the region. And again, it's really with the intent of providing education and experienced students and beyond. Because I think the information now is just so abundant. And so coming at students so fast. And I think it's our responsibility to be educators of what our opportunity is so people can make the most informed decisions at an earlier and earlier time in their careers. Oh, look, the producers just sent me a note. Home milk delivery is a long-standing practice in Great Britain, which I can attest to. In the mid-1960s, when companies began touring universities to promote and advertise their job opportunities directly to candidates, the visits became known informally as the milk round. So there you go. Thank you. So moving on from the process. So once you are lucky, if you're lucky enough to get a place on the academy, can you talk us a little bit about what the daily routines like? What can somebody expect? Well, in the internship program, we start with a one-week experience of general onboard training. What have you? I think that's everything from how your key card works to building your first financial model. And I think it just sort of helps you with the next several weeks, which is working on a team with an individual project. Deliverable that is used on this team, right? It is actually-- we believe in efficiency, but we also believe in doing things with intention. So the teams have projects that are meaningful to them that in turn get to get to engage with, get to be mentored by analysts and portfolio managers on their team. In terms of learning the tools that you need to be an analyst and a portfolio manager, who's doing the teaching? Is it the PM and incumbent analysts? Will you go to-- or do you have third-party people like yourself who come in and sort of train people? How to model? Yeah, so it's my team. So we do the investment professional development team, the academy team. And we are all-- and I think this is actually common. And you know this having worked at 0.72. We're all practitioners, former practitioners. And so for us, it's really teaching what we already have learned to help onboard them. I am familiar with third-party companies that teach modeling. I think that's terrific. And a great experience for people highly recommended. For our firm, we want something a little bit different. And so we've built it ourselves. And so the initial trainings all come from things that are proprietary to the academy. And then when people are on teams, of course, there's ongoing learning. You know, ultimately, this is an apprenticeship business. And so I think it's incumbent upon everybody. And as I said before, culturally, it's incumbent upon everybody to be teaching the next generation. But certainly, that starts with us. And it's something that we've built in-house. So I was going to ask a little bit about the transition from analysts to portfolio manager. I know we're going a little bit beyond the academy here. But so if you are at the academy, you get hired as an analyst. What's then the sort of projected career path to becoming a portfolio manager? Do you slowly get given more responsibility? I mean, when I was there, that's kind of the way it worked. I was an analyst for a few years. But if you could explain a little bit about that, I think people will find it interesting. It's nice that some things have stayed the same, right? But I think that part is true in that being at a hedge fund, unlike other financial positions or other types of industry positions, it's a fairly flat structure. And so there's not a lot of promotions and titles here. It's about gaining responsibility and accountability. And so in the beginning, you might work on opportunities, investments, company coverage, as we call it, with a portfolio manager, with a more seasoned senior analyst on a team. But over time, you'd be, even as a younger person, responsible for decision making. And I always say that's something that people really need to think about. Having accountability for decision making at a younger age is a blessing and a burden. And it's not for everybody. And I think that for us, it's about covering names, covering, maybe up to a certain number of names and getting deeper in those names. It's not about how many names can I cover. It's actually quite, these days, it's quite different, particularly with the proliferation of data, where you need to know so much, more, so much more information is available on something, becoming a domain expert, when there's more information available, means maybe knowing a few less days, but knowing them more deeply than other people. And about the programming itself. I mean, you talk just then about the fast-changing, the dynamic nature of markets, I guess. Yeah. Because back in the day, it was really fundamental analysis. That's really what we focused on. But now it's geopolitics, algorithms, AI, crypto. I mean, how are you bringing those topics into the programming? Sure. I mean, at the end of the day, it's still fundamental analysis. And I think the question becomes, what's incorporated into the comprehension of a company in business? And to your point, a lot more than ever. A, because it's available, the information is available. And B, because the world seems to be changing really fast. The best example that I think that relevant to all of us thinking about the future is AI, right? And thinking about what is AI going to do to a lot of things, but to the analyst role. And this is something that we've started to think about a lot from the moment that we kind of learned that, what is this and what is it going to do? My team and I, we immediately started thinking about, what are we going to train? What are the tools we're going to make available to analysts? And how are the processes going to be different? And this is something that we really have leaned into and think it's important that we leave nobody behind in the sense that this is a real secular permanent change in how everything behaves. But we have spent a lot of time meaningfully changing our curriculum so that people are incorporating the tools of the future today and make themselves relevant for the next, for their careers. Knowing that when you and I were in this business doing the investing roles, none of this existed, right? And you wouldn't, you know, we would be in trouble, right? So, so you have to, you know, you have to stay on top of, I think, things that have changed. You know, the simplest example I always, I always bring up is credit card data years ago was innovative and different. And, you know, cutting edge and leading edge. And today if you're not familiar with what's going on in the credit card data on many of these companies, you're kind of missing consensus. Well, AI is going to be the same, right? And so you kind of, you have to make sure that you are meaningfully teaching people not just what the tools are, but how to use them and how to innovate with them. And so I'm really excited to see what the analyst role is going to be in the future. And my team and I think all the time about the changes we need to make in our education system here so that analysts are the best with what's available. Jamie, I wanted to ask a little bit about how open point 72 is being about how things work in its culture because, you know, congratulations all this. One of the reasons this podcast exists is because for so many years, hedge funds with these closed, mysterious, opaque organizations where people didn't realize what was going on. But you've done a really nice job of opening up about what a day in the life is like, what sort of people you attract. So can you talk a little bit about the culture about what a day in the life of point 72 looks like? You know, that sort of thing. Again, I think the culture comes, you know, this is an apprenticeship culture and, you know, from the days when you were here and, you know, the days I was an analyst all the way through, certainly through today. And I think probably more than ever. It seems to me like, you know, these days when I meet people who are, you know, young and their careers and coming through the Academy mentorship is more important than ever. And that is something mentorship circles is actually something that we have throughout the entire firm. It's not limited to the Academy. We are a firm of thousands. The Academy employs 40 to 50 people a year so that just a small fraction a year, we are, it is, it does may now make up a quarter of the investment population over 10 years because our retention rate is so high. But beyond just that part of the business, mentorship is something that the firm believes in again, from the top down, that comes from Steve. And so accordingly, you know, and even before I got here, I always told people when I was building the Academy that I, you know, that I worked on at the university before I came here, I always said, I'm not looking for anything from anybody, you know, I've been blessed in my career and I'm very lucky to be here. All I ask is that you pick up the phone the next time, the next generation calls you. And it's something that I still ask of anybody who comes through a program like ours, or even if you come through a firm like ours. You know, whether you came to the Academy or not, I think it's important to always pick up the phone for the next generation and help them, regardless of where they came from, if they're asking for your time. And so culturally, I think that is important here. And I think it's important throughout the entire firm. I would not just put that on the Academy. In terms of the daily activities that, just to pivot a little bit, I would say no two days are the same, which is because of the market. I mean, can you remember a time in history that two market days are the same? Like, I mean, what I actually really enjoyed is on your website, I can't remember the name of the person who does a day in the life. And, you know, is get in at 7 or 7 30 and it's like digest the news. Like, how are the markets going to react to this? And I love that because, as you say, like, you know, be prepared for anything. I used to deal with insurance stocks, so it was always any kind of global event could have repercussions. So it was that moment of getting in and then trying to work out. Every day was a puzzle. It's like, let's try and work out what the stocks are going to do. Well, I like what you just said there because I think what is a constant are the habits and the processes and the frameworks that you bring every day. So although, to your point, you don't know what's going to, you know, insurance hasn't, you know, that's amazing because you know, you kind of wait for the next disaster. That was terrible. That's all, it's awful, but, but at the same time, you're bringing the consistent framework every day. You know, you wake up, you digest the news, you ask yourself the questions, you communicate in the same process, your models are all built the same perhaps. And so in the world of the chaos, you try to create some consistency. And that comes through habit formation of good process. And that's a lot of what we teach, you know, from the Academy through the other code. I run coaching programs throughout the entire analyst population to the most senior analysts at the firm. And we work on those habits and the continual formation, reformation, you know, whether it's a person sort of covering a new name for the first time or managing a new person for the first time. What are the habits that help create, you know, consistency in the chaos? And that helps, I think, to scale yourself. It helps to scale when things are idiosyncratic as they certainly would have been, I guess, in your coverage. And so I think you raised an excellent point that what we can do with consistency is what we practice. I wanted to talk a little bit about numbers. So people listening have an idea of how many people you take, how many graduates you have, what percentage of people get taken on as high as. Could you talk a little bit about that since, I think it's 160 graduates since 2015? Actually, I think we're over well over 200 at this point. Oh, okay, sorry. No, it's something I'm happy to correct because I'm so excited about it. We're well over 200 at this point around the world. We have a high-rotennial, well over half of them are still with us. In terms of how many we hire or Academy versus External Hires or what have you, we don't believe in targets. We don't have a specific percentage target. We just want to find the best talent. And we already talked about just some of the traits that we look for regardless of background or experience level or what have you. Academy gives us a great pipeline and hopefully the results speak for themselves. I'm really excited about, we've definitely now have Academy graduates who have discretion at the firm and outside the firm if they've left. And so that's my reward and that's what I'm most proud of. But even our lateral hires benefit from the training and development programs that we have now. And so we try to evolve people at every stage of their career and believe in long-term development. And so wherever the best talent comes from, the Academy has to compete with External and we're happy to learn from when the Academy doesn't beat out an External Hire. I think that's important because we're always looking to get better. I'm really proud of the success we've had, but I would say that I'm trying to be always be a student of how we can train people better for tomorrow. And Jamie, a question about strategies. Obviously point 72, one of the, if not the most famous, long-short equity kind of punch shop in the world and been hugely successful for so many years. What about moving into other strategies? Is there any to talk internally about that? Crypto, more fixed income world? Well, the firm does have other strategies. The firm has, we just launched a new private credit area. We do trade, fixed income. We have a big macro strategy. We have a big algorithmic area within the firm. So we do, and by the way, there is a Cubist Academy for those who are interested in the systematic side. I don't oversee that piece of the business, but we definitely have expanded to two other areas. The firm is expanded to other strategies in the world. I still continue to focus on long-short in the Academy here as our bread and butter, but the firm has definitely moved beyond long-short. And I left this world about 10 years ago, quite a while ago, because I found it then. I thought this is getting hard. I mean, it was getting really hard to make money. Do you think it's getting harder? Is that the information is too much? It's happening too fast. I think it's definitely harder than it used to be. Gosh, I left the investing world longer than that. You made it a much longer than I did. But so congratulations to you. I guess what I can say is that I feel very fortunate, lucky fortunate, that we've been able to bring in former risk takers to then pivot to our coaching seats. And the firm is well-endowed with resource to try to make sense of a never-increasing data world. And so I think you have to match the pace and the changes that have happened in the world with the tools and resources that you can make available and the training of those tools and resources. It's one thing to throw resources. That's somebody that's another thing to teach them how to use them to help with their productivity, efficiency, interpretation of information. At the end of the day, I think it's a question of just turning up the volume on pace and probably on the volume of information. So speed and access to information. And what we try to do is say, what can we do to help with ultimately the productivity in light of that, whether it's efficiency improvements, automation improvements, training improvements. And so, yeah, better than me to have to do this job, I think it's so hard. I always said, we built a program that I could never get into. But I really, it's a hats off to the teachers that we have, the coaches that we have. It's a terrific group, we've all been together a long time. And everyone who's in this role has done this job. And so, you know, and I think that's an important distinction. It's we only hire, I only hire people who have this kind of experience to help teach the next generation. - So we're kind of running a little bit out of time. So just a few more questions and thank you for everything so far. I remember reading once that you can learn as much by trading a future as you can by reading a whole set of books on the stock market. So what advice do you kind of give people, maybe there's some young people listening now who really want to get into this world? Should they kind of have a little dummy portfolio themselves just to have fun with it or there's certain books that you really think people should be reading or just read the Wall Street Journal every day and see if it fascinates you? What kind of things would you recommend people to do who are interested in this world? - You know, not everybody, certainly not everybody can afford to, and I couldn't have afforded to trade stocks when I was younger, but I think following a couple of names every day for a year, pick two or three of interest to you every day after close, after the market closes, maybe look at the standard deviation or percent change from the day before. And if it looks like it's more than, you know, I would say like almost two standard deviations beyond yesterday's close, there's probably a reason. And so maybe for most of, you know, out of the year, if you think about standard deviations, you know, maybe maybe 20 trading days a year out of whatever 252, it's for a reason. And you look up the Y, maybe the Y is specific to an earnings release of the company itself, maybe it's of a competitor, maybe it's a macroeconomic event, whatever the case might be, if you do that practice every trading day, dig in when the deviation is significant. In a year's time, you'll probably know a lot more about that company's behavior, why how the stock moves and feels than you did a year earlier. And so just that simple practice, which anybody can do with or without a bank account, I think we'll teach people if, you know, how much interest they have in this business, because that's what the business isn't just about researching companies. In fact, that's part of it, but you can do a lot of different jobs in research. I think the distinction I'd like to make is that this job is about market moves and about stock movements. And it's underpinned by good research habits and processes. And so knowing that you enjoy research really isn't enough. It's really, do you enjoy stock movements? Do you enjoy markets? And I think that practice will help educate people on whether this is for them because there's a little bit of risk involved and people have to feel that a little bit. We do have a reading list. You know, I invite people to come to our website. There's a whole host of different kinds of books ranging from market wizards and habits of great traders. And again, thinking about habits to deep dives on market history, historical market situations or companies. Jamie, I think that explanation you just gave about following a few names for a year in market moves is one of the better explanations I've ever heard about what it takes to be a good hedge fund manager. So I really appreciated that. Jamie, this has been fantastic. Thank you so much. Before we finish, the website to go to is got so much information. I've been on it quite a few times. And you've done a great job of putting up the how to apply, when to apply and all that stuff. Check out point72.com/careers. The career's page is always updated. We always have the latest on what's available, what you can download, tips and tricks to help you learn about our business, about interviewing, and advice you to apply to the multiple opportunities that we try to offer to educate people on what we do and how you can be a part of it. Jamie, I've had so much fun talking to you today. So thank you so much for your time. Thank you so much for having me, really appreciate it. (upbeat music) Introducing Ready On Workspace, providing a fully integrated EMS experience within LSEG workspace, allowing by-side traders to monitor markets, analyze data and execute trades, all from a single interface. That's a wrap on our final episode for 2025. Thanks once again for listening everyone and please, as usual, give us a follow, like or subscribe, wherever you get your podcasts. We'll be taking a short break and we'll be back with you in 2026. The information contained in this podcast does not constitute a recommendation from any LSEG entity to the listener. The views expressed in this podcast are not necessarily those of LSEG and LSEG is not providing any investment, financial, economic, legal, accounting, or tax advice, or recommendations in this podcast. Neither LSEG nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast and any and all liability, therefore, whether direct or indirect is expressly disliked. For further information, visit the show notes of this podcast or LSEG.com.