Single-Manager Hedge Funds: The Best Way to Get a Recurring Guest Spot on CNBC?

If you think about the most “public” investors – the likes of Bill Ackman and David Einhorn – many of them have something in common: they operate single-manager hedge funds.

In other words, they’re the public face and brand of their fund, and all investment decisions flow through them.

They might have separate teams for specific strategies or markets, but everything is run under a single Profit & Loss statement (P&L).

This setup creates many differences with multi-manager (MM) hedge funds, from investment styles to recruiting and careers.

Interestingly, some well-known hedge funds are also tricky to classify, as they combine elements of SM and MM funds.

Depending on your personality, skill set, and long-term goals, these single-manager funds or “hybrid funds” could be perfect or far from ideal:

What Are Single-Manager Hedge Funds?

Single-Manager Hedge Fund Definition: A single-manager (“SM”) hedge fund is run by one individual Portfolio Manager (PM) with one Profit & Loss Statement (P&L) rather than multiple teams with multiple P&Ls; it aims to earn high absolute returns, often with concentrated portfolios and very specific strategies, and it may have periods of overperformance and underperformance.

There are very few real “requirements” besides the single PM / single P&L one above and the standard Limited Partner / General Partner structure that all hedge funds use.

But one rule of thumb is that nearly all single-manager funds are smaller than the biggest multi-managers, as one person could not manage $100+ billion in assets.

Here’s a quick run-down of the other differences:

• Performance Targets: Like all hedge funds, single-manager funds aim for high absolute returns (e.g., a double-digit percentage regardless of what the S&P does), but their real internal targets may vary based on their strategies, lock-up periods, and more.
• Portfolio Structure: Unlike MM portfolios, SM portfolios do not have to be market–neutral or based on pair trades; many SM funds also tend to run much more concentrated portfolios (e.g., 10 – 15 positions rather than 100+).
• Leverage: Unlike MM funds, which all use significant leverage to boost their modest returns, SM funds span a wide spectrum. Some use no leverage, while others use decent amounts (but less than the multi-manager giants).
• Drawdown Limits: Most SM funds do not have strictly enforced drawdown limits, such as “no more than a 3% drop in a month.” They’ll tolerate monthly/quarterly losses if they’re confident of the longer-term outlook, such as the 1-year performance.
• Ease of Getting Fired: With some exceptions (see below), job stability tends to be higher at SM funds because they want to retain talented people, even if they don’t perform well in one quarter.

A Day in the Life of a Single-Manager Hedge Fund Analyst

At most single-manager hedge funds, an average day is like the one described in the Hedge Fund Analyst article:

• Market research on specific companies and assets.
• Speaking with customers, suppliers, management teams, and market participants.
• Internal meetings where you discuss new ideas and your current positions with the rest of the team.
• In-depth analysis that might take days or weeks, such as a financial model with 1,000 rows in Excel to assess a biopharma company’s valuation.
• “Putting out fires” when emergencies arise, such as unexpected company announcements.

You still pay attention to catalysts and investor sentiment, but the job is more about forming a long-term view of asset prices – not predicting what will happen on the earnings call next week.

“Quick analyses” could still come up, especially when catalysts are triggered, so there is some overlap between the multi-manager and single-manager investment styles.

This is especially common in areas like distressed debt investing that depend heavily on catalysts.

Single-Manager Hedge Fund Performance

The multi-manager hedge fund article described how MM funds grew faster than the overall industry between 2018 and 2023.

But that doesn’t necessarily mean that SM funds “performed poorly”; they simply didn’t get the same attention.

I found a useful Substack article from Joachim Klement (with a separate study) that addresses this point:

“Single hedge fund managers tend to have higher abnormal returns on average than team-managed funds.

But these higher average returns come at the price of higher tail risks and higher variance of returns.

In other words, while the average single-manager hedge fund has better performance, individual funds can be at the very top or at the very bottom, depending on the decisions of the fund manager.

Team-managed funds are in the murky middle, neither particularly good nor particularly bad.”

As a notable example, here’s Pershing Square’s performance vs. the S&P 500 from 2004 through 2017:

Yes, Pershing Square outperformed the S&P on an annualized basis over this entire period, but it also underperformed for multi-year periods!

Also, most of its outperformance came from strong results in 2004 – 2010, which is why it struggled and lost AUM and investor support in the 2011 – 2019 period.

By contrast, a top multi-manager hedge fund would post more consistent results but probably wouldn’t outperform the S&P by 5% annually over 14 years.

(One notable exception is Citadel’s Wellington fund, which has delivered 19% annualized net returns since 1990 – but that is just one fund there.)

The Top Single-Manager Hedge Funds

Single-manager funds far outnumber multi-manager funds, but they’re also much smaller.

Think: “Hundreds of millions in AUM up to a few billion” – a lot of money, but tiny by the standards of the largest hedge funds and asset managers.

If we focus on the larger single-manager funds, i.e., those with $1 billion up to $10 billion+, a representative list might look like this (please see the important notes below before leaving a comment or question):

Many of these funds were spun off from Tiger Global (hence the “Tiger Cubs” moniker).

Some have stayed relatively small, while others have expanded significantly beyond the traditional single-manager size and strategy.

As I mentioned at the top, the classification here is tricky, which explains why I’ve added the stars (“*”) to certain names.

Some of these, such as Pershing Square, Egerton, and TCI, are clearly single-manager funds because they only have a few dozen employees, and everything runs through the Famous Person in Charge.

However, others – such as Coatue, Maverick, Viking, and even Baupost – are more questionable because they’re much larger.

Some of these funds have 100+ employees; Viking has 275+ with 45+ investment professionals.

That’s much too big for a single team, so they have multiple teams with different Portfolio Managers and Analysts separated by sector and strategy.

Tiger Global is another example of this issue: It started as a hedge fund but later expanded into private equity and venture capital, with different teams for each one.

However, many people still consider all these funds “single managers” because of their investment styles.

Specifically, they have looser drawdown limits, they’re not betting on quarters, and they don’t necessarily run market-neutral portfolios.

So, if you go by the size and separate teams, the larger funds here are more like MM funds, but if you go by investment style, they’re more like SM funds.

Recruiting and Interviews at Single-Manager Hedge Funds

Most hedge fund recruiting is “off-cycle,” and that’s even truer at single-manager funds.

In other words, you’ll have to do your own legwork by networking with the right people, monitoring job postings, and pushing your case aggressively.

Some of the larger funds here, such as Viking, may have structured recruiting, but they are very specific about the types of candidates they prefer.

Specifically, they often hire people who have followed “the path” by working at a top investment bank for 2 years and then joining a private equity mega-fund for another 2 years.

Teams are small, so these funds don’t offer many entry-level seats – meaning that you need a great pedigree, luck, or both.

Also, unlike multi-manager funds such as Point72 that offer direct recruitment and training for undergrads, it’s rare for any of these SM funds to recruit university students directly.

If you have the right background – IB/PE at top firms or possibly equity research or CFA / asset management experience – the interviews and case studies are fairly standard.

Expect 3-statement modeling or valuation tests, stock pitches, and combined exercises where you do both (e.g., “Read the filings, build a model, and make a long/short pitch”).

The biggest difference is that you’re more likely to get an open-ended exercise without much time pressure at a single-manager fund, such as:

“Take a week, find a company in Sector X, build a valuation, and pitch us on a long/short/other investment in the company.”

There’s no quick/simple way to do this, but you’d probably start by screening for companies with out-of-line valuation multiples and go from there.

For specific examples, see our stock pitch guide and the templates there.

Careers and Compensation at Single-Manager Hedge Funds

Teams are very small at “true” single-manager funds – perhaps 7 – 15 investment professionals potentially managing billions of dollars.

Since teams are small and want to retain talent, turnover tends to be much lower than at the MM funds.

That’s nice for career stability, but it’s a double-edged sword because it means that promotions are more difficult; entry-level recruiting is tougher since no one wants to leave.

And if there is only one Portfolio Manager, you will only be promoted to PM if the existing one expands the firm by raising capital and creating more teams.

The good news is that if you don’t get promoted, you could move to a multi-manager fund or even back into IB or PE if you came from one of those.

In terms of compensation, most single-manager funds charge lower effective fees than MM funds because most stick to the traditional “2 and 20” (more like 1.75% and 17.5% now) structure.

Multi-managers, by contrast, have adopted a pass-through structure that makes the LPs pay for expenses, including compensation.

This results in effective management fees of 3 – 10% for many MM funds vs. the much lower 1 – 2% for SM funds.

However, the AUM per head is also much higher at SM funds, meaning they are more “efficient” than MM funds, so the lower fees don’t necessarily result in lower pay.

In practice, year-end bonuses at single-manager funds are more variable and arbitrary, which can result in surprises in both directions.

For example, if you have a “bad year,” but the PM sees potential in you, he might award you a solid bonus anyway to retain you.

But sometimes, if you had a “great year,” your bonus might be less than expected if the PM feels that other team members made bigger contributions.

The average compensation levels are similar (low-to-mid six figures at the entry-level, rising to high six and low seven figures after that), but the progression and link to the current year’s P&L are less direct.

Are Single-Manager Hedge Funds for You?

Here’s how I’d sum up everything above:

Pros:

• The earnings potential is still very high, especially as you become more senior (even if you’re not an official PM).
• There’s more job stability since most SM funds do not fire people for a 4% drawdown in one quarter.
• The work is arguably more interesting/appealing because you focus on the longer-term outlook rather than quarterly beats and misses.
• The lifestyle is more sustainable since there’s less stress and reduced hours.

Cons:

• It’s difficult to recruit for these roles due to the dearth of openings, low turnover, very specific requirements, and off-cycle processes.
• The advancement path and compensation are arbitrary; even if you perform well, you won’t necessarily be rewarded as expected.
• You won’t have much brand-name recognition if you ever leave the industry or change careers.
• Fund variability is very high, which means that the stability and stress may not be so great at places like Viking or Coatue (yes, they’re great funds, but they also have a reputation for long hours and stress).

The average banker or private equity investor would probably feel more comfortable at a single-manager fund.

But in the long term, it may not be the best career option unless you perform so well that you could leave and start your own hedge fund.

If you’re more in the “solid but not spectacular” category, it might be more useful to gain experience at an SM fund and then move to a multi-manager or another firm with a clearer advancement path.

You may earn less than a PM at a single-manager hedge fund, but you also won’t get stuck in the murky middle.

Want more?

You might be interested in:

• Fixed Income Trading: The Definitive Guide.
• Multi-Manager vs. Single-Manager Hedge Funds: Recruiting, Investing, and Climbing the Ladder