Citadel is from Mars and Millennium is from Venus

Are pod shops all the same?

Wandering around Mayfair in recent weeks and listening to friends who work for multi-manager pod shops and other hedge funds made me wonder if the conventional narrative that pod shops are a homogenous herd copying each other endlessly is right.

Pod shops are different from other hedge funds as each pod of a portfolio manager (PM) and supporting analysts have a distinct P&L. Unlike other large multi-strategy hedge funds, they are not feeding ideas into one centralized portfolio manager but acting autonomously, a business within a business when it comes to investing. At the same time, they don’t have lots of distinct funds that clients invest in directly. The PM of a pod doesn’t get involved in marketing and client management. Pod shops also don’t charge the standard 2 and 20 fees but instead of a management fee, they pass through a rapidly growing amount of costs directly to clients and hence are better resourced and better paid. That is the beauty of the pod shop business model.

A memb…