In 2001, Dmitry Balyasny together with Scott Schroeder and Taylor O’Malley founded Balyasny Capital Management in Chicago. Over 16 years, the fund, which, in 2004, changed its name to Balyasny Asset Management, has grown to a team of over 500 people with offices in New York, London, Singapore, and Hong Kong, in addition to Chicago. In addition to the founding partners, the fund has two other partners, Christian Zann and Paul Brinberg, which joined Balyasny Asset Management in 2004.
Prior to founding Balyasny Asset Management, Dmitry Balyasny, had been working at Schonfeld Securities since 1994. He is currently the Chief Investment Officer and Managing Partner and owns over 75% of the fund. Two other founding partners, O’Malley, who is also BAM’s Chief Risk Officer, and Schroeder, the Head of Relationship Group, joined Balyasny, when it was still a group within Schonfeld Securities.
Balyasny Asset Management currently manages $12.7 billion in client assets. The fund provides investment advisory services and specializes in investing in fundamental long/short equity, equity trading, quantitative systematic strategies, global macro and credit, but also invests in some alternative asset classes. Balyasny seeks to build a hedge fund that would be run in a way similar to which Jeff Bezos runs Amazon. In his first-quarter letter to investors, Balyasny said that Amazon “is a great example of the benefits of building a scalable platform that can extend opportunistically into new business lines.” In this way, Balyasny Asset Management is built as a large, highly-diversified hedge fund that employs a variety of uncorrelated strategies. The fund also seeks to integrate its long/short fundamental approach with quantitative analysis in order to generate alpha. Balyasny believes that their “ability to spread the investment, data sourcing, and analysis across both the Long/Short and Systematic businesses gives [them] an edge.”
So far this year, Balyasny Asset Management’s performance has been a bit disappointing. Its Atlas Global fund returned 0.08% in the first six months of 2017, while its Atlas Enhanced inched up by 0.78%. On the one hand, it’s not so bad, given that hedge funds on average have been underperforming. Hedge Fund Research’s HFRX Multi-Strategy Index is 4.80% in the green since the beginning of the year, while HFRX Equity Hedge Fund Index has gained 5.70%. On the other hand, the S&P 500 Index has advanced by 8.24% in the first six months and 11.40% year-to-date.
One of the reasons for Balyasny’s weak first-half performance is the high level of diversification. While its investment in Financials, Consumer, Industrials and Healthcare generated double-digit growth in the first six months, these gains were offset by the losses registered by positions in the Energy sector, as well as Macro and Credit investment, according to its second-quarter investor letter.
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At Insider Monkey, we also calculated the returns of Balyasny Asset Management’s stock picks. According to our estimates, which take into account the fund’s long positions in companies with market capitalization over $1.0 billion, as disclosed in quarterly 13F filings, Balyasny Asset Management’s picks returned 1.8% in the second quarter and were 9% in the green in the first six months.
Balyasny Asset Management’s latest 13F showed that the fund has an equity portfolio worth $24.25 billion, as of the end of June. The portfolio is highly diversified, with nearly 1,500 positions. Even though its overall returns were rather poor, Balyasny’s top four holdings generated very solid gains, but they amass slightly more than 1% of the total 13F portfolio value.
On the following pages, we are going to take a closer look at Balyasny Asset Management’s top four long positions.