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December 14, 2016  

Millennium Sends Portfolio Managers Packing

Millennium Management is culling an unusually large number of underperforming portfolio managers.

The multi-strategy fund operator has let go more than 17 portfolio managers since mid-October, out of about 200 investment professionals who hold that title. The last few weeks of 2016 may see more dismissals.

Among those shown the door are equity specialists Paul Karos, Mark Monroe, Michael Ounjian, Ade Patton, Reed Schwandt and Evan Sturza.

It’s unusual for Millennium to cut so many employees in such a short period of time. But one source said total dismissals at the firm this year are within a normal range, reflecting a decision by founder Israel Englander to delay staff cuts that otherwise would have been spread over the preceding months.

Since Jan. 1, Millennium has let go a total of 26 equity portfolio managers. But it already has filled many of those slots, hiring 24 portfolio managers so far this year. Last year, Millennium hired slightly more portfolio managers than it cut.

The decision to delay some dismissals this year was aimed at giving portfolio managers more time to reverse lackluster returns. The New York firm experienced a rare loss at the start of 2016, finishing February with a year-to-date decline of 3%. By Nov. 30, it had climbed back to a 2.4% gain — which still trailed a 4.6% advance for the HFRI Fund Weighted Composite Index.

Millennium’s year-to-date gain also is well below its annualized return of 14%. That said, the firm came close to that mark with gains of 12.5% in 2015, 12.1% in 2014 and 13.3% in 2013 — at a time when many well-established managers struggled to match their earlier results.

This is the first time in years that investment returns haven’t helped Millennium post annual growth in the billions of dollars. The firm, which is closed to new contributions, has seen its assets remain flat in 2016, at $34.4 billion, after growing from $7.7 billion in early 2010.

The staff exits apparently are unrelated to the planned departure of equity chief Hyung Soon Lee at yearend. Lee arrived in 2008 from Lehman Brothers.

Millennium is considering splitting its large equities division in two, with separate quantitative and stock-picking units. Lee previously oversaw the entire division. All together, Millennium has 120-130 equity portfolio managers, including 15-20 that pursue quantitative strategies.