The latest eye-popping headline in the hedge fund industry’s talent war is Steve Schurr’s move from Balyasny to Millennium and the $100 million pay package it took to poach him.
Schurr, a former financial journalist at the Financial Times and short-seller who worked with legendary investor Jim Chanos, was a key part of the equities rebuild that $23 billion Balyasny has undergone. He worked alongside the firm’s founder and executives, like Archana Parekh, head of Asian equities.
Speaking with Business Insider at the end of 2024 about the firm’s thinking about equities investing, Schurr said Balyasny tapped him to build a centralized research function for stockpicking teams that focused on primary research in addition to managing a large portfolio.
Now, he’ll be taking his talents to Izzy Englander’s $73 billion manager after he sits out a year to comply with the non-compete clause in his contract. His pay package includes incentives that will take years to pay out, according to a person familiar with the matter.
Unlike other multistrategy portfolio managers, Schurr didn’t want to use alternative data like credit-card receipts to focus on “triangulating and calling quarters” by estimating a company’s earnings before they’re released, calling the popular investing process “a strategy of diminished expected returns” when he spoke to BI last year.
In a presentation at a conference at the University of Alabama’s Culverhouse College of Business this March, Schurr went into greater detail about how he finds opportunities and researches potential investments.
Looking past the narrative
In a recording of his presentation viewed by BI, Schurr described how he applies a short-seller’s lens to long bets in his book.
“You turn a situation upside down,” he said, noting that “Wall Street is a perpetual optimism machine” that forces investors to dig deep to find the real valuation of a stock, not just the “narrative.”
He also used his experience as a short-seller to identify three buckets of stocks with “certain types of things we should never short.”
Those buckets are:
- Compounders, such as Nvidia, Tesla, and one of his holdings, Reddit.
- Companies with a competitive moat, such as holdings of his like Brink’s and Walmart-connected gas station chain Murphy USA.
- Bad businesses with a recent positive change, such as Abercrombie & Fitch, which has had a multi-year turnaround under a new CEO.
“I thought of the research process as an extension of the work I did as a journalist,” he said, noting that “there’s not a secret trove of information that no one else has access.”
“The best thing you can do is doing the research yourself,” he said, recommending industry conferences and expert networks over sell-side-organized events and meetings with company executives and investor relations teams. He recommended data providers such as 280first, Zion Research, and BamSEC to augment the process.
“Wall Street is an echo chamber,” he said, and good investors look outside of the normal channels. He pointed to YouTube reviews of consumer products and Reddit forums dedicated to a specific company as places where investors could glean insights from.
On a slide titled “How We Maintain Performance,” Schurr outlined that his teams “thrive in obscurity” and look for stocks with less than three teams covering the name. Companies with market caps between $1 billion and $5 billion market cap have been a sweet spot for them.
But duration is also critical. The ability to hold a stock through volatile markets is important, Schurr said, telling the students in attendance that “all the money to be made” is going to come from yearslong positions, not quarterly wins.
“The market is going to change constantly over the next 20 years,” he said, and tools like alternative data and artificial intelligence are “commoditized very quickly.”
“What is durable is deep fundamental equity research,” he said.
