by Sarah Butcher 26 November 2013

Here's why they can be Perfect hedge fund managers

Hedge funds which look solely to ex-bank traders as a means of finding new staff are missing an opportunity. Ex-proprietary traders are a very pedestrian sort of recruit when you could be hiring a former member of the special forces instead.

The skills needed as a special forces combatant and a hedge fund trader are strangely similar, says Peter Warren, a former elite soldier turned hedge fund manager at Warren Capital. "Special forces units are based on asymmetrical power structures," he tells us. "They're all about getting under the skin of a large military power without taking major losses. When you're in a small fighting unit of 6-8 people, you need to manage your risk very carefully - once you have two men down and two men carrying the wounded, you have very few people left to take care of business."

Special forces personnel are therefore expert risk takers, says Warren: "They have discipline and they know how to use that discipline. They're trained to think differently - it's all about survival. It's all about thinking under pressure and managing risk because you can't afford to take the losses."

Unsurprisingly, Warren isn't the only ex-special forces soldier found in the hedge fund industry.

Nicolai Tangen, founder of AKO Capital, spent several months in the Norwegian Armed Forces’ School of Intelligence and Security, where he says he took 'Russian language studies and was trained in interrogation and translation.' Thomas Sass, a 'platform manager' at HFR Asset Management in the U.S., spent 24 years in a U.S. Navy Seal Team. Mark Beder, CEO at US-based Maerisland Capital, spent seven years as a 'Lieutenant Commander and Assault Team Leader' with a Navy SEAL Team. And, Andreas Halvorsen - founder of Viking Global, was a former leader of a Norwegian Navy Seal team before taking an MBA at Stanford.

Nonetheless, moves out of the UK's Special Air Service or Special Boat Service and into trading jobs in Mayfair are strangely unusual.

"It can be difficult for people with a military background to get front office jobs in financial services -and in hedge funds especially. The problem is that they don't usually have direct financial services experience and are up against new graduates in their 20s with a better understanding of the industry," says Simon Treadgold of Orion Consultancy, a recruitment firm which places people with a forces background into jobs in financial services.

"In the UK, people with a military background most often go into operational roles in finance - or into COO roles in hedge funds," Treadgold adds. "That's seen as a better route in."

Rob Applegarth, business development manager at Oriel Asset Management LLP, the Edinburgh-based long only fund management business of Oriel Securities and a former officer in the British army, says ex-military professionals go into operations by default. Operations is seen as offering a good home for the process and people skills developed in the army. However, there's a clear overlap between special forces personnel and hedge fund managers according to Applegarth: "They both attract a slightly more alpha type of personality and both roles require the ability to process an awful lot of information in a very short amount of time and to differentiate signal from noise."

Warren says more special forces soldiers should consider hedge fund careers - after some preliminary finance training. Time in an elite unit is a very good discipline, he says - "You know that you're vulnerable and that you're never stronger than your rival. You know that there will be others out there who have more knowledge and power than you and who can kill you - you learn to deal with that."

Long only fund managers and traders who can only function with the might of a bank behind them are more like conventional military units, adds Warren. "You see traders who have worked for large institutions and had so much volume and power behind them that they only know how to operate in that environment. They know that they can come in and move markets. Working for a hedge fund isn't like that."


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