A compensation scheme masquerading as an asset class

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The spat between Sculptor Capital Administration and its founder and erstwhile head Daniel Och is solely pleasant, and, as Marc Rubinstein has famous, gives a captivating look underneath the hood of the hedge fund trade.

The most recent twist is a good instance. After Och began making an attempt to sabotage the hedge fund’s deal to promote itself, Sculptor has launched a number of savage letters criticising its former supremo.

One included this absolute pearl of a chart (zoomable model right here).

For context, one in every of Och’s most potent assault traces in opposition to Sculptor (née Och-Ziff Capital Administration) is that it has grossly overpaid Jimmy Levin, his former protégé and present CEO and CIO, whilst efficiency has been woefully poor.

That’s . . . not fully incorrect. Sculptor’s funding efficiency has been dismal for some time, and its share worth has bombed. It IPO’d at $32 again in 2007, and now desires to promote itself for $11.15 per share. Over 2021-22 it has paid workers led by Levin $732.8mn in salaries, bonuses and advantages, even because it reported losses of $27mn.

However as Sculptor archly famous in its letter to Och, nobody has accomplished higher than Och himself, regardless of presiding over a lot of the hedge fund’s interval as a public firm and the debilitating results of an African bribery scandal (detailed within the second letter).

There’s a lot to say right here — and there’ll virtually actually be extra twists on this saga — however it actually does hammer residence the adage that hedge funds are a compensation scheme masquerading as an asset class.