According to Business Insider, Paloma Partners, the 44-year-old fund famous for seeding D.E. Shaw, is in its second major reinvention attempt in 18 months. After hiring and then losing CEO Neil Chriss by early 2024, the firm faced significant redemptions. Now, with new CEO Ravi Singh and COO Mike DeAddio at the helm, the $1.5 billion firm is diversifying beyond systematic trading, targeting a split between fundamental, systematic, and credit strategies. The firm returned roughly 9% through mid-December 2025 after a 2.5% gain in 2024, and it’s eyeing growth to $4 billion with its current team of about 25 portfolio managers. Founder Donald Sussman remains chairman as the firm seeks “established emerging managers.”
The High-Touch Hustle
Here’s the thing: everyone in the $5 trillion hedge fund world is fighting for the same hotshot portfolio managers. Citadel and Millennium throw mountains of capital and guaranteed payouts at them. So what’s Paloma’s play? They’re going niche with what Singh calls a “high-touch” model. Basically, they’re not trying to be a thousand-team behemoth. They want to be the cozy, customized alternative for PMs who are tired of the one-size-fits-all factory feel.
And they’re betting that a certain type of investor wants that. We’re talking about more tenured managers who own their intellectual property and track record, who might value a direct line to the CEO and CRO over the absolute highest bid. The example of nVerses starting to trade just four months after getting Paloma’s capital is a powerful selling point in a slow-moving industry. It’s a talent strategy built on agility and relationships, not just a checkbook.
Diversify or Die
But let’s be real. The “high-touch” model is also born of necessity. Paloma’s legacy is quant, but its recent performance (that 2.5% in 2024) shows you can’t just rest on legendary laurels. The explicit push into fundamental stock-picking and credit is a huge shift. It’s an admission that to survive and grow, they need uncorrelated return streams from across the market.
They’ve had a killer win with credit fund Sona Asset Management, which ballooned from a Paloma SMA to over $15 billion. That’s the dream scenario they’re trying to replicate. But can they attract top fundamental talent when they’re competing with the very platforms they’re differentiating from? Singh says they’re “agnostic” about whether PMs run money internally or externally, which is a flexible stance. It feels like they’re throwing every structural advantage they have at the wall to see what sticks.
Scaling the Legend
The big question now is about scale. The firm believes its current roster can handle up to $4 billion without adding people. That’s more than double their current AUM. That’s a bold claim about capital efficiency. DeAddio argues that more teams actually make the multi-strategy model shine because of the diversification benefit. So there’s a built-in pressure to grow to a certain size to make the economics really work.
But there’s a tightrope walk here. Grow too fast, and you dilute the “high-touch” promise. Stay too small, and you might not be competitive. They’ve rebuilt infrastructure and shifted staff to Manhattan, signaling a modern, scalable operation. The core bet is that a legendary name, founder-friendly terms, and a customized approach can carve out a sustainable niche in a war dominated by giants. It’s a fascinating experiment. I think the next 18 months will show if this second reinvention finally takes, or if the turbulence continues.
