Everyone knows someone who is (or sounds like) an awesome investor. In the vast majority of cases, that investor is struggling to be recognised. Is it because they are all talk and no substance? Is it because they can’t sell themselves? Is it because they just don’t have the right background?

Right now, no one really cares. Either the stars align for you or you are out of luck – no matter how great an investor you might actually be.

Wouldn’t it be great if there were people out there working to do away with the luck element?

Fortunately, there are. You have to sift through a lot of nonsense to find them – glorified resume drop-boxes, trading competitions which are little more than marketing gimmicks, headhunters looking to make a quick buck – but there are a few firms looking to get paid for assessing talent.

Without further ado, here is a list of some of the talent scouts I have come across:

• Standardised tests (e.g. BAT, WSAT, CC) – Great at setting apart the top 5% from the bottom 95%, but we have found that for truly exceptional talent such tests are quite easy.

• TransparenCV – Trade ideas used to screen prospective hires on behalf of hedge funds. A beautiful website. Unfortunately, they seem to have had zero growth since launch.

• UndiscoveredPM – A third-party version of the kind of talent search arm a lot of large funds have. The firm is run by the same guys as Manual Of Ideas, so their industry ties are very solid. Unfortunately there is not really a way to apply – this party is by invitation only – and the music died down last summer.

• BattleFin – Probably the smartest guys in this list, though their street cred is still second-tier. Winners in their competitions are awarded seed capital rather than jobs.

• AlphaSeal – A trading competition that awards you coverage by Institutional Investor if you win. Great idea (I may be biased in saying that), but they appear to have no industry partners.

• Marketocracy – Virtual trading platform launched in 2000 specifically to find talent. Much better trade order handling than at AlphaSeal, but performance analytics are lackluster. They seem to be entirely inward-facing: opportunities awarded to top talent are at Marketocracy only.

• Markit Academy – Not sure if I should include them here or file them under glorified resume drop-boxes: winners of their trading competitions have their CVs sent to bulge-bracket banks.

We believe we work a little bit differently from our competitors, and will explain that in a separate post.

Google “trading competition” and you will be amazed by how many different opportunities there are out there for you to win prizes as a trader. Financial services firms aren’t particularly well-known for their altruism – so why are so many of them willing to commit resources to running these competitions?

The question is easier to answer if we split trading competitions into two broad categories:

(I) Drawn-out online competitions.

Online competitions are easy to explain if you look at who runs them – by and large these firms are retail brokers looking to attract clients. Competitions serve as platform demos, and the prizes have more to do with marketing brokers’ services than rewarding great performance.

There are some sites like MarketWatch which aim to monetise competition participant engagement through ad placement rather than brokerage fees – but they are relatively few as overhead is very high and up-side is quite limited.

(II) In-person competitions lasting one or two days.

On the surface, in-person competitions are more difficult to figure out. Professional groups typically partner with multiple financial firms which then cover competition costs and send representatives to talk to competition participants. Competition participants are not charged anything, so the business case may seem to be broken…

… except that instead of the sponsor firms themselves being driven to maximise profit, with in-person competitions it is their in-house recruiters who are looking to benefit. Going into bonus season, they can tell their managers that by having been involved in various competitions, they went above and beyond in looking for great talent.

To be clear, I am not suggesting that recruiters are consciously choosing to put their own interests ahead of the interests of their firms. All I am saying is that if talent discovery was really their primary driver, you would see rigorous oversight from sponsors over the competitions they support – instead, the job of ensuring sponsor firms’ capital is well-spent is generally shrugged off onto the groups being sponsored. Think of it as letting a random student in a class you are paid to teach run the class and grade their peers’ work without any oversight from you.

In short, there is no free lunch to be had with trading competitions. With online competitions, participants themselves wind up paying for it. With offline competitions, the free lunch winds up going to corporate recruiters – competition attendees merely get to drop off their resumes in person.

The situation has begun to change in recent years with the emergence of a handful of start-ups aiming to monetise talent discovery. On the whole this group has so far done little but burn through a lot of cash, but there is reason for cautious optimism. I will explain further in another post.

We are honored and humbled to have been chosen to run the inaugural Fortress Global Macro University Challenge.

You can view the official press release here.

Further details are available on our website.