>> this show has never been solely about investments. we have talked about anything that affected people and their money. from times square in new york . >> sacc capital is a $14 billion hedge fund that traded public money and took 50% of investment gains rather than the usual 20%. the phone was run by a man who

businessweek once crowned the most powerful trader on wall street you never heard of. as part of an agreement with the government, they started -- stopped managing capital and restricted investments to steve cohen and his family. in april of last year, .72, a new firm, family office was darted to manage assets. we are pleased to welcome doug haynes, president of point 72. >> hyatt of the tradition we start here is talking about great -- upbringing. where did you grow up? mr. haynes: i was born and raised in west virginia. i spent my whole childhood there. >> did you go to public school? mr. haynes: yes, private and public school until i went to catholic school. >> what was it like in west virginia, i imagine college football was a big deal, mr. haynes: i grew up in

when i lived there it was 16,000. pretty small. >> look in of aspirations that you have -- what kind of aspirations did you have >> . mr. haynes: because my father was a professor of engineering, we had a very international circle of friends. i had a real hunger to see the world. i met a lot of people, listened to where they came from, different cultures and ways of looking at things. i had a big desire to travel. >> is that what took you to the cia? mr. haynes: no, a kind of came and got me. i was doing programming. at the time, they intelligence ranch was buying technology but did not have talent to use it. they combed universities and a program where they brought in 100 of us, probably the second or third year, to program. to be programmers. they kind of combed the whole country. >> a lot of people i grew up

go into the cia, they think it like james bond. like traveling the world, exciting. is that what your experience was like? mr. haynes: not at all. i don' t know what it would be like today. but this was an era that was pre-internet. a lot of what we did was replacing hundreds of people who would just read documents. we helped them build the technology to automate that. correlation between the cia investor? mr. haynes: yes. in more than one way. there' s a lot of really interesting technology coming out of incutel. it is an incubator for application in government, particularly in the intelligence community. now.

efforts, but some of it has applications in investing. it is not just about the people side or the john' s -- james bond type stuff. >> taught to us about engineering and how it makes you financial services industry. mr. haynes: i think engineering is a terrific background for executives in general. learn over time is how all the pieces work together and how the system is only as strong as the total design of the system. one of the things i have applied through point72, is redesigning office and achieve the mission we set out. >> let' s turn to point72. obviously, you had to have some coming into. what did you think when you took the job? what were you expecting? mr. haynes: i had known steve for a long time.

we had done in particular, cosponsored a veterans initiative of the robin hood board. we had interest in issues. we knew each other personally pretty well. and really cared about him a lot. i wanted to help him plot the course forward. i knew a lot about analyzing companies, 22 years in the kinsey as a consultant. -- at mckinsey as a consultant. it was really the launch of a new firm. point72 is descended from s ac, but it is not that in any way. it has a different objective. >> let' s talk about that. what is the mission statement? mr. haynes: a three-part mission. to be -- generate the highest terms in the industry. also

to create highest ethical standards and also create the best opportunities for the brightest talent in the industry. we think those three things are absolutely synergistic. they support each other. >> in terms of recruiting, are you still able as a family office to ring in the best and brightest? mr. haynes: we were oversubscribed after we hired about a hundred analysts. we have looked at for 500. on the outside over the last couple of years. we have had stuck -- such an internal pipeline of people coming up as analysts. some of them want to be that as a career and some aspire to be a portfolio manager. of the nine new or folio miniatures, the last time we designated them, one was an outside higher and eight were internal. "wall street week" will be right back. >> what is the temperature on the trading floor? >> is point72 going to be a family office just managing

s money, or is it to get back to managing outside capital? >> sign-up for the free "wall street week" newsletter where we dive deeper into the most recent episode with feature articles and investment primers. go to wall street week.com and sign up today. >> "wall street week" is sponsored in part by federman --

>> coming in november, "wall street week" talks larry summers. gary: we are back with doug

there are some myths i think we should clarify. there is this idea, i never actually visited but i know people who did, they talk about the temperature within the building and the strategy behind it. let' s clear that up once and for all. what is the temperature on the trading floor and what is the thesis behind that? mr. haynes: i don' t know the exact temperature but it is in the 60' s. we keep it cold because -- gary: i happen to love it. mr. haynes: people say it is cold because the lexical, but everybody likes it. -- because steve likes it cold, but everybody likes it. gary: is there a cause and effect between better investing performance and cold temperature? mr. haynes: i think it keeps it a little more turkey, keeps everyone more awake. i don' t know if they need that

gary: there were deep sec vets that became the most popular item. -- vests. is it a cutthroat culture? mr. haynes: i thought that is what i came into, but it is not true at all and it is even less true now. our turnover, involuntary turnover, i think the industry averages something like 20%. our average for portfolio managers is under 10% and the average is under 5%. the numbers are there. it is a collaborative culture. where the ends were competing in house with the other ones. s not true. they are independent, that is true. but it is independent, but collaborative. we don' t want our portfolio managers to all wind up behind the same ideas. we don' t want them to be behind the same trades.

that is bad for us. gary: and it is a risk management issue. mr. haynes: exactly. we want them to have independent perspectives, but we want them to share. we want them to talk to each other. the coming up with the investment thesis and deciding how you will express that and manage it, that is independent. and we want that to stay independent. gary: one of the things the general media coverage of s ac did not get to was sell side analysts get paid to do research, and get compensated by selling research. sell side analysts -- ce ll site analysts always wanted to make the first call to s ac because they had a culture of paying for good research. how does point72 view that in terms of paying for good research, and paying for first calls? mr. haynes: we absolutely still believe we should pay for good research. we have great relationships with our counterparts. i was out to dinner with some

we spend a lot of time with them. we really want to have a productive relationship. part of that productive relationship, if you were to interview people, a would tell you that we give the most direct, frank, quantified feedback. on your show you had ken, and you asked him what made a great company. >> the key to any great company are the people. hopefully with common sense, that cn understand what the customer needs and wants, and they will be the advocate for the customer. mr. haynes: he went on to say, having customers that get feedback, that are demanding, not afraid to tell you where you are strong or not, we aspired to be great. not just about the money. we aspired to be a great customer in terms of feedback, in terms of frankness, we aspired to be a great customer in terms of inking about the

we want to be the place that not only do they talk about great research ideas but great ideas. gary: is point72 going to be a family office just managing steve' s money 10 years from now or is the objective to get back to managing outside capital? mr. haynes: we have no plans to manage outside capital. the are in fact, right now we have more than enough capital. we probably struggle more to deploy ineffectively then to see the opportunities -- deploy it effectively than to see the opportunities. steve is probably the world' s most demanding customer. not just in terms of returns, but how we get there. he is with us in the business, on the floor every day. and he is a customer. he wants to see, he has a restless desire for innovation that is insatiable, and he wants to always see how we can do it better.

gary: why is before -- why is the firm more public today? mr. haynes: we are not an ordinary family office. we never were. we are not ordinary in terms of aspirations for performance. we want talent. we recognize, if you go back to the mission, we can at the brightest if people don' t know what we are doing. gary: what do you think in terms of the hedge fund industry? mr. haynes: that is a big question. industry. it is totally different now in terms of the number of funds, about of money they have, the credit this that results from that -- crowdedness that results from that. we took of you -- a view recently, that says the market is down by half over the last 20 years. hedge fund has undoubtedly had

role in that because hedge funds move fast and create a lot of efficiency in the market. if you look forward, it is not an easy place. gary: do you expect more funds are going to close down and get significant redemptions by the end of this year? mr. haynes: i think it could happen. i don' t really worry too much about what is happening in other funds, but as i look forward, i think the cost of being excellent heaps going up. that could be the cost of developing people, the cost of maintaining a proper compliance environment, the cost of eta -- data, but this is an industry that 10 or 15 years ago had very little barriers to entry. gary: thank you for the inside. we will be right back with more. "wall street week" will be right back. >> we have a lot of different the end of the day we are a stockpicking firm. >> for the investor it does not

gary: we are back with doug haynes, ms. kroft: , and mike cahill. gary: tell me about your thoughts on point72 and the market. mr. haynes: we have a lot of different investment strategies

but at the end of the day we are we don' t need to go up or down that said, we think the economy is in an unusual place. there has always been a real divide between the consumer driven portion of the u.s. economy and the main faction of the different forces. our view at the consumer driven piece, it looks pretty healthy. on the manufacturing side with the strong dollar, with some of the oil related investment, manufacturing side looks pretty tough. gary: in terms of the markets, the volatility that you talk about, being able to navigate, has it been surprising how volatile this has been? h i would -- i would have to say that we did not see that coming. gary: how do you see the world right now? mr. haynes: we see things weakening a fair amount and we

our industrial contacts , manufacturing, energy, i think it is a challenge. and our fear is that in 2016 eight could be worse. if you look at the export data, u.s. exports are going to be down this year in 2015. typically, you are never down unless you are in a recession. that is a challenging situation. gary: you are a little more concerned in terms of the overall economy then you are. your thoughts? ms. kroft: we are positive on the firm as an economy, but as a stock ticker -- pi cker, i think it is great. we had six years of no volatility and no need for analysis. but with volatility back in the market, for people investing the money, a creates a ton of opportunity.

individuals securities will trade more like individual securities as opposed to within the overall sector? ms. kroft: that' s exactly right. after the financial crisis of 2008, the markets did nothing but go up, with little concern for fundamental analysis. since the last year, volatility is back and in recent months we have seen it back with a vengeance. that gives managers the opportunity to buy stocks that they really like on the down. gary: if i listen to warren buffett, a number of years back 500 index fund, is it now time to sell? ms. kroft: there is a place for allocations. but today when you might have been more heavily weighted is going to make much more of a difference today. t think volatility is going anywhere. gary: what about the

mr. haynes: we are reopening the london office. we are doing it especially because while the time was not great over the past few years, we have a much more positive outlook gary:. gary: your thoughts? mr. cahill: our thoughts are around china and the slowing significantly. it has had several tough quarters and now there' s a little bit of stabilization. we hope that it has an adjustment time in funny 16 -- 2016. ms. kroft: the concerns about china had such a huge impact in domestic markets. it is what happened in august when the markets really plummeted. we think that is overblown. there is headline risk and headline volatility and fundamental risk. gary: we have had a number of guests joined the program over the last several weeks and months, and they said that they think 90% or 100% of the equity

mr. cahill: i totally disagree. if you look at the timing -- the markets, on august 17, that was the top. that was the exact day the chinese started to talk about devaluing. that caused a global prove scare that triggered the u.s. to go down. the fed, 25 basis points is a rounding error compared to what is coming. mr. haynes: we agree with that. i think, ironically, the fed' s probably doing damage because of uncertainty, not because of whether he goes up or down 25 basis points. i feel for the fed members, because it is hard to affirmatively do nothing. they can say they think the best remedy is not to raise rates, but because they are doing nothing, it is viewed as

gary: janet yellen is watching this program, so what advice would you give her in terms of laying out a clearer message? mr. haynes: from a communication point of view, she is doing a great job. right now, she is over watched. has become an echoed chamber with everybody said watching and then everyone is breaking down what words she chooses are when she mentions what, that is overanalysis. to that degree, i agree it is not productive. ms. kroft: and for the investor, it does not matter when they raise rates, because 25 basis points is not going to make a difference. you are not investing for the six-month time horizon. or even a 12 month. you are investing to make sure your money does what it needs to do for you.

gary: we are back with all of our guests. let' s give the viewers some ideas about what is most opportune for their money. in terms of either stocks or sectors, how are you guys looking at the best opportunities now? mr. haynes: there are a bunch of sectors we like. we like the health care sector, retail and consumer a lot. the health-care care sector, despite recent troubles, we think you cannot look at the body of inundation coming out of the -- innovation coming out of the health-care sector and say there is not opportunity. to be honest, we are looking at the innovation pieces of the economy. we even like a lot of the energy technology. it is very easy when you get into energy, particularly the way crude prices have moving, to get wrapped up. the really interesting things are in energy technology.

mr. haynes: solar, electric vehicles, there was another example by toyota that they wanted to have a certain percentage of their fleet fuel cell. those are interesting technologies. a might not be interesting to investing right now but they are very interesting over a couple of years. gary: you talked about continuing development in japan. what are your thoughts on the space right now given the correction in energy and the fear of higher interest rates? ms. kroft: we really like midstream mlps, we think they have been hurt unnecessarily by sector. we also like the energy sector. we really like cyclical sectors today, and taking a step further for the investor, we think it continues to be more of a risk on environment. we like equities over debt today.

income, we like that it over direction. gary: talked about -- talk about the outlook you find attractive. mr. cahill: one stock we like is kiev industries. a nitrogen-based fertilizer company. 2016 fantastic management. they bought back at third of years. at the same time to have dramatically increased their about to come on stream. that will generate about 10 billion of free cash flow. we think that is a very attractive company. gary: 2016, interest rates higher or lower? mr. cahill: higher. ms. kroft: same, higher. mr. haynes: flat and down.

gary: we want to thank you, all of you for spending time with wall street week. that is it for today. you can check with us all week at "wall street week" -- wall street week.com. all new net sunday. have a prosperous week. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy.

. (applause) well god bless you and thanks for letting us come into your homes. if you're ever in our area, please stop by and be a part of one of our services. i promise you we'll make you feel right at home. but thanks so much for tuning in and thank you i like to start with something funny. i heard about this pastor. he was raising funds for a new auditorium. he said to the congregation, "anyone who will give a thousand dollars can pick out the next three hymns." this little, old lady in the back raised her hand and said, "pastor, i'll do it." he was so excited and

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