Key Takeaways
- • Taproot Management, a new hedge fund run by founder David Lin and CIO Jason Beverage (formerly of Two Sigma), has lost money since launching last summer, according to Business Insider.
- • The firm's alpha capture model feeds analyst ideas into an internal platform where an algorithm makes final investment decisions, aiming to replicate multistrategy-like returns without the cost of dozens of human portfolio managers.
- • Kevin Merritt, Taproot's director of research and a partner at the firm, began garden leave in March 2026; his responsibilities have been assumed by Ted Orenstein, who joined after launch as head of equities.
- • The fund has operated in a difficult quant environment, with July described as part of "a long, slow bleed" for quant funds and early 2026 losses reported at Renaissance Technologies and Engineers Gate.
- • Taproot's model resembles central books at large multistrategy funds and Marshall Wace's TOPS strategy, though TOPS sources external ideas rather than internal analysts.
Summary
Taproot Management is seeking to bring a new investing model to the $5.2 trillion hedge fund industry, but according to Business Insider, the young firm has lost money since it began trading last summer. The fund is run by founder David Lin, previously of Tamridge and Glenview Capital, and by Jason Beverage, its chief investment officer and a former executive at quant giant Two Sigma. The stated goal is to recreate the steady returns associated with multistrategy managers such as Citadel and Millennium without the high costs of a large roster of human portfolio managers.
The structure relies on experienced analysts who feed investment ideas into the firm's internal platform, where an algorithm ultimately makes trading decisions. Hiring analysts rather than PMs is intended to keep costs down. The model is similar to the central books run by large multistrategy funds, which aggregate the best ideas from their PMs, and to Marshall Wace's TOPS strategy. Unlike Taproot, however, TOPS draws its ideas from external sources such as sell-side analysts rather than internal investment professionals.
The fund has faced a challenging quant environment since launch. The article notes that July was described as part of "a long, slow bleed" for quant funds, and that managers including Renaissance Technologies and Engineers Gate lost money at the start of 2026.
Taproot has also lost Kevin Merritt, its director of research and a partner in the firm. Merritt's LinkedIn profile states he began garden leave in March. He joined before the fund began trading in July 2025 and previously worked at Wedbush and the now-shuttered Aptigon stockpicking unit at Citadel. His responsibilities have been absorbed by Ted Orenstein, a former investor at SAC, Millennium, and most recently Walleye, who joined Taproot after launch as head of equities. Taproot's management and Merritt declined to comment.
The demand for multistrategy-like offerings reflects growing interest from institutional investors such as pensions and sovereign wealth funds in multistrategy managers, driven by their reputation for consistent returns across market conditions. The industry's talent war has pushed up costs for end investors, creating room for cheaper alternatives. Taproot is not alone in this pursuit: Doug Haynes, former president of Point72, launched an effort in 2024 called Norias Research that never got off the ground, while David Stemerman's Centerbook Partners now manages more than $1 billion using a network of external managers.
The structure relies on experienced analysts who feed investment ideas into the firm's internal platform, where an algorithm ultimately makes trading decisions. Hiring analysts rather than PMs is intended to keep costs down. The model is similar to the central books run by large multistrategy funds, which aggregate the best ideas from their PMs, and to Marshall Wace's TOPS strategy. Unlike Taproot, however, TOPS draws its ideas from external sources such as sell-side analysts rather than internal investment professionals.
The fund has faced a challenging quant environment since launch. The article notes that July was described as part of "a long, slow bleed" for quant funds, and that managers including Renaissance Technologies and Engineers Gate lost money at the start of 2026.
Taproot has also lost Kevin Merritt, its director of research and a partner in the firm. Merritt's LinkedIn profile states he began garden leave in March. He joined before the fund began trading in July 2025 and previously worked at Wedbush and the now-shuttered Aptigon stockpicking unit at Citadel. His responsibilities have been absorbed by Ted Orenstein, a former investor at SAC, Millennium, and most recently Walleye, who joined Taproot after launch as head of equities. Taproot's management and Merritt declined to comment.
The demand for multistrategy-like offerings reflects growing interest from institutional investors such as pensions and sovereign wealth funds in multistrategy managers, driven by their reputation for consistent returns across market conditions. The industry's talent war has pushed up costs for end investors, creating room for cheaper alternatives. Taproot is not alone in this pursuit: Doug Haynes, former president of Point72, launched an effort in 2024 called Norias Research that never got off the ground, while David Stemerman's Centerbook Partners now manages more than $1 billion using a network of external managers.
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