Taproot Management is hoping to bring a new investing model to the $5.2 trillion hedge fund industry. So far, though, the young firm and its innovative structure haven’t made money.
The manager, which received $250 million in backing from massive Canadian pension CPPIB, launched in the third quarter of last year and lost roughly 1% in its first six months of trading, two people close to Taproot told Business Insider. The firm has also lost money through the first two months of 2026, though the exact amount of the drawdown is unclear.
Taproot is run by founder David Lin, previously of Tamridge and Glenview Capital, and by Jason Beverage, its chief investment officer, a former executive at quant giant Two Sigma. They manage the alpha capture fund with the aim of recreating the steady returns of multistrategy managers like Citadel and Millennium without the high costs that come with dozens of human portfolio managers.
The computer-driven fund has battled a tough quant environment since launch; July was described as a part of “a long, slow bleed” for quant funds, and the start of 2026 saw managers like Renaissance Technologies and Engineers Gate lose money.
The fund has also lost its onetime director of research, Kevin Merritt, who was also a partner at the firm. Merritt’s LinkedIn states he began his garden leave in March. He joined the firm before it began trading last July and previously worked at Wedbush and the now-shuttered Aptigon stockpicking unit at Citadel. His responsibilities have been subsumed by Ted Orenstein, a former investor for several big-name funds, including SAC, Millennium, and, most recently, Walleye, who joined Taproot after launch as head of equities.
The manager and Merritt declined to comment.
At Taproot, experienced investment analysts feed their investment ideas into the firm’s internal platform, where an algorithm ultimately makes investment decisions. Hiring analysts instead of PMs helps keep the fund’s costs down.
It’s similar in many ways to the central books run by large funds, which invest the best ideas from their PMs, as well as to the original alpha-capture fund, Marshall Wace’s well-known TOPS strategy. TOPS, however, is created by taking in external investment ideas and research from sources such as sell-side analysts, not by internal investment professionals.
Multistrategy managers have become increasingly attractive to large institutional investors like pensions and sovereign wealth funds because of their reputation for strong returns regardless of the market environment. But the industry’s war for talent has driven up costs for end investors, creating demand for a cheaper, multistrategy-like offering.
Doug Haynes, Point72’s former president, set out to create something similar to Taproot in 2024, but Norias Research, the launch, never got off the ground. Meanwhile, David Stemerman’s Centerbook Partners now runs more than $1 billion and relies on a network of external managers for its investment ideas.
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