Hedge Funds Paying Up to $1 Million for Weather Modeling Experts

(Bloomberg) -- When Alex Goldstein was just 7 years old, he says, he was drawn to extreme weather. Within 10 years, he convinced his father to take him storm chasing and hasn’t stopped since.

Now, at 35, he leads a small group of data scientists and meteorologists who help teams of traders at one of the world’s largest hedge funds position themselves in commodities markets.

Millennium Management’s Goldstein and other specialists like him who can help model weather patterns in an increasingly volatile climate have become one of the most sought-after groups for hedge funds and trading firms. 

They’re not your typical hedge fund employees, like traders who easily expect to make $1 million by the time they’re in their mid-30s. If they weren’t at hedge funds, many weather experts would make a fraction of that amount working in a less adrenaline-fueled environment such as a university or federal agency.

Squarepoint Capital, Jane Street and DV Trading are among the firms that have recently hired weather experts, while Millennium and Balyasny Asset Management are beefing up existing units, people familiar with the matter said. 

Commodities trading is heavily influenced by the weather, particularly for natural gas and agricultural commodities including coffee, cocoa and grains. This year, record-breaking cold weather in the US sent natural gas futures surging, while Arabica coffee futures hit a record fueled by worries about bad weather in top grower Brazil. While weather volatility can disrupt people’s lives, it can mean big money for hedge funds that capitalize on rapid price shifts in commodities.

The pool of potential candidates for weather-related jobs at hedge funds has deepened in recent weeks. Massive job cuts and budget uncertainty at federal science agencies mean many more weather scientists are looking for jobs. Indeed, the pivot to hedge funds is poised to accelerate, according to interviews with a half-dozen people in both the private and public sector.

Hedge funds on average hired 23% more weather experts, including data scientists and meteorologists, in 2024 compared to a year earlier, according to executive search firm Proco Group. The average pay package has also increased by 18%, with the top talent getting as much as between $750,000 and $1 million.

That compares to a median salary in 2023 of about $93,000 for atmospheric scientists, including meteorologists, according to the US Bureau of Labor Statistics.

“Academic meteorologists, with strong data science skills, who can translate their skills into the commodity trading environment, are one of — if not the most — sought-after skill set,” Proco Group senior partner Ross Gregory said.

Squarepoint recently hired two weather scientists — including a longtime climate data expert focused on machine learning models — and has at least a half-dozen experts on its weather team, people familiar with the matter said. Jane Street and Balyasny also hired weather scientists last year.

Representatives for Millennium, Balyasny, Squarepoint and Jane Street declined to comment. 

Big Results

Until recently, the typical career path for weather scientists ran through the National Oceanic and Atmospheric Administration, the US Forest Service or other government agencies, or landed them back in academia as researchers and professors.

But the private sector has been peeling away talent over the past few years, as increasingly damaging hurricanes, wildfires and floods wreak havoc on raw materials like natural gas, grains and even cattle. Since 2014, extreme weather events caused more than $1.4 trillion in damage across the US adjusted for inflation, according to the US National Centers for Environmental Information.

As these weather disruptions whipsaw commodity prices, it has created an opportunity for some of the world’s biggest hedge funds and traders to rake in profits. 

Ken Griffin’s Citadel — a multistrategy firm that managed about $66 billion as of Feb. 1 — had a head start compared to several others in the industry. It hired the head of weather-focused trading firm Cumulus in 2018, as well as roughly 20 traders and analysts. Seven years later, Citadel has about two-dozen weather specialists who help bolster its commodities trades, people familiar with the matter said.

One of Citadel’s teams is led by Nicholas Klingaman, an expert in sub-seasonal weather prediction, tropical meteorology and weather and climate modeling who was previously a senior researcher at the UK’s National Centre for Atmospheric Science, according to his LinkedIn profile.

Such predictive capabilities are vital to timing and positioning in commodities markets, which depend on the movement of supplies to demand centers. So far, that expertise has paid off for the firm, which also employs another weather expert, Nick Weber, who has a PhD in atmospheric sciences and was a visiting scientist at the National Center for Atmospheric Research.

Citadel’s commodities business has raked in about $4 billion or more for the past three years, largely driven by natural gas trading. The firm declined to comment.

Another large multistrat, Izzy Englander’s Millennium, has roughly five to 10 people in its meteorology and weather team and continues to hire in the space, according to a person familiar with the matter. The group — some of whom report to Goldstein, the expert drawn to extreme weather at a young age — is a centralized resource that so-called pods of commodity traders can consult with, the person said. The weather experts employ a range of cutting-edge methods, including ones related to AI and data analytics.

Goldstein used NASA’s model in his PhD research to “examine the dynamics and evolution of rapidly intensifying northeastern US winter storm events,” he wrote on the website of storm-chasing community Highways & Hailstones. Such storms can roil natural gas markets, and predicting their size and scale can give commodity traders a significant edge.

Still, it can be hard to measure the benefits of having an in-house weather team.

“You can produce a great weather forecast, but how you apply that weather forecast to trading requires its own unique skill,” said Ramsey Stephan, managing director of US & EU Natural Gas & Power teams at DV Energy. But he said “weather as an input to our trading operation has certainly been additive and that’s why we’ve invested in the space.”

DV Trading — one of the biggest liquidity providers in oil markets — hired a former NOAA meteorologist with a PhD in atmospheric science late last year. It even has an internal channel for distributing real-time weather forecast information to traders and other staff, people familiar with the matter said.

The ideal hedge fund candidate often has a doctorate, coding or Python skills and, crucially, the ability to work with traders. While hedge funds will potentially pay millions for these skills, the government and academia offer other perks like work-life balance and relative stability. 

Hedge fund scientists also sometimes have to sign non-disclosure agreements barring them from publishing their findings, though some firms find there’s an upside to sharing more basic research since it gives the fund credibility and can benefit the public.

“When it comes to predicting outcomes that could harm people, you have a moral obligation to share that information,” University of Wisconsin-Madison professor Andrea Lopez Lang said. 

Lang — who formerly did consulting work for hedge funds and commodities traders — said she was recruited for at least one high-paying job since leaving the private sector, where she translated weather forecasts into actionable guidance ahead of cold weather outbreaks and other weather phenomena.

For many with weather and wildfire expertise, the allure of hedge funds and other private sector work remains high. Last month, as job cuts swept the federal government on Valentine’s Day, climate scientist Daniel Swain began hearing of US Forest Service weather experts looking for jobs.

In identical posts on LinkedIn, Bluesky and X on Feb. 14, Swain asked private-sector employers with “a need for a highly qualified PhD-level wildfire risk modeler” or meteorologist to get in touch.

The response was immediate: “People are interviewing,” Swain said.

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