Right, I've worked at quant funds and met a ton of people at different funds. The weird thing about hedge funds, is that until recently, prestige and outward appearance have been traditionally more important than returns. This is changing now, especially with ETFs and the explosion of passive management and the media exposure/public discussion about how finance has really been about money managers making themselves rich, at the expense of institutional investors and pension funds. Its a business, where the model is not returns, but instead the appearance of a coherent brilliant investment philosophy.
For example, AQR (which is more of a mutual fund I know, but its a prime example) is known for hiring based on academic prestige, and the returns have been absolutely dismal. But they have a specific "investment philosophy" and a brand name, so the game is to never admit that their strategy is a failed one. They cant outwardly say their strategies dont work. Its the same with replacing a bad portfolio manager, funds whos portfolio managers are well known cannot switch them easily, as soon as investors discover a big internal change (like high up management/PMs leaving) they know something is wrong and may pull their money.
This all ties in to how they hire, with school prestige usually the most important criteria. I worked at one place where everyone on my team went to either princeton, yale, or wharton. They were all intelligent, energetic, on the ball. None of them were "exceptional". Whats worse, none of them could program, none really knew statistics, etc, but they were all "Data Scientists". I was appalled at the amount of money being made and how much these guys were being paid.
This is in contrast to places like Citadel or Two Sigma. Whose business model still holds prestige, but is basically already a well oiled machine. Citadel doesnt need a brilliant mathematician like Jim Simmons, they need a smart guy that can crank out work, who fits as a cog inside their money printing machine. Citadel is better at things like HFT, some alternative data etc, but its a calculated better, they know where to get their edge, how to get it, and who to hire for it. Its a business where the employees can be plugged in.