Marching band sendoffs at Goldman Sachs; another twist in the alt-data story
Dan DeFrancesco, Business Insider's financial technology reporter, pinch-hitting for Meredith.
It's fitting that I'm filling in for Meredith this week, as people moves were a bit of an ongoing theme for a lot of our coverage. (Don't worry, she'll be back next Saturday.)
Dakin Campbell reported on partners who left Goldman Sachs in 2019. In addition to listing 36 names, he found out some great details about where the exits have hit the bank the hardest (Hint: the securities division.)
However, what I found most interesting was the fanfare surrounding the partners' exits. Because this is Wall Street, extravagance is a must. For some, like the firm's trading head Marty Chavez, it's simply a nice dinner at an elegant restaurant.
Others, though, take a different approach. Justin Gmelich and Brian Levine were honored by marching bands on their final days. Here's hoping they played Pink Floyd's "Money."
Meanwhile, Paul Russo, Goldman's head of stock trading, was featured in a short video played in the auditorium. No word yet on if it'll secure a nomination at this year's Oscars, but fingers crossed.
That's not to say that people moves are only going one way at one of Wall Street's most prestigious firms.
Dakin also reported on two senior recruiting executives who recently joined Goldman with the sole focus of poaching top talent from other firms. While stealing good employees from your rival has been a favorite pastime for much of Wall Street, it's somewhat of a new focus at Goldman, which has historically prided itself as a place where one could work their way from the bottom up. Oh well, every end is a new beginning, as they say.
Speaking of employee turnover, stop me if you've heard this before, but an alternative data company is seeing some exits. This time it's 7Park Data, which Vista Equity Partners bought in December 2018 for $100 million. Vista wanted to make some changes, as private equity firms typically do. For 7Park, that meant pivoting its offering, which also led to a handful of executives departing and a bit of a revolving door of a sales team, as Bradley Saacks and I reported on.
In case you're new to the world of alternative data, here's a (somewhat) quick summary: Years ago, a small group of very smart quantitative hedge funds recognized the benefit of using unique, unstructured data (think satellite images and credit card transactions) as part of their trading strategies. Startups began popping up looking to serve these firms the wonky data sets. At some point the rest of Wall Street realized that, why yes, having that type of data could be useful.
But after a red-hot 2018, things turned chilly in the world of alternative data. In September, Bradley and I reported on Thasos laying off a majority of its staff and its CEO resigning. December brought more bad news for the space with M Science, one of the longest-standing sellers of alt data, shaking up its executive ranks and cutting data-scientist jobs. It remains to be seen where the industry will go in 2020, but it seems likely more change is imminent. If you're hearing something, I'm all ears. Drop me an email or reach out on Twitter.
Continuing our theme of the comings and goings of powerful people, Alex Morell broke news on some changes at BNP Paribas' investment bank in the US. Bob Hawley, the CEO of Corporate and Institutional Banking in the Americas, is stepping down from his role to serve as a vice chairman within the French bank. Jose Placido, the global head of financial institution coverage, has been tapped as the next top exec. The shakeup comes as the firm fights for relevancy in the states. BNP ranked 12th in investment banking revenues in the Americas in 2018 among the big global players.
Last but certainly not least for many of you, Wall Street bonus season is almost upon us! Alex has all the important details for the big banks, including when people are getting their numbers and expectations for how bonuses are shaping up.
For those of you in equities, you might want to hold off on booking that two-week vacation to the South Pacific. Keep your head up, though. You might be able to find something great closer to home. According to Airbnb, the hottest destination in 2020 will be...Milwaukee.
More great stories below, including fresh hedge fund performance figures, how neobanks are getting unicorn valuations despite not lending money, Wells Fargo starting to post more tech jobs and fewer roles related to cleaning up its sales-practices scandal, and an early sign that the WeWork effect could still be a factor when bank earnings season kicks into high gear next week.
Enjoy the weekend.
Billionaire Larry Robbins' Glenview Capital crushes 2019 with eye-popping returns after a year that lost the firm billions
Glenview Capital dominated 2019, finishing the year with returns that more than tripled the average competitor.
Larry Robbins' returns for the year in his flagship fund marked a complete turnaround from 2018, when the firm lost 16% in its flagship fund and investors redeemed billions from the firm's hedge funds and long-only vehicle.
The $7.1 billion firm is back on the leaderboard in a year when the industry had its best showing, on average, in a decade, posting returns of more than 8%, according to Hedge Fund Research.
$50 billion D.E. Shaw's flagship fund bested the average hedge fund in 2019
D.E. Shaw, the $50 billion hedge-fund manager founded by computer scientist David Shaw, returned 10.5% in its flagship Composite fund in 2019, a source familiar with the firm's performance said.
That beat the average hedge fund, which returned just over 8% in 2019 according to Hedge Fund Research, but trailed the overall stock market, which returned more than 33% including dividends. The flagship fund nearly matched its 2018 returns of 11.2%.
The firm's macro-focused fund, Oculus, returned 11.8% last year, the source said.
D.E. Shaw's solid performance came in a year with a fair amount of internal turmoil over a decision to ask employees to sign non-compete agreements for the first time.
Business Insider reported in August that the firm improved the payout before the deadline to sign - a move insiders felt was done to encourage more people to agree to the contract.
Neobanks like Chime are attracting billions in VC cash, but unlike most retail banks they don't do any lending. Here's how they've built a business on referrals and debit card swipes.
The traditional banking business model is pretty simple.
Banks take in deposits from customers and pay them interest. Then, they lend that money out to other customers, charging interest. Traditional banks make money on the spread, or, the difference between the deposit and loan rates.
But upstart digital banks like Chime, N26, and Varo-which are attracting billions in VC cash- for now only play on the deposit side of the balance sheet, offering checking and savings accounts.
And these neobanks are attracting waves of VC cash. By the third quarter last year, neobank funding totaled $3 billion, surpassing 2018's record $2.3 billion, according to CB Insights.
Wells Fargo is advertising more tech jobs and fewer risk and compliance roles - hinting it could finally be spending less on cleaning up after its sales-practices scandal
The San Francisco-based bank is looking to staff up in technology roles and wind down hiring in risk-, regulatory-, and compliance-related positions, according to a job-listing analysis from Jefferies and the data provider Thinknum published on Wednesday. Overall, hiring fell in 2019.
Wells Fargo has for years been under pressure to improve its efficiency ratio - which measures costs as a percentage of revenue. And it has had to balance new tech investments against spending on improvements on the risk and compliance side as it struggles to put the extensive sales-practices scandal that first came to light in 2016 behind it.
Jefferies just took another WeWork hit with a $69 million writedown to its stake in the coworking company
Jefferies Financial Group again cut the value of its small WeWork stake, the investment bank said in an earnings release on Wednesday.
Its merchant banking unit had invested $9 million in the company for a stake that it said was worth $269 million as of May 31. In September, the bank said it had slashed the estimated value of the stake by $146 million on August 31, more than two weeks before WeWork shelved its plans to go public.