Morning Coffee: 38-year old trader on ~$30m at Goldman Sachs finds better job. When clients brush-off big name bankers
It's a good year to be trading commodities on Wall Street. According to the estimates of Vali Analytics, the 100 biggest banks by revenues are due to make $18bn from commodities trading this year, more than the previous peak of 2009 and more than during any year in all the previous 14.
If true, this implies that commodities traders at Goldman Sachs could find themselves abnormally well paid. When the Goldman commodities trading business generated $2.1bn in revenues last year, up from $300m in 2017, some traders there were reportedly rewarded with $30m each.
One of those lavishly remunerated traders is likely to have been 38-year-old Anthony Dewell, one of Goldman's best oil traders. Having worked for Goldman since 2006, Dewell was one of the most senior people and one of the biggest pnl generators on the oil desk. He was reportedly behind many of last year's big profits. But Dewell has found something better. He's leaving for Millennium, the hedge fund.
Neither Dewell nor Millennium spoke to Bloomberg about the catalyst for Dewell's departure, but Millennium is definitely out there and is definitely hiring. Last year, Millennium increased its headcount by 17% and said it had created a new class of "senior portfolio managers" to lead its mere portfolio managers. It's not clear what Dewell will be doing, but he could form his own "pod", implying that he may at some point pick some more people from Goldman's commodities desk too.
Why would Dewell walk away from Goldman, where he was reportedly tipped to become head of the commodities trading business? It's likely because while Goldman pays well, Millennium can pay even better: even the average partner at Millennium in London earned £15m last year and £19m the year before. At Millennium, as at all hedge funds, you get to keep more of your personal PnL. And there's not an underperforming investment banking division to drag you down.
This latter consideration may have been a big factor in Dewell's decision to leave GS late in the season. After all, his bonus for 2022 would have been paid in a few months' time. So, why not wait? - Millennium may have made him whole, but equally he may have simply decided that he wasn't going to earn as much as he wanted at Goldman this year or the next, and that it made sense to go. Revenues in Goldman's investment banking division were down 48% year-on-year to mid-September '22. Someone will have to help pay for that, highly profitable commodities traders included.
Separately, you might think that by the time you got to be one of the world's top technology bankers, and to lead the whole technology banking team at Morgan Stanley, people would start treating you with respect. But there is always a bigger dog than you, and that dog will make sure that you know it.
In the case of Michael Grimes, head of technology banking at Morgan Stanley, the big dog is Elon Musk. Musks' mobile phone messages have been released ahead of the court case over the Twitter deal, and they reveal the following exchange between Musk and Grimes on April 25th, the day Musk decided to buy Twitter. Confusingly, the exchange isn't about Twitter but Sam Bankman-Fried at FTX.
First, Grimes tries to get Musk's attention:
Grimes: Sam Bankman-Fried is why I’m calling. …
Musk responds with:
Musk: I’m backlogged with a mountain of critical work matters. Is this urgent?
Grimes tries again:
Grimes: Wants 1-5b. Serious about partner w/you. Same security you own. …
Grimes: Could do 5bn if everything vision lock. Would do the engineering for social media blockchain integration. Founded FTX crypto exchange. Believes in your mission. Major Democratic donor. So thought it was potentially worth an hour tomorrow a la the Orlando meeting and he said he could shake hands on 5 if you like him and I think you will. Can talk when you have more time not urgent but if tomorrow works out it could get us 5bn equity in an hour.
Musk replied by hitting the "dislike” tap back button" before provisionally agreeing to meet Bankman-Fried “so long as I don’t have to have a laborious blockchain debate."
The exchange is an illuminating insight into what it's actually like to be a senior banker dealing with petulant clients. It suggests that managing directors deserve some sympathy, and that when they treat VPs brusquely, who then treat associate brusquely, who then mete out the same stuff to analysts and associates, it's nothing personal but all part of the dawg dynamic.
Andrew Coombs a bank analyst at Citi says Credit Suisse is in a negative feedback loop: it needs more capital to move out of its capital intensive businesses like leveraged finance and credit trading and without it, will struggle to restructure. “The current multiple therefore constrains the new management’s ability to restructure the investment bank and we fear the tail will continue to wag the dog.” (Financial News)
Credit Suisse shares are in Citi and AIG drawdown territory since the highs in 2007— Ben Carlson (@awealthofcs) October 3, 2022
What an insane chart pic.twitter.com/tTmi6KC2Iy
It's not just Leda Braga. Other women are setting up major hedge funds. Divya Nettimi, a portfolio manager who oversaw more than $4bn at Viking Global, has just founded Avala Global with $1bn. It's the largest woman-led hedge fund launch in history. (Bloomberg)
Grant Kassel at Moelis thinks big banks will move into cannabis banking, one day. (Bloomberg)
Kim Kardashian agreed to pay $1.26m for promoting EthereumMax’s crypto asset on Instagram and not revealing that it was a promotion. She was paid $240k for tweeting: “ARE YOU INTO CRYPTO??? THIS IS NOT FINANCIAL ADVICE BUT SHARING WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN.” (CNBC)
EthereumMax tokens declined 70% the week after Kardashian's post. (Financial Times)
Being back in the office is encouraging bankers to take cocaine. “They have come back from working from home, and once back in the office, they are partying after work. They have plenty of disposable income, work long hours and are making up for the partying they missed.” (Financial News)
Check the attic for Chinese artifacts. An ordinary Chinese vase valued at €2k sold for €8m after some Chinese buyers got into a bidding war. It dated from the 20th century and was "quite ordinary" according to the valuer. (Guardian)
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