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Morning Coffee – The 83 year old star analyst who hates doing deals. Four day weeks for juniors while older bankers struggle to get hired

Every job in investment banking has its own stresses and strains, but the lot of an equity research analyst is notoriously one of the hardest.  The hours aren’t quite as long as in investment banking, but the baseline level of stress is much higher.  There are no quiet times between deals because the market is always open.  And everyone knows when you get it wrong. 

And importantly, the job doesn’t get much easier as you get older.  The ratio of juniors to MDs is much lower in research than it is in advisory, and it’s intrinsically harder to delegate – you can’t hand a disastrous stock recommendation to your associates with a “pls fix” when the price moves against you.  For all these reasons, it’s very unusual to find somebody like Dick Bove, who is still doing it at the age of 83.

Why, for heaven’s sake?  Because the secret of sell side research is that for the right personality type, it’s highly addictive.  You have the intellectual appeal of trying to outsmart the market, and the gambler’s rush of watching prices rise and fall, but without the downside of having real money on the line.  Everyone knows when you get it wrong, but they know when you get it right, too.  If you like the sound of your own voice, there are not many roles on the Street that will allow you to hear so much of it.

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It seems that Bove is one of these personalities.  He still spends 14 hours a day analysing the market and calling clients for Odeon Financial Group, working from home and taking care of his disabled wife.  In his current role, he’s able to concentrate on the pure business of stock picking, rather than having to hustle and schmooze corporate contacts to try and facilitate introductions for the advisory bankers.  That’s notoriously the least pleasant part of the analyst’s job, and one that he appears to have been glad to give up.

Bove is a specialist in the banking sector, and he’s been a fixture of the market for as long as anyone else can remember – he’s seen more financial crises than most of his competitors have had big bonuses.  Despite having started his career when Jamie Dimon was still in elementary school, he refers to himself as a “Jamie Dimon groupie”, noting that JD is “from Queens, as am I, and he has that Queens mentality — skeptical but friendly, and some cursing. He has proven his superiority”.

There aren’t many oldsters like this in the industry, so we ought to treasure them a bit.  It’s easy – and inevitable - to make Grandpa Simpson jokes, but nobody survives that long in a competitive business if they haven’t got something to them.  That’s particularly the case in a sell-side job where the only way to do the job is to wake up every day and find something to say that a client wants to listen to.  To still be doing that at the age of 83 should surely be worth something.

Elsewhere, some law firms have decided to reactivate pandemic measures, allowing junior lawyers to work four days a week in return for a 20% cut in pay.  The specialist advisory lawyers are downstream of the investment banks’ M&A teams, and consequently they’re going through a revenue drought almost as bad as the first half of 2020.

But the juniors are wary of taking the offer.  There’s a feeling that to do so would mark you as someone insufficiently committed; as one puts it, “I don’t think anyone who signs up to the reduced hours scheme is going to become a partner”.

The same would probably be true in banking if any firm decided to make a similar offer.  As it is, junior bankers seem to have a bit more protection; everyone is scared of laying them off and being caught short-staffed in the event of a recovery.  There’s more reason for senior bankers with 15 to 20 years of experience to be worried.  According to headhunters, when they get laid off, they’re going to find it very difficult to get back into the market, as vacancies disappear and firms try to promote from within.

Meanwhile…

Peter Komolafe managed to overcome an unbelievably tough childhood – including several weeks spent sleeping rough – to get an investment banking job, and later to become a personal finance influencer.  He admits that when he finally got the six figure salary, he did treat himself to a £1000 pair of sneakers and a nice watch. (Inews)

UBS is setting out its ambitions in the Middle East with a big ticket hire.  Hazem Shawki, the former Goldman banker who they acquired with Credit Suisse, is going to be head of MENA investment banking, but they’re also bringing in Bassel Zouk, Deutsche’s former country officer for Saudi Arabia. (Bloomberg)

David Tepper is finding out that a crucial difference between owning a sports club and owning a hedge fund is that when things go badly, the fans don’t just make a redemption and go away – they stick around and shout at you. He appears to have retaliated by throwing a drink at somebody at a Carolina Panthers game and is now in trouble. (Daily Mail)

Stefanos Kasselakis, the leader of the Greek opposition party Syriza, is discovering that although a career in risk management at Goldman Sachs is a good preparation for many things, it has disadvantages when it comes to holding together a rickety coalition of socialist political parties. (Bloomberg)

The term “activist” comes full circle; after activist investor Bill Ackman put pressure on Harvard University to fire its President, civil rights activist Al Sharpton is calling it “an attack on every Black woman who’s put a crack in the glass ceiling” and threatening to picket his office. (Guardian)

Activist hedge funds investing in Disney seem to be spending as much time criticising each other as the incumbent management. (Axios)

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AUTHORDaniel Davies Insider Comment

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