Morning Coffee: How to become a famous equities analyst, aged 27. Bill Gross's nemesis now hiring
How do you make a name for yourself in equities analysis just three years after you've left university? Why not try issuing a succession of detailed negative research notes suggesting that investors short large companies which you consider to be overvalued crowd-pleasers? It's worked for Kevin Kaiser.
Kaiser, a U.S.-based analyst at independent equity research boutique Hedgeye Risk Management, first came to prominence in September 2013, aged just 26. Now he's 27 and has popped up again. Kaiser is suggesting (again) that investors short Kinder Morgan Energy Partners, the third largest energy company in America. In Kaiser's estimation, Kinder will have too much debt after buying out two of its partnership companies. All that debt is bad news given that Kaiser also thinks that Kinder hasn't invested in enough in its infrastructure historically. Reuters, for one, has taken note.
If you're a young and ambitious equity researcher, will Kaiser's technique work for you? Maybe, but you'll need some successful and well-researched negative calls before the media reports upon your opinions. Kaiser's own personal reputation is built upon a negative note he issued on Linn Energy in March 2013, shortly after which Linn disclosed that the SEC was investigating its accounting practices. Unfortunately, the SEC investigation subsequently came to nothing and Linn's stock recovered. Reuters points out that Kaiser's most recent call on Kinder Morgan hasn't gone too well either - the company's stock rose 17% on Monday, burning any short sellers who took Kaiser's advice. Maybe veteran equity researchers are best after all...
Separately, Marc Sneider, the former Pimco fund manager who resigned only just before Mohamed El-Erian dropped his bomb on Bill Gross, is hiring over at his new place. In an interview with Reuters, Sneider said he's hiring up to 12 new, 'quantitative and fundamental analysts and portfolio managers,' for Grantham Mayo Otterloo (GMO) & Co, the firm he joined last year. Sneider omitted to say where in the world he's adding the new staff, but GMO has offices in America, Europe and Asia Pac.
HSBC has followed RBS in handing out extra pay to sidestep the EU’s 200% bonus cap. Its top 15 bankers will be receiving allowances worth £7.1m (Samir Assaf, the head of its investment bank, is getting £1.5m) but they’re being paid as shares which may be both deferred and clawed back. (Guardian)
US banks are lobbying the Federal Reserve for a seven year delay to that part of the Volcker Rule which says they have to sell their investments in private equity funds and hedge funds. These jobs may yet be safe until 2021. (Reuters)
Europe’s high yield bankers have been doing very well indeed, but structures are becoming a little precarious and there are worries that it could all come crashing down. (Dealbook)
More bad news for Barclays bonuses? One analyst thinks the bank could face another $2bn in litigation charges this year – related both to charges of FX fixing and to allegations of disreputable goings-on in the dark pool. (Dealbook)
Global head of electronic execution at Nomura confesses that it’s fairly difficult to trade credit and bonds electronically: the only markets “…that allow for that today are really just European government bonds and US treasuries.” (Financial News)
Forget quitting banking for a start-up. You’ll still find yourself working at 11pm – this is now standard. (Businessweek)
Yale University professor writes book describing elite university students as ‘excellent sheep’ determined to do little more than stuff their CVs. (Newsweek)
If you go to an elite university, you will always earn more. (Marginal Revolution)
20% of the people who were supposed to be sitting the CFA III exams didn’t turn up. (Financial News)
(Legal) drugs that are supposed to keep you awake don’t work. (BusinessWeek)
You can also earn quite a lot as an air traffic controller or foot doctor. (WSJ)