Goldman Competing Against Its Own Clients?
It’s hardly the first time anyone’s brought this up, but as Goldman’s bottom-line evolves to look more and more like that of a hedge fund, there’s growing concern in some quarters that the bank is increasingly in the conflicted position of competing against its clients for deals.
In yesterday’s Wall Street Journal, Goldman CEO Hank Paulson had to tackle that accusation head-on:
I strongly disagree with your assertion. We look to co-invest with our clients. Our clients, by and large, are very sophisticated. And so when our clients ask us to perform a role they are pretty thoughtful about it, and they’re doing it based upon our history of being able to manage conflicts and potential conflicts. I do believe that the way in which we manage the conflicts and perceived conflicts is critical to our reputation and we would not have the market share we have and the client relationships we have if we weren’t able to manage those in a way in which it meets the high standards we set.
Staggering On The Line [MarketWatch]
Goldman CEO Tackles Critics [Wall Street Journal]
Hedge Funds: The Dumb Money in VC?
Start-ups are finding it easier and easier to raise money, in part because of an eagerness on the part of hedge funds to cross-over into the private, early-stage space. The Journal claims that hedge funds are often willing to pay more for stakes in new companies than the venture capitalists themselves, prompting one to wonder if the traders have any idea what they’re doing. Usually, though, they’re just investing along side vc’s that are leading the deal. In the biggest raise of the first quarter, for example, Los Angeles-based Amp’d took in $150 million from a consortium that included four hedge funds in addition to a handful of vc’s. The last time this happened, things didn’t turn out so well.
Hedge Funds Get Active in Start-Ups [Wall Street Journal]
Hedge Fund Managers Fudging Results? Never!
A few guys with Ph. D. after their names are wondering whether hedge fund managers are managing their returns in the same way company execs in recent years have drawn attention for managing earnings. How else to explain the fact that funds consistently report their best results in the month of December followed by weakness in January. “It looks like they could be faking some of the numbers,” says Naveen Daniel of Purdue, one of the authors of the paper “Why Is Santa So Kind to Hedge Funds?” Unfortunately, they have no real way of knowing because, Daniels points out, “we have no clue what they are doing inside the funds.”
Are HF Results for Real? [NY Times]
Supply-Demand For Interns Works Against Banks
Summer interns are in high demand again, The Times reports today, and investment banks are finding themselves scrambling to attract the best talent. It’s kinda like the late ‘90s, when no self-respecting college junior wanted to spend the summer on a trading desk when he could be playing ping pong in the air conditioned offices of a dot com, only know it’s hedge funds and, say what?, consulting firms luring the best and the brightest away from Wall Street. Consulting firms? Fact checkers, please! What 21-year-old in his right mind would want to get on a track with worse lifestyle and worse pay than the Street. If you’re gonna be miserable, you might as well make some real dough.
Interns Feel Wanted Again [NY Times]
More Legal Woes for San Fran Fund Manager
The Post paints a picture today of San Francisco-based hedge fund manager Lawrence Goldfarb and it ain’t pretty. According to a recent lawsuit by vc shop BayStar Capital, Goldfarb, along with others, conspired to run one of BayStar’s investments, Clickradio, into the ground so that he could pick up its assets on the cheap. The accusation comes on top of some bad press Goldfarb got back in 2001 for stiffing (no pun intended) a stripper for $25,000. Goldfarb, who’s currently trying to revive rap label Murder Inc., has also managed to piss off other high profile businessmen like Quicy Jones and the Marciano brothers.
Larry’s List of Legal Hits [NY Post]
