Morning Coffee: Steve Cohen will never need a separate hotel room for his trading rig again. JPMorgan gains major bragging rights over Goldman Sachs
Truly the end of an era. Steve Cohen has emailed investors in Point72 Asset Management confirming that he is no longer actively managing their money. Steve retains his title as co-Chief Investment Officer, but will concentrating on the gentle arts of mentoring and developing talent for the multi-strategy fund. Now an anonymous colleague’s wish for him - “that he dies at his trading desk” – will never come true.
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Steve's sunset should come as no surprise. He's been blazing a lot less for the last couple of years and has mellowed.
The Steve Cohen of the past, though, was notorious for being anything but. He spent years working 90-hour weeks in the style of junior bankers and at his eponymous first hedge fund, SAC Capital, he was famous for renting a second hotel room on trips, so that he could get a replica of his trading desk set up there.
Cohen also had a full size pig as a pet, missed the birth of one of his children because the market was open, and was one of the first hedge fund guys to get seriously into poker. Whatever schlocky financial drama you’ve seen on TV in the last twenty years, one of the characters was almost certainly based on Steve Cohen. He once had a large house pig and has a reputation for bellowing at underlings while a camera is trained on his face. He used to call regular four-hour meetings on Sunday nights. He even helped kick off the fleece vest trend by keeping the trading floor cooled to uncomfortably low temperatures.
SAC Capital, however, flamed out in an early 2010s compliance scandal. And when he came back with Point72 Capital (originally his own family office, which he managed while serving a brief ban from taking money from outside investors), it seemed that he was at least a slightly changed character. Buying the New York Mets seems to have been good for his soul – although Cohen was one of the inventors of the “pod-shop approach” to risk management, aggressively cutting capital and firing people for relatively small losses, you can’t really do that with a baseball pitcher who’s having a bad game.
And so, the “Steve-Cam” will now point at an empty chair, and analysts will no longer fear “ulcers and night sweats” or being berated publicly for not passing on their tips and information quickly enough. This is probably a good development for Point72 as a firm; although it is often good for small financial firms to be led from the front, you can’t really run a major institutional investor on the basis of one person’s individual talent.
It's also good for Steve Cohen himself. The saying is always that you should leave people wondering why you’ve stopped rather than wondering why you haven’t, and this way his reputation as “The best trader ever” won’t be sullied. And he gets to enjoy his success a bit and mentor the next generation, rather than becoming a precautionary tale like Leon Cooperman, who is still investing successfully well into his 80s, but freely admits that his urge to do so is pathological. As the song has it, you’ve got to know when to hold them and when to fold them; when to walk away and when to run. If you keep on trading when it isn’t fun anymore, that’s not success, it’s addiction.
Elsewhere, it can’t be other than painful for Goldman Sachs to see that the Apple credit card business may be moving to JPMorgan. Goldman has been getting out of consumer finance for a while, and this particular move has been expected since December. It still looks painful. The Apple Cad was a flagship “game-changing” thing when it was announced. Now it's gone to Goldman's biggest rival.
It's tempting to suppose that Goldman drank too much of its own Kool-Aid. It walked into retail financial services thinking that it must be easy, and got blown away. But that doesn’t really fit the facts. Most of the Goldman MDs in charge of the ill-fated exercise were consumer finance veterans who have since found good jobs elsewhere. And the Apple Card was genuinely a good product. Maybe it just wasn’t a good product for Goldman Sachs.
Meanwhile …
On the one hand, a mid-cap stock picking strategy hasn’t worked for a while in a market dominated by multistrats and big tech stocks. On the other, the principal has had some major life events, with the death of a parent and arrival of his first child. In the circumstances, the decision of Vikram Kumar’s Kuvari Capital to hand back external investors’ cash and convert to a family office seems completely understandable. (Bloomberg)
There are apparently six regulators among the “Most Influential People In European Finance”. Although, Mairead McGuinness wasn’t reappointed to the European Commission, so by now there’s only five. (Financial News)
They call it “Nerd Davos”. The Man Group Alternative Investment Summit is actually quite a bit more exclusive than the WEF or Milken, because as well as being important enough to merit an invite, you actually have to be smart enough to get something out of the highly technical conference sessions. (Business Insider)
Interesting consolidation on Boutique Boulevard; Hannam & Partners wants to go beyond the franchise of M&A “Mining King” Ian Hannam, so it’s merging with HCF Advisors, a debt advisory firm. (Financial News)
The links between ultra-high net worth wealth management clients and investment banking corporate clients always seem to promise great opportunities. They have a horrible tendency to become less attractive the closer you get to them, though – conflicts of interest, complicated regulation and massive potential for internal turf wars. At Bank of America, Jim Rourke and Michael Liu are the latest bankers to step into this dangerous but potentially lucrative territory. (Bloomberg)
It might be a coincidence, but just as those horrible fleece vests have receded into history, “finance bros” are having another moment as fashion icons. Apparently, “the A/W ’24 catwalks are reinterpreting trading floor threads through a fashion lens. A trend that trades under different guises – office siren, corpcore, corporate fetish [what?] – a more succinct way to put it would be ‘banker but cool’” (Grazia)
“Make finance great again”. A Trump family crypto venture called “World Liberty Financial” looks like a perfect subject for all the most unbearable people on your trading floor to have an argument about. (WIRED)
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