"Even if you don't have the authorities - and frankly I didn't have the authorities for anything - if you take charge, people will follow." — Henry Paulson
Good Morning! Stocks are getting punished more this quarter than they usually do when they miss Wall Street estimates. Hedge funds had a rough October, down an average of 1.4%. But no hedge fund is down as bad as Bridgewater - a new book details crying employees, strippers, and filthy poems at Dalio’s firm. Jersey City’s skyrocketing rent means it makes it harder for New Yorkers to justify leaving. Hot desking is the next threat to the return-to-office push. And Goldman is expecting a less robust dealmaking scene in both the short and medium term.
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SQUEEZ OF THE DAY
Private Equity Perks
It’s no surprise that thanks to rising borrowing costs, private equity fundraising and dealmaking are looking a little bleak.
But in a down year, it’s looking like private equity firms are focusing on keeping their employees happy.
So far in 2023, junior and mid-level professionals have seen boosts in base salaries, with an average raise of about 10%. And even the senior folks are enjoying an average 9% pay bump.
Nearly half of private equity firms are dishing out performance shares, up from a measly 24% in 2022. Performance shares are typically reserved for the top dogs, but private equity firms are spreading them around.
Now, in a year where global deal values have taken a nosedive by about a third, and capital raising is in limbo under the shrinking bar, private equity firms are still doing right by their employees.
Besides fattening those base salaries, they're rolling out the red carpet of perks. They’re offering extra paid time-off, gym discounts, and student loan repayments, and some are even tossing in travel and car insurance.
Takeaway: Even in a rough year, you still see how crucial it is for these firms to retain top talent. When the deal flow gets a little soft, folks get restless and start looking for greener pastures. But as firms learned during the Great Resignation, it’s expensive to hire replacements off the street - and they’re taking proactive steps to keep employees happy.
Stocks continued their 7-day win streak thanks to positive earnings.
(+) Roblox ($RBLX) +12% after the company’s bookings and revenue beat estimates.
(–) Robinhood ($HOOD) -14% after missing Q3 estimates, a decline in trading volume and revenue.
(–) Upstart Holdings ($UPST) -27% after the AI lending platform missed Q3 sales targets.
Wonder, a cloud kitchen and food delivery company, raised $100 million
Black Ore, an AI platform for financial services, raised $60 million
Refurbed, a refurbished electronics marketplace, raised $57 million
Forward Therapeutics, a biotech focused on inflammatory diseases, raised $50 million
L-Nutra, a longevity nutrition products maker, raised $47 million
Traba, an industrial staffing marketplace, raised $22 million
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Private equity wants to be your banker (YF)
How a banking capital of the world botched its own banking rule (WSJ)
Liquidity gridlock worsens in commercial real estate sector (Reuters)
How AI poses growing risk to financial stability (Axios)
Apple wants bigger slice of $183 billion gaming market (YF)
Private equity superstores overstock shelves (Reuters)
Wall Street starts dreaming about Fed rate cuts again (BB)
Big banks cook up new way to unload risk (WSJ)
Federal regulators take new aim at private equity and hedge funds (Axios)
Goldman moves to offload GM credit card (WSJ)
BOOK OF THE DAY
LIV and Let Die
Over the past two years, professional golf has been at war, and Alan Shipnuck has been our most trusted correspondent on the front lines.
Following closely on the heels of his bestselling sensation Phil, Shipnuck turns to the conflict that made Mickelson, and many other top golfers, villainous in the eyes of the public: LIV Golf’s controversial—and belligerent—storming of the professional golf world.
In LIV and Let Die, Shipnuck delivers the inside story in real time, with fly-on-the-wall reporting from the yachts where LIV was hatched and within the corridors of power as the PGA Tour failed to fend off the threat.
Shipnuck has traveled seamlessly between both tours—having countless conversations with players, caddies, CEOs, agents, financiers, lawyers, flaks, fans, and Instagramming wives—to deliver a no-holds-barred account of the most chaotic moment in golf history.
Anyone who has a stake in professional golf lined up for an interview with Shipnuck—because they knew everyone else was talking to him, too. The disruption to an old, proud sport was largely conducted in the shadows, but LIV and Let Die delivers numerous revelations about what really happened, and why.
“It’s a compelling read, littered with so much profanity that it sometimes reads more like a screenplay for a Quentin Tarantino movie than a book about a traditionally genteel sport.”
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3 principles to learn emotional intelligence
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Is Crypto Back?
Read our “Is Crypto Back?” deep-dive here.
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Risk of Failing
Richard Saul Wurman on the risk of failure:
"When I was a child, I once saw someone in a wheelchair. My mother told me that the person in the wheelchair had been in an accident and would recover, but would need to learn to walk again.
That was a revelation to me because it seemed that once we’d learned to walk, we’d always know how to walk. The notion of learning to walk has lingered in my mind, and I’ve contemplated the process of teaching someone to walk again.
I realized that this process has a lot to do with thrusting a leg out into the terror of losing your balance, then regaining your equilibrium, moving forward, and then repeating with your other leg. Failure as loss of balance, the success of equilibrium, and you move forward.
Terror of falling, confidence, regaining your balance — it’s a fascinating metaphor for life. Risk is half of the process of moving forward. The risk of failing is inherent in achieving a goal."
HEARD AROUND THE STREET
Wall Street Corner
Famous People Who Were Investment Bankers
Jeffrey Immelt: Former General Electric (GE) CEO Jeffrey Immelt began his career as an investment banker at Drexel Burnham Lambert before joining GE and eventually leading the company for 16 years.
Henry Kravis: Henry Kravis is a co-founder of Kohlberg Kravis Roberts & Co. (KKR), a leading private equity firm. He worked as an investment banker at Bear Stearns before venturing into private equity.
Steven Mnuchin: Before serving as the U.S. Secretary of the Treasury under President Donald Trump, Steven Mnuchin worked as an investment banker at Goldman Sachs and later founded his own hedge fund.
Bain and Co. released their 2023 Private Equity Midyear Report. You can find the full PDF here.
Memes of the Day