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Morning Coffee – The $2bn fund with the best-treated junior analysts in the world. Goldman Sachs is going to have an awkward dinner party

Although apparently some junior analysts have a rough time of it with their MDs, there are some bosses out there who do things differently. David Morehead, for example, tells all his staff that if the most junior person in the room has a question, they should drop everything to help them.  In his words, “…under no circumstances should an analyst be waiting to have a question answered because that’s holding them up from learning the next thing […] You can go back to doing your spreadsheet, but this person is sort of behind the eight ball because they don’t know the different ways that a private equity firm can exit an investment”

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What a wonderful way to live.  Kailey Ransom, the most recent junior to benefit from Morehead’s policy, is apparently given time to study for the CFA (with the option of getting an MBA later), and going on road trips with senior colleagues to investor meetings and conferences.

Readers of median cynicism will have started wondering about one and a half paragraphs ago what the catch is.  And indeed there is one.  Morehead and Ransom work for the university endowment fund of Baylor University, located in Waco, Texas.

Waco is small, and hot, and remote.  According to Baylor’s investment team, it’s difficult enough to recruit asset managers to work in Fort Worth, and Fort Worth is nearly a hundred miles away. Not only is Waco not a financial centre, it’s not “a vibrant big city with sports teams and everything that anybody could avail themselves of”, so recruiting mid-career investment professionals is more or less out of the question.  (Morehead, a Chicago native, doesn’t discuss how he ended up there himself)

And so, if Baylor University wants good results from its endowment fund (which so far it appears to be getting – the five year return is better than Harvard or Yale), then it needs to recruit its own people and hang on to them.  That’s the reason for the policy of being nice to the junior.  David Morehead also has a policy of recruiting new employees with a substantial “age gap” to the next most senior person, so that everyone can see a clear career path laid out in front of them, and set about getting a taste for Texas chilli.

You couldn’t necessarily manage a bulge bracket bank in this way, or even a big hedge fund, but it’s important to remember that other models of working are possible.  And David Morehead’s comment that it’s easier for a senior employee to pause their work for five minutes than for an inexperienced young person to scramble around for information is an interesting inversion of the usual banking cliché about whose time is most valuable.

Elsewhere, David Solomon is apparently going to be hosting a dinner party at his apartment next week for women partners of Goldman Sachs.  And it’s likely that among the topics of conversation will be the fact that, as he admits, “Advancing women into our most senior ranks is an area where we have not accomplished our goals”.

Breaking out the Ottolenghi and Nigella cookbooks is a bit of a signature move for D-Sol when he realises that there are problems to smooth over – he held a lot of soirees last summer when there were rumours of partners being discontented with strategy.  The current problem is that while Citi has Jane Fraser, Morgan Stanley has Sharon Yeshaya and JP Morgan has both Jenn Piepszak and Marianne Lake, Goldman currently has no really clear female candidates for top jobs; Susie Scher missed the CFO job, Beth Hammack recently left and Stephanie Cohen is still recovering from the retail banking experience.

It's not in any way clear that this is really Solomon’s fault – the WSJ writeup is forensic in detailing all the women whose careers nearly-but-not-quite reached the top level but noticeable lacking in any theory of why that happened except “bad luck, plus successful Goldman Sachs women are very likely to get offers elsewhere”.  Over the petit fours, however, people might ask if an opportunity was missed when Jim Esposito left, or whether the management restructuring has had the effect of putting more layers and promotion levels between Goldman’s top women and the jobs they might reasonably aspire to.


One positive feature of the much-feared Basel Endgame regulation – while the process is dragging on, it seems to be taking up energy which might otherwise have been directed at “compensation plans which encourage excessive risk-taking”, also known as bonus caps. (Politico)

When bankers decide to step back and start a business, they often try to develop it from their own interests and experiences – that’s why there are so many boutique hotels, artisanal gins, organic skincare products and office-appropriate athleisure ranges.  Emmett Kilduff (formerly of CS and Morgan Stanley), on the other hand, founded Pitstop, an app aimed at preventing men from having heart attacks like his. (Irish Independent)

The Bernard Mourad court case is of interest to le tout Paris, as it may determine whether a French employment law that forbids deferred compensation being forfeited on leaving is applicable to unvested bank bonuses. Morgan Stanley won this round, but it will likely be appealed to the highest levels. (Bloomberg)

Angela Maragkopoulou received a €2m severance payout after spending slightly less than a year as COO of DWS.  When you look at the number of senior executives to have had very short careers there, it’s hard to understand what’s going on. (Financial News)

BNP Paribas bonus pool is down 5% - interestingly, insiders are saying that they would have preferred a bigger cut, but felt unable to do so in an environment where so many competitors were leaving compensation flat. (Bloomberg)

On a similar theme, the two partners sacked by Social Capital in an argument over parallel investment in an AI company are denying all wrongdoing, and say they’re prepared to sue for the carried interest held in their names. (FT)

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AUTHORDaniel Davies Insider Comment

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