Welcome to Wall Street Insider, where we take you behind the scenes of the finance team’s biggest scoops and deep dives from the past week.
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Car-rental giant Hertz filed for bankruptcy protection on Friday evening after it was unable to reach an agreement with its biggest lenders, adding to a wave of bankruptcy filings in recent weeks as companies struggle with an unprecedented hit from the coronavirus pandemic.
Distressed-credit trading at Wall Street banks had been a small, quiet corner of the market over the past decade. But as the economic fallout spreads, more opportunities and flow are likely to come the way of the desks that make markets in bonds and loans trading at discounted prices, bankruptcy claims, litigation events, and other more complex and special situations.
Alex Morrell and Dakin Campbell spoke with industry insiders — including buy-side traders and portfolio managers, current and former sell-side credit execs, and headhunters and consultants — to map out Wall Street’s most powerful and noteworthy distressed-debt traders.
Read the full story here:
Meet 11 Wall Street stars trading busted bonds, bankruptcy claims, and other fire-sale securities
The pandemic has also prompted a surge in e-commerce as well as a re-think of how companies use and occupy office space. A pair of stories from Dan Geiger this week took a look at how those forces are already reshaping real-estate markets.
Facebook CEO Mark Zuckerberg revealed on Thursday that the tech giant is eyeing offices in cities like Dallas, Atlanta, and Denver to act as “hubs” to support 50% of its workers staying remote — and it’s a move that could upend Silicon Valley and NYC real estate. Meanwhile, warehouse properties are suddenly red-hot, with Amazon snapping up space while ailing companies are looking to sell. Here’s a look at key deals and market forecasts that lay out a huge opportunity for industrial real-estate.
Keep reading for a look at where investors draw the line when it comes to hedge fund social-media spats, the story behind pandemic bonds, and a push to pitch SPACs to family offices and super-wealthy people.
Have a great long weekend!
Meredith
Hedge fund Twitter spats
Lucy Nicholson/Reuters
As social media has become ubiquitous over recent years — and the pandemic now has everyone staying at home and logged on at all hours — hedge-fund investors have added online activity to their due diligence checklist.
Bradley Saacks took a look at what allocators make of high-profile social media spats, and what kinds of online behavior from managers can cross the line and cause them to rethink investments.
Read the full story here:
When big-name hedge-fund managers like Cliff Asness feud with the Twitter masses, major investors notice. Here are the behaviors that could cost them billions.
Pandemic bonds
Bank of America Merrill Lynch
Investors are clamoring for “pandemic bonds” linked to the coronavirus recovery effort, and Alex Morrell took a look at how Wall Street banks are preparing for a deluge of similar socially-minded financing opportunities.
For one, Karen Fang, a star in Bank of America’s sales and trading division who’d been promoted to an ambitious new role a year earlier, relinquished some of her trading responsibilities earlier this year to take on a newly created global head of sustainable finance role.
Read the full story here:
Investors are clamoring for ‘pandemic bonds.’ Here’s how Wall Street banks are revamping their businesses and senior execs are devising ways to capture the surging demand.
Staffing shuffle at JPMorgan and Bank of America
Reuters/Joshua Lott
As Dakin Campbell reports, some of the largest US banks have been shifting employees into roles restructuring troubled loans. Workers are also lending a hand with an influx of new loan requests, including credits for troubled companies seeking cash.
Lenders are being encouraged to move people around by regulators who have come to see them as a source of strength, insiders said. In some cases, authorities are taking a lighter regulatory approach that’s in turn allowing banks to move people who would have interfaced with them into more hands-on roles.
Read the full story here:
JPMorgan and Bank of America are reassigning staff to focus on troubled loans and companies amid a wave of pandemic-driven disruptions
Pitching blank checks
UBS is pitching special purpose acquisition companies — so-called blank-check companies — to its massive wealth-management network, and looking to bring SPACs to market with as much as a 20% retail investor base.
Dan DeFrancesco took a look at how the trend is a departure from how SPACs — entities with no commercial operations that raise money and IPO with the intention of acquiring a company — traditionally raise money.
Read the full story here:
UBS is pitching more ‘blank-check’ companies to rich clients and family offices
Knotel-Rhino deals
Dan Geiger revealed that flex-office firm Knotel and the insurance startup Rhino failed to disclose a family tie between the two companies when the pair struck a deal to place an insurance firm on the hook financially if Knotel defaults on office leases it has signed.
In recent months, Knotel has let millions of dollars in bills to vendors and landlords go unpaid — and its CEO has said the firm will walk away from leases.
Read the full story here:
Knotel and insurance startup Rhino didn’t disclose its CEOs were brothers when it struck a complex financial deal. Now a key partner could be on the hook as Knotel scrambles to pay bills, slashes staff, and plans to shed portions of its portfolio.
On the move
Citadel is adding Two Sigma’s Andrew Janian, the $60 billion quant fund’s former chief information officer and data chief, to its tech team. Ken Griffin’s fund has poached several big names from Wall Street and Silicon Valley for its tech team in the past couple of years, including former Goldman Sachs partner Umesh Subramanian.
Careers
- The CEO of $192 billion wealth firm Edelman Financial Engines lays out its post-pandemic roadmap, from ‘doubling down’ on digital to hiring more planners
- Morgan Stanley’s head of HR lays out how to impress in a virtual internship and land a banking job at the end of the summer
- From virtual ice-breakers to weekly wellness surveys, PayPal’s head of talent lays out what remote work will look like for interns and new hires
- Read the full memo one of tech and media’s biggest investment bankers just sent to his team laying out why returning to the office will be a ‘complex art’
Hedge funds and investing
- The world’s biggest hedge funds like Bridgewater are blending quantitative and fundamental trading. Here’s why it’s gaining hype on Wall Street.
- $7 billion hedge fund WorldQuant is bringing on the former top quant at Goldman to help create the ‘future of quantitative investing’
- A rumored $60 million trade of Airbnb shares signals reboot of secondary market for private securities
- BlackRock execs lay out how its $1.3 billion eFront deal is setting up Aladdin to crack into a massive alternative-investment opportunity
- Tradeweb just hired a former Citadel exec to lead its strategy for selling data and launching tools based on its massive fixed-income marketplaces
Fintech
- SoFi just cut 7% of staff based on performance reviews, and is eliminating a team by automating it away. The moves come a month after the fintech announced a $1.2 billion acquisition.
- $85 billion e-commerce giant Shopify is trying to make banks irrelevant for small businesses. Its chief product officer lays out why.
Real estate
- Global firms are cutting down on their real-estate footprint as CEOs across industries are considering a permanent switch to remote work
- A smart home startup that raised $41 million from Amazon and Bain just launched an app that lets landlords and residents give remote access for deliveries, guests, and self-guided tours
- Worker-tracking startup VergeSense just raised $9 million as it pivots to provide social-distancing tech. Here’s the pitch it’s hoping can boost sales to Fortune 1000 companies by 500%.
- Zillow is restarting its iBuyer business with the help of a former US surgeon general. She laid out how the company will get home-flipping up and running safely.
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