Morgan Stanley did not exactly win friends and influence hedge fund people during the 2008 crisis. Blaming short sellers for his firm’s problems, former CEO John Mack couldn’t have alienated more fund managers if he changed his name to Eliot Spitzer.
Goldman Sachs, meanwhile, let hedge funds know during the dark days that anyone who pulled assets was going on a special list that would be tucked away and never forgotten. (A lot of fund managers have not forgotten that crass move either).
But the single biggest thing that the bulge bracket did to distance themselves from the largest amount of money managers was to distance themselves from a large amount of money managers, specifically the smallest hedge funds enlisted in their prime brokerage units. Lopping off the most unprofitable (smallest) fund managers from their ranks produced opportunities for new entrants into the prime brokerage sphere (so-called mini primes) firms such as Conifer Securities.
But a funny thing happened on the way to an industry sea change. The stock market turned around, dramatically, in mid-2009, and government spigots belched mightily, and by then summer banks were calling around trying to aggressively win back the brokerage business of the funds they cast adrift, according to Conifer’s senior partner Richard “Dick” Del Bello and sales head Sal Campo.
“The banks looked at their balance sheets after the financial crisis and realized they needed to clean them up, which meant they literally all lopped off the bottom 15 percent of their rosters, or hundreds of funds,” Del Bello said.
Business was booming for Conifer for a few months, as big banks began referring relinquished customers in their direction; then, on a dime, things slowed down, Campo, formerly head of Citigroup’s PB business, said. “Now the banks are trying to win all the small funds back,” he said.
That small funds are being courted again might not be a sign of a newly forming bubble, but it does show that on Wall Street the pendulum sometimes swings faster than industry members would like.
Speaking of missing little guys, here now, as a bonus item, are the three Best Gary Coleman Performances (Non Diff’rent Strokes):
3. Alongside “Bentley” star Robert Guillaume in 1979 made-for-television film “The Kid From Left Field.”
2. Opposite nebbish character actor Michael Lembeck in 1981 feature film “On the Right Track.”
1. Dueling late pint-sized rapper Joe C in 1998 Kid Rock music video for “Cowboy.”
Rest in peace little fella(s).
Rich Blake is a New York City-based freelance financial journalist. He currently contributes to Institutional Investor magazine, Reuters HedgeWorld and ABCNews.com, among others.
