Posted on 06/17/2008 6:50:58 PM PDT by TigerLikesRooster
Commodities analysts leaving Wall Street
By Francesco Guerrera and Deborah Brewster in New York
Published: June 18 2008 02:10 | Last updated: June 18 2008 02:10
Wall Street is witnessing an exodus of analysts covering oil, gas and other commodities as the credit crunch and lucrative offers from hedge funds drive research experts away from investment banks.
Over the past few months, highly regarded oil analysts such as Citigroup’s Doug Leggate and Geoff Kieburtz, Morgan Stanley’s Douglas Terreson and Bank of America’s Robert Morris have left.
Recruitment experts say the moves are prompted partly by investment banks’ need to slash costs to cope with the financial crisis and partly by hedge funds’ desire to boost their in-house expertise to cover booming commodities markets.
The departures underscore the challenges faced by Wall Street’s research departments, the profitability of which has long been dogged by clients’ unwillingness to pay substantial amounts for analytical work.
Bankers say research departments have been hard hit during the crisis as Wall Street firms targeted their least profitable businesses in their cost-cutting drives.
Russ Gerson, chief executive of the Gerson Group, a recruitment firm catering to hedge funds, said: “There has been an aggressive trend in hiring in oil, natural gas and commodities; a lot of hedge funds have picked up sell-side analysts from Wall Street.”
He said Gerson was looking for an energy analyst for a US-based hedge fund and pitching for an assignment to find an energy analyst for a European/Middle East firm.
Several hedge funds said much of the hiring had been from commodities trading adviser funds, which have been growing rapidly.
Mr Leggate, who left Citi after seven years and joined Quadrum Capital Management this month, said working for a hedge fund offered a “better opportunity” at this stage of his career.
Mr Terreson, Mr Kieburtz and Mr Morris could not be reached for comment. It is unclear whether they have left the industry or will be joining hedge funds.
Investment banks rebuffed suggestions that the analysts’ departures would weaken their coverage of oil and other commodities.
Citigroup said Mr Leggate’s responsibility for covering large oil companies had been taken over by another analyst.
Morgan Stanley said it had suspended coverage of oil majors but only until it found a replacement for Mr Terreson.
Bank of America confirmed Mr Morris’s departure and in a statement said: “Bank of America has a deep bench of analysts covering the energy sector.”
Ping!
IMHO, these miserable SOB's need to be in jail, not going to new jobs. Their greedy speculation has caused misery to millions of Americans. I hope that the ba$tard$ sleep well at night.
FRiend, pardon me if I oy.
Wall Street is leaving Wall Street for hedge funds.
The breaching of Glass-Steagal is turning Wall Street into a superbank complete with all the implied regulation and gov't interest that comes with it.
Entrepreneurial capital -- which Wall Street used to be a pool of, before Sandy Weill made it into a bank -- has been flowing to hedge funds, especially in the past decade.
That's what capital (and that includes intellectual capital) does: it flows to the least inhibited course.
You are a very long way from home, mac. This is a conservative forum.
The last person I ever waited to finish a sentence like that -- and it sounded almost exactly like that -- was a true avowed socialist carpenter from Vermont.
And all the people (cry babies) will end up forcing more regulations which will just move it off shore which is typical populist bullshit (i.e. McCain).
“You are a very long way from home, mac. This is a conservative forum.”
WAY too many people around here think that if you own a gun, oppose abortion, and hate the Clintons you are a conservative. Scary.
“This means we have a commodity bubble”
LOL
Where mob psychology is freer to roam.
“Their greedy speculation has caused misery to millions of Americans.”
How? Speculation can only last so long; the ride down is always as rapid.
Will people complain when speculators take the other side and drive oil to $30 and gasoline to $1.40? I think not.
What’s wrong with the free market working? It’s not always perfect, but it’s the best system devised by man.
and cooler heads are freer to prevail.
You apparently are uncomfortable with the risks entailed in freedom.
These hedge funds are beginning to have a lot in common with Amaranth, BP and the Hunt brothers. They need to rein in the excess, and soon, before they meet a similar fate.
People talk about cooler heads only when things turn sour and market is about to head south. Riding high is rational, but bailing out fast is irrational. That seems to be the theme.
Cooler head would eventually prevail after a huge damage is done, to the point that people are worrying about the whole system going under.
you’re certainly at liberty to hold your own opinions.
They’re attempting to make themselves whole, after their debacle with derivatives. Financial bail-outs apparently are only to be used for stock buybacks; speculation is much more lucrative. But, they’re already on thin ice. Wrecking the economy of the US, and the world, on top of bringing finance to the brink? They’re rapidly becoming more trouble than they’re worth, and will face heightened scrutiny and regulation.
I would not hold my breath until these fine humans, who we label speculators, drive the price back to the norm.
As for the 'free market' related to oil and gasoline prices, you are kidding aren't you?
There are THREE classes of spec traders, not just one. Two have been around forever in mkts, and are essentially beneficial to mkts, whether now or at any other time.
The third class, however, only came into full-blown existence following the Regress' idiotic and so-called ''Commodity Modernization Act of 2001''. From this act, following the Gramm-Whoozis Act of 1999 which eliminated Glass-Steagall, large banks -- when acting as agents for clients, NOT when trading for their own accounts -- became classified as (believe it or not) ''commercial traders'', otherwise known as ''hedgers''.
OK, a rose is a rose is a rose, and who cares how investment banks are classified, right? Well, you do. Because ''commercials'' are NOT subject to any exchange's position limits, whereas ''reporting traders'' ARE.
This means, DIRECTLY, that when CALPERS or the Harvard Endowment Fund approach Goldman, or MS, or Merrill, or Chase, and say ''Well, gents, we'd like to invest X% of our pension fund/endowment in commodities'', that Goldman or whoever can -- literally -- buy as many futures contracts as they like and ''swap'' them to said funds/endowments, and are free and clear to do so, courtesy of the now-infamous ''swaps exemption''.
All that needs to happen in order to curb this odious practice is for CFTC (did you see that idiot Luken, acting head of CFTC, and his testimony in front of the Regress today? Kee-rist, what a putz!) to simply reclassify banks-acting-for-clients as speculators, specifically ''reporting traders'', aka ''large specs'', and this problem just goes away -- THAT simple, and no fooling.
Won't happen, of course. CFTC are, and have been for years, basically ''all hat and no cattle'' as regulators. Timid as mice, and any self-respecting mouse would be insulted at the description.
And, equally of course, the Regress are neither interested in nor competent to actually solve any problems. Not to mention that inv't banks can buy or have bought already as many Regresscritters as required to keep a valid solution from being implemented, even if the Regress were so inclined.
Why should they want to spoil a perfect record, eh?
Ahhh...Free Republic. Smoking dope, looking at porn, or listening to rap? That’s bad for the country, son. Knock it off for the sake of our social fabric. Tanking the economy with bullshit financial instruments and speculation? You go girl!
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