Seemingly every week, big-name activist investors like Carl Icahn and Bill Ackman take huge positions in a company eyeing oftentimes radical changes. The end goal is always to “create greater shareholder value” – a euphemism that sounds much better than “making more money for myself.”
The targets range industries – electronics giants, clothing retailers and even nutritional supplement companies that may or may not be pyramid schemes. But rarely are they ever banks. Wall Street has to follow more regulations than any other industry, making banks less attractive to activist investors proposing major changes.
That’s what makes the news surrounding BNY Mellon so intriguing. On Monday, famed activist investor Nelson Peltz announced a 2.5% stake in the bank, valued at roughly $1.05 billion. The Wall Street Journal reports that he is looking to “create more shareholder value.” How does he propose achieving such a goal? That’s the mystery.
If you look at BNY Mellon, cost cutting – a key goal for most activist investors – is already well underway. The bank just sold its headquarters and is moving further downtown. Heck, they even considered New Jersey. It’s also been trimming assets and other expenses, resulting in a 34% jump in shares over the past year.
While Peltz has been mum on his ideas for the firm, other than saying he plans to meet with the bank’s executives, analysts have been busy making their best guesses. Possibilities include even more aggressive cost cutting, consolidating technology platforms, selling off additional pieces of the business and even spinning off its asset management unit, something wave-making analyst Mike Mayo urged earlier this year.
BNY could even use its stockpile of cash to begin lending like a traditional bank, creating yet another funnel for revenue, one analyst suggested to Bloomberg.
Either way, something is brewing, and shareholders don’t seem to mind. The stock is up 3% since Monday.
We spoke to one former hedge fund analyst – an Ivy League grad – who was hired right out of school. He recently left the industry to start his own business. Here’s what he said a young analyst can expect in their first two years.
Here are nine reasons why you may not fit into the investment bank of the future. If you are any of these, you may want to alter your orientation.
Former Goldman Sachs banker Anthony Noto has been named the new finance chief of Twitter. Noto stepped down from Goldman last month to join Coatue Management, but it seems that’s no longer happening.
Congrats Morgan Stanley brokers. You are now free to tweet. The only downside is the messages must get pre-approved by the bank, which can take hours. So probably not much World Cup commentary.
Well that didn’t take long. Blackstone has hired three traders just one day after news broke that private equity giant would be looking to bring on “teams” of talent to manage its money. No word yet on the names of the three traders. They’ve already talked to 75 people about opportunities.
Solomon Kumin, the former chief operating officer of SAC Capital Advisors, is considering launching his own firm. The only potential fundraising concern: he was never a trader. But as one of SAC’s top recruiters, he certainly knows where to find them.
What’s the reason for all these recent billion dollar settlements with large banks? The whistleblower program has been a big help. It’s become more lucrative to rat your bosses out than keeping quiet and cashing paychecks.
Buzz Around the Office
A police horse that was once deemed too fat to be on patrol lost 200 pounds and, after getting put back on his beat, chased down and trapped a suspect.
Quote of the Day: “Working for a French bank: When France plays their Round of 16 match, BNP sends an email announcing that a large conference room on client floor is set up for viewing. When the U.S. plays, they schedule a 4:45 offsite “town hall” meeting to discuss the settlement.” – an unknown BNP banker in a note to Dealbreaker