Morning Coffee: 46 year-old star French trader stands by his $100m+ loss. Citi finds two men to do the job of one woman
Rudyard Kipling once wrote that “If you can make one heap of all your winnings / And risk it on one turn of pitch-and-toss / And lose, and start again at your beginnings / And never breathe a word about your loss”, then (to summarize) various good consequences would ensue. A noble sentiment in many ways, but you don’t see it hanging on the wall in many banks’ risk management departments. These days, almost nobody is exempt from the discipline of risk limits, even in hedge fund world. Almost, but not quite …
Pierre Andurand’s eponymous Andurand Capital Management has $1.4bn under management in total, but it’s most famous for the Commodities Discretionary Enhanced Fund, in which the man himself takes big positions, mainly in oil futures. The marketing material seems like it’s intended to scare off anyone who doesn’t want a bit of excitement; as well as having “discretionary” and “enhanced” in the name, it’s a “high conviction” strategy with “no set risk limits”.
A fund with “no set risk limits” is rather like a black Amex card with no set spending limit – it’s more of a status symbol than a statement about financial reality. There’s no such thing as complete discretion when it comes to managing other people’s money and even though a large part of Andurand’s fund is made up of his personal wealth, there is bound to be someone, or some committee of people, who could tell him “non” if they really felt they had to. But it does mean that, Pierre Andurand is allowed to bet the ranch when he has a strong view – and more importantly, that he’s allowed to hang on to positions when they go against him.
And having negotiated that freedom, he’s using it. With Brent Crude futures having fallen 15% so far this year to $71.40, Bloomberg reports that Andurand’s view is that “all the indicators he uses are getting more bullish”, that “the recent fall was not backed by fundamentals” and that he predicts prices of more than $140 a barrel this year. So far this year, the fund is apparently 40% down, wiping out a 59% gain from last year.
Don’t feel too bad for the investors – they still have their 87% gain from 2021 and their 154% gain from 2020 to comfort them, and they knew what they were getting into. In many ways, part of the attraction of having your money with Pierre Andurand or Said Haidar or Crispin Odey is that they give you what lesser gamblers call “a run for your money”. As long as it’s a small part of your total wealth rather than your whole pension, part of the return on investment comes in the form of a “psychic dividend” from the thrill of vicariously participating in trades that few people would have the nerve to make themselves. If you can meet with triumph and disaster, and treat those two impostors just the same, then … blah blah, etc. But if you can’t, then hiring a fund manager who can could be almost as much fun.
Elsewhere, when Alison Harding-Jones retired to her fantastic house in the country, Citi needed a new Head of European M&A. They’ve now made the decision – Robin Rousseau and Barry Weir will be co-heads.
One might think it a tribute to Harding-Jones’ franchise and workrate that they had to replace her with two people, but of course, co-head structures in banking are not job-shares; they’re usually more about internal politics. Robin Rousseau was previously head of EMEA M&A at Deutsche Bank before joining Citi in 2020 and had a “vice-chair” title; it’s easy to see how it would have been difficult not to promote him. Conversely, Barry Weir was recruited in September last year from JPM where he’d been head of UK M&A – it’s hard to believe that the Harding-Jones succession wasn’t at least part of the conversation before he was hired. Giving the job to either banker would probably have meant losing the other – that’s how co-head structures happen.
What’s interesting is that the co-head split represents a new geographical balance. Rousseau will be based in Paris and Weir in London. As Paris gradually pulls away as the largest stock market in Europe and the main trading centre for global banks’ equity franchises, is it also taking the first steps toward being the centre of power for advisory banking too?
BNP Paribas continues to indicate its intentions to be the “last man standing” of the European investment banks, promoting former JP Morgan banker George Holst to run its “sectors and advisory” group (Financial News)
One of the reasons that the atmosphere is so bad at the Credit Suisse conference in Asia is that the bankers have realized that in a number of areas from wealth management to ECM to research, there is significant overlap between CS and UBS in terms of business areas and clients, and the UBS team is usually stronger. (FT)
He might prefer to be feuding with old sparring partners like Elizabeth Warren and Bernie Sanders, but if they’re not on Twitter, Lloyd Blankfein is happy to give an interview and cast some shade on Jamie Dimon’s rescue package for First Republic Bank (Bloomberg)
When big firms change strategy abruptly, odd things happen. A former Facebook / Meta employee recalls how she was hired to be a recruiter in September last year, just as a hiring freeze begun, then spent six months in endless team meetings and (apparently excellent) onboarding sessions being told “don’t recruit anybody”, then fired herself. Surely similar things have happened at banks. (NY Post)
Anyone who lives in Zurich and who – for whatever reason – finds that they have a bit of unexpected spare time and a desire to take their mind off things might be pleased to learn that the city is going to experiment with legalizing the consumption and sale of cannabis. (FT)
No bank is quite ready to admit to using ChatGPT itself for live applications, but Mario Argenti has confirmed that Goldman Sachs engineers are testing out a proof of concept to see if specialized “generative” tools can be used to produce lines of code. (CNBC)
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