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Morning Coffee: Hedge fund boss melts “snowflake” students. Another bank is cutting before bonuses

There’s always someone with a tougher job than you.  This week, if you’re feeling under pressure, spare a thought for whoever it is on the Citadel campus recruitment team who has to go up to Massachusetts with a PowerPoint deck, shortly after the company’s founder has referred to elite students as “whiny snowflakes”, who are “lost in the wilderness of microaggressions” and "caught up in a rhetoric of oppressor and oppressed."

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You’d have to imagine that the question and answer session at that presentation would have the potential to turn bad-tempered.  Although the online comments at the Harvard Crimson (which doesn’t seem to require any proof of student or alumni status to sign up) are by and large highly supportive, hedge fund leaders have historically tended to look after the employer brand quite carefully, which usually means paying public respect to DEI and not sounding off too aggressively about elite students.

Griffin wasn't referencing Harvard directly, but what appears to have happened is that Ken Griffin, never famous for his limitless patience, reached the final straw when it comes to an institution to which he has donated vast amounts of money, despite the fact (as has been noted in the past) that it constantly promotes a set of values and ideology diametrically opposed to his own. 

As with Bill Ackman, the immediate catalyst has been public statements made by faculty about the Hamas attacks on Israel and campus antisemitism.  But also as with Ackman, this seems to have opened the floodgates for a long list of the ways in which Kenneth C Griffin ’89 (as they call him on the university website) is dissatisfied with the youth of today and the general state of American elite institutions. 

So maybe the Citadel recruiter ought to save themselves a trip?  Griffin has already made it clear that he’s not interested in hiring anyone who signed the controversial student group letter from last October. It's not clear how feels about their peers. But if Harvard students as a bunch, are whiny and lost in the wilderness, then perhaps they aren’t a good fit for Citadel anymore?

Unlikely. On one side of things, the reason that Ken Griffin donated so much money to Harvard despite the lack of political simpatico is the same reason he’s got “89” after his name on their website. He’s an alumnus, which won’t stop being true.  He’s “paused” his donations rather than cancelled them.  Although the implicit threat is that they won’t restart until Harvard gets its act together, it’s just as likely that this case will be similar to his disagreement with the Whitney Museum in 2019, which blew over quite quickly.

And on the other side, particularly in this economy, Harvard students aren’t likely to pass up an incredibly sweet internship, let alone a lucrative career, just because someone moaned about them. In all probability, the Citadel campus team will be mobbed with enthusiastic undergrads, all determined to prove that they, unlike the snowflakes, really are different and unique.

Elsewhere, it seems that 60 employees at Nomura got bad news yesterday. Most were in the investment banking business and half in the US operations, with layoffs also made in London and ex-Japan Asia.  Although Nomura’s bonus season wasn’t necessarily imminent – it usually pays in May – this is another example of a firm cutting before the 2024 bonuses are paid.

In Nomura’s case, it follows on from 20 headcount reductions announced last October, as part of a plan to reduce costs in the wholesale banking division by $100m. 

This is basically an exercise in pain tolerance – every bank on the Street is caught between not wanting to be caught short-staffed if the market turns back up, but also not wanting to keep paying out an elevated cost base if it doesn’t. The trouble is that employer brands are built over more than a single business cycle, and memories are long. Firms which get into the habit of using redundancies as an earnings smoother in this way often end up having to pay “danger money” when they come back to hire.

Meanwhile …

The bad boys of Wall Street are on their way back to rehabilitation.  Even in the context of Wells Fargo, the FX trading team had a bit of a reputation, thanks to an overcharging scandal from the 2010s which was settled two years ago. But under CEO Charlie Scharf and Deutsche Bank veteran Rob Hitschler, they’re ahead of their target to double revenues in five years. (Bloomberg)

“No one wants to go to prison, but I think it's actually a really enjoyable experience overall”, according to Su Zhu, one of the founders of spectacularly bankrupt crypto fund Three Arrows Capital.  Apparently, his co-founder Kyle Davies isn’t fully convinced by the attractions of a Singaporean jail; his whereabouts remain unknown. (Coindesk)

The “short Jim Cramer” ETF has finally been wound up, but it’s still very cheap and easy to set up a new passive index, so we should expect to continue to see “thematic funds” allowing investors to express a view on cannabis, AI, crypto or even just trolling TV presenters. (Bloomberg)

Interesting speculation about what Jim Esposito’s departure might mean for Goldman Sach’s succession planning, including the view that “the job will be Goldman President John Waldron’s if he stays long enough”. (Semafor)

Philippe Andurand’s nerves remain ice-cold; after a 55% drawdown last year, he’s written a letter to investors explaining exactly where the market’s got it wrong. (Bloomberg)

Are we going into an “ESG winter”?  Nikita Singhal has left Lazard Asset Management, as an “overhaul” of its sustainable investment team concluded it wouldn’t have a co-head structure any more. (Financial News)

When his eponymous hedge fund went remote, Mohnish Pabrai realised he had a chance to really remodel his library.  Now, $180,000 of interior design later, it’s the ultimate remote space, with enough room for all his books, but also with full blackout curtains so that he can have a nap when he wants to. (WSJ)

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AUTHORDaniel Davies Global Editor

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