Morning Coffee: Talented hedge fund managers are difficult people. JPMorgan's rejected recruit

It's not polite or right to disparage people for their irregular thought processes, but in closed emails, some have been known to refer to portfolio managers in hedge funds as "talented weirdos." They are not always easy to deal with.

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Robert "Gags" Gagliardi, a block trading specialist, may not be weird, but he seems to have the potential to be both very annoying and very capable. Gagliardi annoyed his previous boss so much, that the Financial Times reports that this boss suggested assigning him the title of "Fuck face." During a court case involving Gagliardi and the boss, Gagliardi admitted to being "volatile" and to causing tensions while he went about his job.

Gagliardi's former boss at hedge fund Evolution doesn't seem the easiest person to deal with either, though. While trying to paint Gagliardi as an "abrasive" employee, Michael Lerch, Evolution's founder, liked to use profanities and famously informed Gagliardi that he wouldn't be paying the bonus he was asking for and so: "fuck you, sue me.” 

Gagliardi did sue him. Yesterday the court awarded Gagliardi a $5.4m bonus, plus interest, to accompany the $625k signing bonus, the $425k base salary and the $6m “new issue bonus” Gagliardi already got from Evolution. He only worked there for 10 months. He earned $300k a week.

Gagliardi was worth it. During his brief tenure, he generated $60m in profits and 97% of Evolution's revenues and was its star employee. Gagliardi, who has 30 years' experience and previously worked for Credit Suisse, Hambrecht & Quist and Bank of America, seems to have been aware of his talents and to have reached the conclusion that he could do Lerch's job. He asked Lerch to promote him as co-chief investment officer in September 2021, but left six months later when this didn't come to pass. 

For his part, Lerch (an ex-Princeton football player) had been arguing that he didn't need to pay Gagliardi the extra $5.4m because Gagliardi had brought disrepute to the firm through his closeness to Pawan Passi, the former head of US equity syndicate at Morgan Stanley, fired for breaching regulations concerning block trades. Lerch is now left nursing his family office, minus $5.4m.

Gagliardi can go and be abrasive elsewhere. He's not always difficult. Under the pressure of cross-examination, the judge noted that he remained “impressively calm.” This, too, is a feature of talented risk-takers.  

Separately, JPMorgan has given its big job managing its new $10bn fund investing in the defence, aerospace, healthcare and energy sector to a man who didn't get the job he probably wanted more.

Todd Combs is joining JPMorgan but he spent the past 15 years reporting to Warren Buffett at Berkshire Hathaway, and might have hoped to become Buffett's replacement when he steps aside in the New Year. That job is going to Greg Abel at Berkshire Hathaway instead. JPMorgan looks like Combs' fallback choice. JPMorgan has, "has made a good decision," in hiring him, declares Warren Buffett.

Meanwhile...

Trump isn't sure about the Netflix Deal. “They have a very big market share. And when they have Warner Brothers, that share goes up a lot....I’ll be involved in that decision.” (WSJ) 

Paramount launched a hostile takeover bid for Warner Bros at $30 a share in cash. It says its offer gives Warner Bros. shareholders $18 billion more in cash than the Netflix bid.  Warner Bros insiders are saying a $33 offer will be necessary. (Bloomberg) 

Paramount is using Centerview and RedBird Advisors as its lead advisors. It's also using Bank of America, Citi and...Michael Klein. (Bloomberg) 

UBS might cut another 10,000 jobs next year. (Reuters) 

Nomura has plans to relocate more Japanese employees internationally. It is saying: “We want to proactively send trainees and transfer staff to greatly strengthen the development of global talent.” (Bloomberg) 

The Bank of England will be offering a voluntary redundancy programme. (Bloomberg) 

The Bank of England is cutting operating costs by 8% in each department. (Financial Times) 

Abu Dhabi now has 40,000 employees in its finance sector, versus Dubai’s 48,000. (Semafor) 

BNP Paribas hired eight dealmakers from HSBC in the US in November. (Financial News) 

Deutsche Bank is seeking to increase the pay of its supervisory board chair by more than 40%. The rest of the board will probably then get a pay rise too. (FT) 

Counting the reasons Wall Street loves ETFs: The ETF fees. The profits from all the transactions that surround the ETF: the expensive Flex Options the ETFs buy, the gains from short-selling the ETFs, the arbitrage earned by authorized participants creating and redeeming units, the fees financial advisors can charge putting them in client portfolios, and the trading profits from market makers and fees to stockbrokers. (Bloomberg) 

Being cool is associated with six traits: extraversion, hedonism, power, adventurousness, openness to experience, and autonomy. Being good is associated with: calmness, conscientiousness, and tradition. (BPS) 

London bankers voted Labour and now they're wondering about voting Reform. "The low tax, light touch regulation, public expenditure cutting message naturally appeals to some.” (Bloomberg) 

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