TGIF! It’s Dan DeFrancesco checking in from NYC. Wishing everyone except the Netherlands a great weekend.
Today we’ve got stories on what it was like working at Lehman Brothers in the lead up to its fall, incoming layoffs at Morgan Stanley, and the search for a rat hunter in NYC.
But first, can I have my money back, please?
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Blackstone President and Chief Operating Officer Jonathan Gray
Drew Angerer/Staff/Getty Images
1. Blackstone would appreciate it if you stopped taking your money out.
There are plenty of things that keep fund managers up at night. The recent market environment doesn’t lend itself to a sound sleep.
But the biggest fear for those managing other’s money isn’t so much the threat of a market crash as it is not having the privilege to do so anymore.
“Redemptions” is a word no fund manager wants to hear. As hard as it might be to navigate a market downturn, it’s even harder to do so when people want their money back.
Blackstone, the world’s largest private-equity fund, is facing that reality within its Blackstone Real Estate Income Trust (BREIT), which has seen withdrawal requests exceed its quarterly limit.
BREIT is a $69 billion fund for individual investors that’s mostly focused on rental housing and industrial assets in the southern and western US, according to its website. It’s also a key part of the firm’s push to attract retail investors, Insider’s Rebecca Ungarino reports.
And while the fund has largely been a winner for investors since its inception in 2017, and is up 9.3% this year through October, that hasn’t stopped some folks from heading for the exits as rates continue to rise and a recession looms.
(A quick hat tip to Credit Suisse research analyst Bill Katz for switching Blackstone to a rare “sell” rating early last week. On Wednesday, Blackstone’s stock dropped 7% on the back of the BREIT news.)
Blackstone, for its part, is nonplussed.
“Our business is built on performance, not fund flows, and performance is rock solid,” a spokesperson for the firm told Insider.
Blackstone also has some real skin in the game on this one. Bloomberg previously reported that both firm CEO Steve Schwarzman and President Jon Gray have each put $100 million of their own money into BREIT since July.
But as nice as it is to have the bosses’ money backing your fund, that’s not the target audience. BREIT isn’t interested in billionaires like Schwarzman and Gray as much as it is smaller investors. BREIT is one of the most popular funds within the firm’s private wealth solutions division.
Blackstone’s not alone in its push into retail. Plenty of alternative asset managers have been building out distribution teams for smaller investors, as previously reported by Insider.
And while there is a lot of upside to attracting retail investors — its private wealth arm has quadrupled in size to $233 billion in assets in four years — there are risks, too. It’s easier to ride out the storm when you’re part of the three-comma club.
In other news:
Courtesy of “Ratatouille” from Pixar.
2. The grind for Goldman juniors hasn’t stopped. A recent survey of investment-banking analysts suggested first-year bankers at Goldman Sachs are still pulling 100-hour workweeks. Read more about pay and work culture among analysts.
3. The SBF media tour rolls on. George Stephanopoulos of “Good Morning America” interviewed Sam Bankman-Fried in what he described as a “therapy session” for the disgraced crypto executive. In the interview, SBF acknowledged that if he spent “an hour a day” assessing risk then FTX might not have collapsed.
4. A first-person POV on the downfall of Lehman Brothers. Adam Taylor worked within the firm’s London M&A team, and was let go weeks before the firm’s collapse. He shares his perspective on what it was like at the bank before it went under.
5. Top investors in the payments space. We mapped out the 11 venture capitalists who have zeroed in on the payments space, one of the lone bright spots in the fintech ecosystem. Check out our list here.
6. A four-day work week could be on the horizon. Companies that shifted to a four-day schedule over a six-month trial actually saw an increase in revenue, according to a recent global study. Check out the full story here (or just forward this to your boss).
7. Things are not that bad at Credit Suisse, according to Credit Suisse. Axel Lehmann, the bank’s chair, said that things have leveled out at the bank after a difficult few weeks, the Financial Times reports. Here’s why he’s confident.
8. The cuts are coming at Morgan Stanley. James Gorman, the bank’s CEO, said layoffs are coming to Morgan Stanley, but didn’t specify numbers or specific divisions, Reuters reports. This is what we know so far.
9. Michael Corbat is back in the game. The former CEO of Citigroup will serve as a senior advisor to Apollo Global Management cofounder Josh Harris’ new investment firm, 26North Partners, Bloomberg reports. More on that here.
10. NYC’s rat problem has gotten so bad they’re willing to pay someone six-figures to sort it out. A recent job posting for a director of rodent mitigation entails “keeping the city’s rats in check and on notice.” Here’s hoping Master Splinter and Remy keep their heads on a swivel. More info from the surprisingly funny job posting.
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Edited by Jeffrey Cane (tweet @jeffrey_cane) in New York and Hallam Bullock (tweet @hallam_bullock) in London.