Traders Ditch TARP Firms For Hedge Funds
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And as many TARP-firms have previously enjoyed strong revenues from commodities trading, losing talent like this looks certain to adversely impact the bottom line. No wonder Goldman Sachs raised $5bn last week to go towards the early repayment of their $10bn TARP funding.
The news agency quotes New York-based headhunter George Stein from Commodity Talent, who said: 'There have been a slew of very high departures from Morgan Stanley and Goldman Sachs....people going off to the world of alternative asset management, hedge funds and private equity'. Reuters also reports that some traders have become frustrated at the lack of risk appetite at the bigger firms (especially the ones that have government-backing). Vikram Tandon from recruiter Options Group said: 'With the angst of everything else going on, there are 10 people you have to report to, and to get a trade approved, you have to jump through hoops. When you go to a hedge fund, you have your own portfolio, or you're just part (of a team) of one or two people. That makes a massive difference'.
Finally, The Wall Street Journal reports that the report on the demise of energy trading firm SemGroup has concluded that the company's oil-trading strategy was built around never realizing a loss. The firm's traders sold call options on near-term futures contracts, betting that the price of oil would fall. The strategy would apparently have worked at almost any other time in the history of trading oil futures- apart from the first 6 months of 2008, when oil prices rose to $145-a-barrel.
As the price of oil went higher, the firm's traders continued to double their bets in the hope of recouping losses. When losses reaching $3bn in July last year, SemGroup filed for bankruptcy protection.
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