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Goldman Prop Heading To KKR
And so the chapter of Goldman's prop trading operation comes to an end. As Dealbook reports, "famed New York proprietary trading desk is headed to Kohlberg Kravis Roberts, as the investment bank winds down the operation to comply with new federal regulations for Wall Street." Of course, all those who are left at Goldman prop will be put in "client facing" positions, which means nothing really as they will merely hold inventory based on what Goldman's flow bias is, even as Goldman follows in Morgan Stanley's footsteps and ramps up its VaR to fresh all time highs.
More from Dealbook:
Members of the team, led by Bob Howard, will help bolster K.K.R.’s own services as the now-public firm seeks to expand beyond its core private equity businesses. The firm has been building out its fixed income and capital markets divisions.
“This is part of a strategic build out of our asset management platform,” K.K.R. said in a statement. “Our goal has been to add new capabilities and exceptional talent that allow us to strengthen our product offering and better service our clients. Bob and his team will be an ideal fit for that objective as we’ve been impressed with their investment experience and performance as well as their ability to manage risk.”
K.K.R.’s main rival, the Blackstone Group, already has four distinct operations, from buyouts and real estate investing to hedge funds to advisory services.
What apparently was not discussed is the unprecedented tribulations that Blackstone's various "hedge funds" have had over the past 2-3 years, especially its distressed group, as they have tried unsuccessfully to mimic the company's core LBO competency. We are confident that without the benefit of flow trading for advice on where the block trades are coming to going, KKR's prop shop will be merely another mediocre fund generating just barely passable alpha (if that) but really nice levered beta (courtesy of all those great Prime Broker ties to Goldman), but collecting 2 and 20 nonetheless, courtesy of piggybacking on intangibles that just because they have worked in the past are expected to continue doing so in the future.
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TD, "Avoiding stocks" isn't working so well, eh?
With asset class correlations as they are, why wouldn't you buy gold, take advantage of up days in risk assets and have a hedge against the ultimate and eventual failure of this bullshit? The superior place for your money is physical.
So now, how will they front run the customer?
Who needs prop trading when you have robots.
Wonder if KKR will give kickbacks to Goldman for finding retail suckers to take the opposite side of institutional bets at KKR?
You can count the # of decent props left on your foot.
I count 6. What did you get?
Internalization, flow trading and HFT...That's the ticket Tonto!
Sweet.
Caption could also read HIGH FREQUENCY TRAITOR.
Those waiting for PE to lead the way with the return of equities may be waiting a while...With the inevitable cuts in future PE capital allocations from investors these guys have to continue to find ways to bring in new revenue. (however they may steal it) Shake out in the industry should be interesting to watch..
early isn't wrong if your thinking this market comes down.
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Thanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic.
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