The Ledger
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Grantham: Goldman and JPMorgan will never tell clients to exit overpriced markets
“You will never hit a Goldman Sachs or a JP Morgan Tell you to get out of the market because it's ludicrously overpriced. Everybody knows today it's ludicrously overpriced, but no one can tell you, and they never will.”
The optimal private markets portfolio contains between 22 and 27 funds
“And they've realized that in private markets, for example, the optimal number of funds in a portfolio should actually be between It's like 22 and 27 funds, where as we started shifting there and offering more choice, our clients were like, aren't you diluting …”
J.P. Morgan halted allocations to mega-cap buyout funds in 2013
“So we made a decision in 2013 to stop investing in some of the mega cap buyout funds because we felt like returns were coming down.”
Masters: The traditional private equity playbook of cheap leverage is dead
“The playbook that was developed in private equity originally used to be buy cheap, deploy the maximum amount of leverage that you conceivably can tolerate. At apparently almost no cost until recently. Cut a lot of costs out of a poorly managed company to cut i…”
Emerging markets investing must be run as a standalone horizontal activity
“One of the things I had known about emerging markets is emerging markets is a horizontal activity. I had built it at JPEEP as a horizontal standalone activity. It was not a fixed income subsidiary, not a subsidiary of equities or of anything else. It was its o…”
Funding source for hedge funds completely shifted from equities to fixed income
“If you asked us 10 years ago, the funding source for most hedge funds was equity, and that's completely shifted. Even in our portfolios, the funding source is fixed income.”
Masters: Corporate innovation inside major banks is not genuine entrepreneurship
“Innovating with such an enormous safety blanket around you and a whole legion of people who are there to make sure you don't screw it up. It doesn't necessarily count as being really entrepreneurial.”
Masters: J.P. Morgan intentionally avoided 2006 subprime market despite losing share
“All of that combined with what I think frankly was just a great judgment call on the part of Jamie and the executive management team at JP Morgan later in 2006 and seven in avoiding the subprime home equity lure. The trap. Super extraordinary volumes of activi…”
Anchorage Digital holds the exact same federal OCC charter as JPMorgan Chase
“That's what ultimately led us on the path to become the first nationally chartered bank. So we are regulated by the OCC, and we're the only crypto bank that has this ability. And this charter is exactly the same charter as That puts us on the same footing as a…”
Ariely: JPMorgan found his human capital data uncorrelated with ESG
“And the team at JP Morgan did a really nice analysis of our data. They were unbelievably thorough. I was deeply impressed by these guys, and it came basically with very good analysis and result, and it's kind of nice to have somebody like a third It's a little…”
J.P. Morgan rejected Madoff in 2008 over front men and impossible returns
“So we met with some front guy, and we had this 19 page questionnaire that we go through as part of our due diligence process, and the very first one is, when can we meet the principal that's making the investment decisions? And they told us, That we wouldn't b…”
JPMorgan Chase marked down valuations on some software loans
“JP Morgan marked down some software loans as far as their bank lender.”
Integrating bank private equity spinouts requires an unbending management hierarchy
“We've done a bunch of arranged marriages, and in those, my conclusion is, You have to have the structure to oversee them, and you have to be very unbending about who's in charge.”
J.P. Morgan favors tender offer funds over interval structures in private credit
“As the industry evolved in private credit, which is the main source of the interval funds, we preferred tender offer funds versus interval. We preferred the concept that in some of the worst market drawdowns that a fund manager could or a board could say it's …”
J.P. Morgan's largest wealth clients hold less than 5% in venture capital
“If you look at our client portfolios, even for the largest families, venture allocations was still less than five percent. It was 4.85%.”
J.P. Morgan vets private equity managers by asking credit lenders for feedback
“If we invest with a private equity manager, we typically go to all the private credit managers and ask how they treat them.”
J.P. Morgan rarely takes GP economics, prioritizing fee discounts via MFNs
“We rarely take GP economics. We do from time to time. But we're mostly focused on how do you generate the best net returns? If we're going to bring in institutional size capital, we want to make sure that we get most favored nations and that discount.”
Direct investing constitutes less than 5% of large family portfolios
“So direct investing, even of our largest families, is less than five percent of their portfolios, which surprises me because it takes up a lot of conversation because you get excited about those things.”
Fund rejections at J.P. Morgan's investment committee are intentionally rare
“The actual investment decisions, it's rare that you get to investment committee and something's a no because you've already worked on all these processes before then.”
Bessent: Soros bought Jon Corzine's $3.5B Italian bond liquidation in 2011
“I think five days in, the biggest trade I'd ever done was John Corzine's firm got liquidated out of their Italian bond position, and it was a three and a half billion dollar trade. I still had the index card that I worked it out on. JP Morgan called us, and I …”
Gleich: Jamie Dimon is one of the best CEOs in history
“And JP Morgan, I think, has one of the best CEOs in history, Jamie Dimon. I think he's amazing.”
Assaf: ICG left JPMorgan post-Bear merger over funds placement conflicts
“JPMorgan wanted us to stay. They were great too. But we figured out that because they have this massive funds placement business, that business had conflicts with ICG. And when we figured it out, I went to the compliance people and I called our lawyers and sai…”
Fink: Hedge fund managers differentiate themselves by responding thoughtfully to bear cases
“Where you really figure out who's got that something extra is when you feed back to them the bear case and say, well, okay, you said this is positive, but what about this risk and what about that risk? And how they respond to those risks, whether they thought …”
Majewski: J.P. Morgan held $10B+ in market value CLOs in 2002
“Now, at the time, the bank had over ten billion dollars of exposure to these investments. The bank's market cap was only around thirty billion dollars at the lows in 2002.”
Brosens: Goldman Sachs was considered a 'middling firm' early in his career
“It was viewed as kind of a middling firm at the time. The big firms at the time were First Boston, Morgan Stanley. The banks really weren't players in the space. JP Morgan wasn't really considered a competitor. There were other smaller firms, Bear Stearns, et …”
Forman: Holding USDT or USDC Carries Issuer Counterparty Risk Like Bank Deposits
“So if you own USDT, you're taking tether counterparty risk. How do you price that? What return do you need to earn to make that worth your while? If you own USDC, you're taking kind of circle counterparty risk, and you're making a bet on their risk management.…”
Analyzing Brazilian Banks Requires Researching Global Private Fintechs
“In order to understand a Brazilian bank, you have to look at the private banks, the startups, and you have to look at the international banks, either JP Morgan or Chime or Revolut or others.”
Friedman: Big US banks will not see massive regulatory relief
“I think you're not going to get massive changes for the big banks, because the Federal Reserve Board's view is, look, we care about the 10 big banks in this country. They're significant. JP Morgan is systemically important. Citicorp is systemically important, …”
Cembalest: Mexican Assets Became Top Performers in Decade Post-1994 Devaluation
“And in 1994, after the Mexican peso devaluation, you couldn't sell a peso denominated asset or a dollar denominated asset with exposure to Mexico to anybody, and over the subsequent decade, all sorts of Mexican denominated assets were among the best performing…”
Cembalest: J.P. Morgan warned clients away from Puerto Rico debt in 2014
“We warned our clients aggressively away from everything having to do with Puerto Rico, you know, in, in, in 2014 or wherever they did that long-term debt placement because the fundamentals are awful.”
Cembalest: J.P. Morgan Rejected Leveraged Structured Notes Despite Competitive Pressure
“You know, as a global firm with a global reputation and with fiduciary mindset on, there were a lot of times when I said that we're just not going to do that. And I understand this puts competitive pressure on you, but these things don't make sense.”
Exposing false data reversed a J.P. Morgan management decision within a month
“Within a month, the decision was reversed, and some people were gone.”
Cembalest liquidated $5 billion from J.P. Morgan's emerging markets portfolio in 1998
“And in the summer, in May, June, July of 1998, I sold five out of that six billion.”
Rohatyn executed J.P. Morgan's first-ever interest rate swap in 1983
“And in fact, I'm proud to say I executed the first interest rate swap ever at JP Morgan in 1983.”
Rohatyn created the first emerging market bond benchmark at J.P. Morgan
“I was responsible for building the first bond benchmark in emerging markets. It was called the Emerging Market Bond Index, MB. I did that at the time at JP in order to help grow the pie because I, of this exact point, people needed a benchmark.”
J.P. Morgan sees hedge fund flows rebound after seven years of outflows
“We went from a period in 2014 where we made a strategic asset allocation shift downwards in hedge funds as we thought that rates were going to stay lower for longer. So our strategic asset allocation is 10%. We had negative flows for a period of almost seven y…”
J.P. Morgan manages $178 billion in alternative investments
“It's not as significant as the portfolios that we manage on behalf of clients, which is almost a half a trillion dollars, but a lot of what we do in alternatives, which is about a hundred and seventy eight billion dollars, where we allocate to a lot of non JP …”
J.P. Morgan's top 200 family offices average a 46% alternatives allocation
“We run a family office report. We started it a couple years ago where we go to the top 200 families. About 25% of it was in pure equities. 46% of it was in alternatives. And the remainder, about just over 20%, was in fixed income. Started the family office sid…”
Masters: J.P. Morgan lagged peers in 2001 due to retained credit exposures
“JP Morgan did not come out of 2001 covered in glory. JP Morgan came out of 2001 very much at the bottom of the pack. And the reason for that had to do with the extent of the retained credit positions in leverage and high-yield credits and associated Private eq…”
Chhabra: Charles Schwab's market value exceeded JP Morgan's around 1999
“I believe, if I have my facts right, that the market value of Schwab exceeded The market value of JP Morgan, and Morgan, in some sense, was in an existential crisis, especially the private bank”
Baumgartner: 2014–2018 equity returns doubled consensus forecasts while volatility halved
“Back in 2013, 20 14, you've got bears projecting low returns... You've got folks like Goldman and JP Morgan, and the folks who publish capital market expectations, and you see, eh, equities, seven percent annualized return, 15% vol... Now, you fast forward fiv…”
Hedge funds generate massive short-term capital gains for taxable clients
“Hedge funds for clients that are taxable versus non-taxable because hedge funds generate enormous amounts of short-term capital gains to ordinary income.”
Masters joined J.P. Morgan's five-person global commodity derivative team
“When I graduated and joined full time, I joined the Global Commodity Derivative Group, which consists, I think, of about four people and me. I was the only girl or woman. The bank had been in the business of bullion and related precious metals for many decades…”