Monday, November 19, 2007

Welcome to MER, Mr T.

Never one to eschew offering advice to those in need, Cassandra offers up her 10-Point "Road-Map to Personal Success" for the new and incoming chief at Merrill Lynch:

1. Fire your flow traders, Go Electronic, & Write Down Anything and Everything.
There is simply nothing worse than a flow trader thinking he makes money because he's smart, when the retail order originating from Podunk or Chapel Hill, is the source of profit, not overpaid "clerk" who books it and processes it. Indeed, invest in technology, NOT mediocre fraternity boys who carry inflated opinions of themselves. At the same time look deep and take the opp to write down (or off) everything including the proverbial kitchen sink. This will - of course - temporarily hammer the share price, and allow you to strike yet more options at low prices. More importantly it will allow you to...

2. Hire some smart risk traders.
Rock-bottom valuations will allow you to engage your friends and collectively "back up the truck" with stock, options, etc. and all other manner of comp. This is timely as there are lots of smart risk-takers that would take a flier with you, either for the opportunity or because they've simply been [recently] unlucky. You can get 'em cheap, too, as the worlds shakes out, and they want to be part of a ummm "thundering renaissance", of sorts. Mates and brains by your side, you can then set about to insure the firm is actually on the RIGHT SIDE OF RISK (for a change), rather than eternally being on the wrong side every industry-wide accident.

3. Stop Telling the Truth.
Merrill's biggest failing in comparison to other white shoe firms is that it seems to hold itself to higher ethical principles. THIS IS WALL STREET!! No one gives a sh*t about honesty or integrity. Just DO WHAT IT TAKES!

4. Stop Being Politically Correct.
Political correctness and diversity is fine for governments, charity work, and advisory boards, but, as was said before, this is Wall Street, not Main Street. If you want to make money you've got to hire the Chosen Ones. Forget the MBAs or CFAs, just make sure they've got either nepotistically impeccable connections or have coined mountains of cash and have been Bar Mitzvah'ed. Otherwise, you'll be left with the likes of "Cassandra", Michael Lewis, Sally Krawchuk or Joe Jett. This won;t make you any friends amongst the tree-huggers, or rainbow coalition, but as they say on The STreet: Want a friend??!? Get a dog....!!"

5. Get Rid of "the Merrill Mafia".
You'll know them when you meet them. They are in excess 110kg. They are not team players, but into protecting their own turf & P&L, parochial empire-building, nepotism, knee-capping, and, of course, Calzone and cannolli's.

6. Dump the BlackRock Stake.
BLK's current run is as good as it gets. The rating is uber-high, and the cash would be more useful at this point-in-time for use in opportunistic endeavors (read: "Dry Powder") than an unmarketable stake in a growing but way-over-valued investment management company, half of which was based upon the lame one MER contributed to the deal. Spin-it off if you have to, but get rid of it while the going's good, else might be left holding a "WP Stewart" or a "Legg-Mason".

7. Do Something Visible With the Bloomberg Stake.
Talk about hidden assets!!! The stake might be equal to more than 25% of MER market cap. You should probably drop it into a listed LP that MER owns 51% of, and let the market place an absurdly high value upon it, and use that as support for MER valuation now that you've struck all your options.

8. Thin the Ranks of the Bankers.
Does IB actually make money at MER? With the shakeout, just think the ranks, keep the guys with good relationships that produce and fire the rest because, the grand plan has to be that you'll....

9. Sell The Balance to Goldman!
Now that you've struck ALL your incentive options (as well as those of your friends) at great levels, firmed all the anti-takeover and merger clauses to your contract, hired all your old mates on similarly attractive deals, all at the expense of existing MER stockholders, call up Uncle Lloyd and ask him what he'll pay for the retail distribution, despite the coming storm, remains very valuable and something that GS has always coveted, but never taken the plunge.

10. Now Return to GS to Run the Combined Shop.
Round the bases, Home Run!! Bravo! Bravo! You win!! You win!! You win!! La vie est belle!! Now you can do something civic minded like run the Treasury or FRB in order to quickly liquify you from the oodles of GS stock you'll be sporting.

1 comment:

weichristineliao said...

lol, this is hilarious!!

11, if you really wanna challenge Tiger Woods, take him to the boardroom n keep away from the golf court :)