One of Wall Street's most talked-about trends is the wave of special-purpose acquisition companies, or SPACs, that have launched IPOs at such a torrid pace that they're on track to raise more than triple last year's totals.

One-hundred and twelve SPACs, aka "blank-check firms," have raised more than $40 billion so far this year — compared to 59 last year that raised less than $14 billion — according to the website SPAC Research. There are now 183 shell companies with $57 billion to spend on bringing other companies public, the data provider said.

More than the money is that the vehicles are now seen as a viable alternative for companies looking to go public in a way that they haven't ever been before. Famed Silicon Valley investor Bill Gurley, an outspoken proponent for rethinking the traditional IPO process, lent his support to SPACs in a recent blog post touting their benefits for certain companies.

The companies, which initially have no revenue or operating assets, raise money from investors by selling shares, typically for $10. They then put that money into a trust until it's time to buy another company.

The development of the SPAC market over the past few years is often credited to the sponsors of the vehicles, the people who launch them in return for a stake in the merged company once the SPAC has found a willing seller.

In recent months boldface names like hedge-fund titan Bill Ackman, LinkedIn founder Reid Hoffman and Silicon Valley power player and Dragoneer Investment founder Mark Stad have raised funds for SPACs. Ex-Citigroup investment banker Michael Klein completed the largest SPAC-led merger in history this year.

But there's also an entire ecosystem of advisors, salespeople, and lawyers increasingly pitching blank-check companies to investment platforms and wealthy people. Asset managers like Fidelity, T. Rowe Price, and Capital Research are also increasingly participating in the market, lending an additional aura of respectability to what had once been considered a back corner of the financial markets.

Historically, SPACs have been used as an alternate way into the public markets for companies that didn't have the governance threshold to attract investors in a traditional IPO, or a last-ditch effort for investors to exit their stake. The traditional process requires filing a prospectus, engaging with the Securities and Exchange Commission and facing scrutiny from discerning investors.

Inevitably, that meant the deals didn't always work out well and the market had a history of failures and occasional cases of fraud. In 2005, for example, the SEC removed some protections afforded other entities after some of the shell companies were implicated in fraud, according to a Harvard Law School white paper.

As the market has gained more respectability, the names of the players driving its growth have changed. Business Insider spoke with more than a dozen people in the industry to come up with a list of the current market's most influential players.

Who'd we miss? Contact Dakin Campbell, Jack Newsham, or Alex Morrell if you think there's a name that should be on the list.We'll update this list periodically.

The bankers

Underwriters typically don't earn a lot of fees when they underwrite the SPACs because the IPO is so simple there isn't much work to do.

But they do set themselves up for future business, including the fees that come from helping to advise on the eventual merger transaction. More than one banker on this list counts as their job everything from taking SPACs public, to helping them find and vet targets, and then advising on the deal once one has been chosen.

Add that up and it becomes a lucrative business. For Credit Suisse, described below, SPACs are the largest business in the Swiss bank's equity capital markets unit.

David Batalion, Cantor Fitzgerald

Cantor is a recurring fixture at the top of the league tables for SPAC underwriting. It ranked first in 2018 and 2019, with $1.6 billion and $3.1 billion in deal volume, respectively, according to SPAC Research. As the market has heated up, larger and more brand name banks have taken on some of the business, pushing Cantor to sixth place on the 2020 leaderboard with $2.5 billion.

Leading the efforts at the firm since 2014 is David Batalion, an investment banker focused solely on SPACs. A top recurring client is Betsy Cohen, the former CEO of The Bancorp, and her son Daniel Cohen, chairman of financial services firm Cohen & Co., where Batalion worked before joining Cantor.

Cantor has helped the Cohens raise six SPACs since 2015, public documents show. The first, Fintech Acquisition Corp. 1, bought payment processor CardConnect in 2016 at a $350 million valuation, which was then acquired a year later by First Data for $750 million. Another, Fintech Acquisition Corp. III, raised $345 million in 2018 and in August paid $1.3 billion for Paya, a digital payments platform.

Batalion and Cantor this year also advised on PropTech Acquisition Corp., a blank-check firm that in July merged with home-services marketplace Porch.com at a nearly $525 million valuation.

"Target companies like that the process is less risky than a traditional IPO in that the deal valuation is set before the public announcement and SEC review process, rather than the night of pricing," Batalion told Business Insider. "Many traditional IPOs either fail or leave too much money on the table. The SPAC helps fix this."

He added: "And investors like the product because as we sit here on the heels of a record long bull market. It's a way to invest in a security where you preserve 'equity upside' with limited downside up until the SPAC vote."

John Chirico, Citigroup

When one looks at the league tables, there's one name that's been there year in and year out, and that's Citigroup.

The underwriter has ranked fourth or higher in SPACs every year going back to 2015, and 2020 is no different. It's currently ranked second, according to SPAC Research.

This year, the firm was the sole underwriter on Ron Burkle's SPAC, as well as the lead left on Bill Ackman's vehicle, which raised the most ever for a SPAC when it sold $4 billion in shares in July.

The bank also took the lead on the SPAC launched by Silicon Valley power player Dragoneer Investment Group. That firm's entrance into the SPAC game led more than one person Business Insider spoke with to suggest there are more like it on the horizon, examples of deep-pocketed Silicon Valley players taking a fresh look at what had been a backwater of the financial markets.

Citigroup has seen the potential in the SPAC space for years, said John Chirico, cohead of North America for Citigroup's corporate and investment banking business. The key is designing a deal that meets the needs of three key players in any transaction — the sponsors, the investors and the target company — which can be figuratively represented by the corners of a triangle.

Read more: We mapped out Citi's 42 most powerful investment bankers. Here's our exclusive org chart.

"It's a tug of war," Chirico said. "You want to stay in the middle of the triangle, and we tell each of those parties that if they want something, they generally have to give something else up."

Chirico ascribes his company's position in the underwriter rankings as an outgrowth of Citigroup's equity capital markets team having worked together for decades. That could be Tyler Dickson, the head of the combined corporate bank and underwriting group, who started his 30-year career in equity capital markets, or other senior ECM leaders who have worked together for decades such as Chirico, Doug Adams, or Phil Drury.

Niron Stabinsky, Credit Suisse

Another bank that has distinguished itself this year in the league tables is Credit Suisse. The Swiss bank is ranked first, having completed 19 deals worth $6.7 billion as either the sole manager or lead left bank.

The bank's effort is led by Niron Stabinsky, a managing director who has been working on SPACs for 15 years, going all the way back to when the vehicles were still associated with companies that didn't always have the governance qualities required to sell shares to the public through a traditional IPO.

At Deutsche Bank in 2005, Stabinsky led the first SPAC underwriting to be done by a bulge-bracket bank when he helped bring Cold Spring Capital to market to focus on an acquisition in the time shares space. Stabinsky led Deutsche Bank's Los Angeles office and played a leading role in the IPOs for private-equity firms Blackstone, Apollo, Carlyle, and Fortress.

He was there in 2007-08 when SPACs enjoyed their previous spike in popularity.

"When I started doing SPACs it was more of a hobby rather than a full-time job," he said. "The structure was not really well understood. None of us really understood it when we were doing it.

"Now it's virtually 100% of what I do," he said, adding that since those early days the market has matured significantly, grown exponentially, and attracted higher-quality sponsors, target companies, and investors.

Since joining Credit Suisse in 2015, Stabinsky has focused on SPACs almost full-time, building it into Credit Suisse's top business in equity capital markets. That puts him in the room when the SPACs are sold to the public for the first time all the way through the merger process after the management team has identified its target.

Among the notable deals Credit Suisse has led this year are the one sponsored by former Goldman Sachs president and Trump advisor Gary Cohn. The bank has also led both of the SPACs sold by Chamath Palihapitiya, an early Facebook employee and successful venture capitalist, and there are more in the works.

Palihapitiya, who already used one of his SPAC's to purchase Virgin Galactic last year, recently announced that he would be buying the SoftBank-backed home-buying website Opendoor with another of his vehicles.

Read more: SoftBank-backed Opendoor lost $339 million in 2019. Here's how it's pitching a path to profits as it gears up to go public via a SPAC.

Simon Watson/Olympia McNerney, Goldman Sachs

One bank that comes up in every conversation about SPACs is Goldman Sachs. The investment bank's asset-management arm was early to the latest SPAC craze when it launched a vehicle with former Honeywell CEO David Cote in 2018. It's led several others since then.

It's also near the top of the league table this year in terms of underwriting share, handling 17 deals worth $4.9 billion through September 28.

This year, the bank has been the sole bookrunner on the shell company launched by Kevin Hartz, an investor in Uber and Airbnb, as well as a blank-check company sponsored by former Goldman Sachs private-equity investor Gerry Cardinale, who teamed up with "Moneyball" star Billy Beane.

Goldman's SPAC team is led by Simon Watson, a partner based out of the UK. In the Americas, the SPAC group is led by Olympia McNerney. McNerney has become a vocal proponent for the market, appearing on the bank's podcast and speaking with journalists for market stories. (Stabinsky, too, does a lot of media.)

Niccolo de Masi, the sponsor of a two SPACs Goldman has underwritten, says the enthusiasm for SPACs goes all the way up to investment-banking chief Gregg Lemkau and CEO David Solomon. The bank declined to comment for this story.

"Goldman is as picky about their SPAC IPOs as they are about traditional IPOs," said de Masi, who sold shares in dMY Technology Group earlier this year with Goldman's help. "Being treated as a Goldman IPO is very valuable to me."

Read more: UBS has started pitching its wealth-management customers on 'blank-check' companies as it looks to tap into a SPAC frenzy

The lawyers

The SPAC space wouldn't have developed into what it is today without the work of lawyers who've been at the head of table for some of the market's most important innovations.

One change that opened up the market nearly a decade ago was separating the redemption process from the shareholder vote on approving the merger. Another key area mentioned by those Business Insider spoke with has been around the private investment in public equities, or PIPE, investments that help cement the merger.

Read more:Elite law firms are rushing into the 'SPAC' craze, looking to make hundreds of millions

Derek Dostal, Davis Polk

As SPACs have gone more mainstream, they've attracted some of the larger, diversified, well-known law firms.

Among the most savvy of the newer entrants, according to people Business Insider spoke with, Davis Polk has gone from doing a couple of SPAC offerings a year to representing underwriters on over a dozen IPOs — and at least one issuer, VG Acquisition, that filed for a $400 million offering on September 16.

The firm's practice is led by Derek Dostal. A banker who's worked with Dostal said he's likely the "most thoughtful" lawyer out there because "he thinks about the product."

The firm primarily advises underwriters, handling $7.5 billion worth of deals so far in 2020. Those include vehicles sponsored by Bill Foley, former Blackstone exec Chinh Chu, and True Wind Capital.

Ellenoff Grossman & Schole

Even as SPACs grow in popularity and acceptance, some of the original law firms are hanging on. One of those is EGS, a longtime player in the SPAC market after setting out to develop a focus on the space.

Led by Doug Ellenoff, the firm has done hundreds of IPOs, including recent representations of underwriters such as FTAC Olympus Acquisition, which raised $750 million, and sustainability-focused Northern Genesis Acquisition.

It's also done work for issuers like TWC Tech Holdings II, the second SPAC backed by True Wind Capital, and Vesper Healthcare Acquisition, a $400 million vehicle led by the former CEO of Allergan.

Alan Annex, Greenberg Traurig

Greenberg Traurig, too, has a long history in SPACs. Alan Annex, who cochairs the firm's corporate practice, highlighted its role in the development of the "Crescent term," a warrant price-adjustment provision that is now common. The firm also worked on the Prisa transaction in 2010, which decoupled a shareholder's ability to vote on a proposed merger from the ability to cash in one's shares, known as the redemption, which reduced the risk of a merger being rejected.

"There are a lot of regulatory things around the SPAC that will change from time to time, but there's also been changes to the product," he said.

Greenberg has worked on at least seven SPAC offerings this year, according to SPAC Research. Major M&A mandates include representing Nebula Acquisition in its tie-up with financial risk analytics company Open Lending and helping VectoIQ, which also tapped Greenberg for its IPO, strike a deal to take the electric-truck company Nikola public.

That deal is now facing scrutiny as the Securities and Exchange Commission and the Department of Justice are reportedly investigating fraud claims raised by a short seller.

On Sept. 23, Greenberg represented United Wholesale Mortgage in a merger with a $425 million SPAC that included a record valuation for a SPAC target of over $16 billion, according to an announcement.

Paul Tropp, Ropes & Gray

Another latecomer that's making up ground is Ropes & Gray, the Boston-based law firm founded in 1865. The firm has been working on an increasing number of deals lately for both underwriters and issuers, with one banker saying his team "loved the way they were thinking about M&A." Paul Tropp, who joined the firm from Freshfields in 2018, co-chairs its capital markets practice and acts as the face of the SPAC practice.

The firm has represented underwriters on more than a dozen transactions this year, including Ackman's $4 billion Pershing Square Tontine Holdings, and issuers including Dragoneer Growth Opportunities Corp, a SPAC backed by the Silicon Valley investment firm of the same name.

Gregg Noel, Skadden

Few law firms are as white-shoe as Skadden, which has become a frequent presence in both IPOs and mergers. Noel, a leading partner in its capital markets practice, has helped the firm work on more than two dozen IPOs so far in 2020, representing underwriters in at least 16 of them and issuers on at least 10. Two of them raised more than $800 million: Cohn Robbins Holding, backed by former Trump advisor Gary Cohn, and CC Neuberger Principal Holdings II, sponsored by former Blackstone executive Chinh Chu.

"We were working with the investment banks early on, when the product started migrating from the smaller I-banks up to the bulge bracket," said Noel, who worked on his first SPAC in 2006.

Skadden also has an active practice in helping complete the merger process. The firm helped GS Acquisition Holdings take the infrastructure tech company Vertiv Holdings public, and it also represented sports gambling tech firm SBTech in Diamond Eagle Acquisition Corp's acquisition of SBTech and DraftKings.

Joel Rubinstein and team, White & Case

When capital markets partners Joel Rubinstein, Jonathan Rochwarger, and Elliott Smith moved to White & Case from Winston & Strawn this summer, it was the talk of some SPAC circles.

Rubinstein "is the most sought-after man in the SPAC business," according to Niccolo De Masi, who said the lawyer has played a critical role in the structuring of PIPE deals that are attracting some of the world's largest asset managers.

Since arriving at White & Case, Rubinstein and his team have stayed busy on SPAC IPOs, with one industry source saying their team is seeking to add associates to deal with the workflow. They have continued to represent the big banks, representing the underwriters for the Churchill Capital entities backed by investment banker Michael Klein, and Goldman Sachs on the $500 million IPO of Cardinale's sports-oriented RedBall Acquisition Corp.

They've represented SPACs run by entertainment execs Harry Sloan and Jeff Sagansky, helping their SPAC Diamond Eagle Acquisition Corp. go public and then representing it in its acquisition of DraftKings and SBTech. In June, they helped the company, now called DraftKings, sell even more shares.

They also represented Sloan and Sagansky on another SPAC, Flying Eagle Acquisition Corp., working on both its IPO and its move to take mobile gaming company Skillz public.

The money managers

Talk to enough sponsors, bankers, and lawyers, and you'll come to understand that the current enthusiasm for blank-check companies wouldn't exist without the arrival of deep-pocketed and blue-chip capital providers now getting interested in the space.

If in the past SPACs were sold to retail investors, they're now increasingly being bought by institutional investors signing onto a sponsor's vision, and then financing it through the provision, most often, of a private investment in public equity (PIPE) at the time the SPAC merges with the target company.

Many of the investments, particularly for Neuberger Berman and Fidelity, are often done out of mutual funds and purchased with client funds. Even the hedge-fund players are using client funds, in their case using institutional money collected from pension funds, foundations, and endowments.

"In general, we see the best PIPE investors as those that know the underlying industry the best, are seen as 'thought leaders' in the space, and have the longest term investment time horizon," Batalion, the Cantor Fitzgerald banker, said.

A separate banker added that another mark of a good investor was someone willing to publicly put their name behind a deal, saying "the highest breed of PIPE investor is that mutual fund who will put their name on the cover of the press release," one banker said. "Fidelity does that."

Charles Kantor, Neuberger Berman

As one of several Neuberger Berman portfolio managers involved in SPACs, Charles Kantor represents one half of a blank-check power couple that has orchestrated two marquee transactions in 2020.

The Neuberger Berman portfolio manager has teamed up with CC Capital's Chinh Chu with the intention of launching a series of SPACs. The first, CC Neuberger Principal Holdings I, was more than three-times oversubscribed raised more than $400 million in late April, according to Reuters.

The second SPAC launched at the end of July and doubled the first in size, hauling in nearly $830 million in proceeds.

The pairing is a smart one, one banker said, as it matches complementary skill sets. While Chu boasts a track record investing in big deals, Kantor brings public-markets experience to the table to discern how a company will be received by the broader investment community.

Cliff Greenberg, Baron Funds

For Cliff Greenburg, a small-cap fund manager at Baron, SPACs allow him to invest more capital and at better prices than a traditional IPO.

"We have great expertise and relationships with most of the SPAC sponsors and underwriters and we are often brought into the process early to learn about the companies in which these pools are interested in investing," Greenberg wrote in a May investor note.

Another bonus to SPACs is that he can more thoroughly vet an investment than with a traditional IPO.

"Another advantage is there is more disclosure and more time to do due diligence. You can learn more about a SPAC's acquisition target, see projections, and communicate with management," Greenburg told IPO Edge in a Q&A. "I take advantage of the ability to meet these companies and get to know them well before investing."

Greenberg prefers to invest in companies, rather than blind pools of capital, and already has a couple winners to his name. In 2019 Baron invested in payments processor Repay Holdings as it merged with Thunder Bridge, a $200 million SPAC formed by Monroe Capital. Baron currently holds a 7.3% stake worth $92 million.

The fund also invested in the Churchill Capital SPAC that formed in 2019 and then merged with Clarivate, an information services company that's trading at all-time highs with a market cap of $11.1 billion. Baron's 1.7% stake is worth $145 million.

Millennium management

Industry bankers told Business Insider that a trio of portfolio managers — Dan Duggan, Jason Roth, and Ken Waitz — lead SPAC efforts at Millennium Management, the hedge fund managed by billionaire Izzy Englander.

The blank-check effort that's garnered the most buzz for Millennium is RedBall Acquisition, the sports-focused vehicle led by Billy Beane.

Beane is the Oakland Athletics exec made famous by "Moneyball," a book later turned into a Hollywood blockbuster.

Millennium revealed a nearly 8% stake in the venture in August after RedBall raised $575 million in its IPO.

RedBall will pursue "businesses in the sports, media and data analytics sectors, with a focus on professional sports franchises," filing documents with the SEC showed.

Fidelity

The asset-management behemoth — it now handles more than $3.3 trillion — likes to throw its weight around in the SPAC market. Bankers say the firm's stature makes it a sought-after investor; the Fidelity imprimatur on a blank-check firm projects credibility to the rest of the investing community.

William Danoff, the 30-year company vet who manages its $139 billion Contrafund portfolio, is said to be one of the key decision makers in signing off on SPAC investments.

Marquee efforts that have earned the Fidelity stamp of approval include Flying Eagle Acquisition Corp, which recently agreed to merge with mobile-gaming company Skillz, valuing the company at $3.5 billion. Fidelity also invested in QuantumScape, a battery maker backed by Volkswagen that merged with Kensington Capital in September at a $3.3 billion valuation.

Another high-profile deal has come under scrutiny. Electric-truck maker Nikola went public in March in a merger with VectoIQ Acquisition Corp, backed by Fidelity and ValueAct. Nikola has since been bitten by a short-seller report in September that questioned its technology and alleged false statements.

Nikola rebutted the allegations, but the stock has plummeted and founder Trevor Milton has stepped down as executive chairman. Bloomberg News reported that Fidelity was among the backers who pushed for Milton's removal as CEO, before the allegations surfaced.

As Business Insider spoke with bankers, lawyers, and sponsors about the market, it was the spectre of deals gone bad that worried everyone in this burgeoning market. A few more like Nikola, they worry, and the opportunity in the SPAC market could shut quickly.

SEE ALSO: SoftBank-backed Opendoor lost $339 million in 2019. Here's how it's pitching a path to profits as it gears up to go public via a SPAC.

DON'T MISS: Elite law firms are rushing into the 'SPAC' craze, looking to make hundreds of millions of dollars in the process — here's how it works

NEXT UP: UBS has started pitching its wealth management customers on 'blank-check' companies as the bank looks to tap into a SPAC frenzy

Join the conversation about this story »

NOW WATCH: What happens to animals during wildfires

• Goldman Sachs is looking to cut 400 jobs, roughly 1% of its workforce, sources told Bloomberg on Wednesday. 
• The company was among a number of US banks such as Citigroup and Wells Fargo that in March pledged to remain from cutting jobs during the COVID-19 pandemic. 
• Goldman never specified how long the moratorium would last. 
• The job cuts come despite the bank's strong Q2 performance boosted by market volatility. 
• A source told Bloomberg the cuts could pave the way for deeper cuts to take place over the next few months to help the bank save $1 billion 
• Visit Business Insider's homepage for more stories.

Goldman Sachs is resuming job cuts after briefly pausing them during the pandemic and is looking to slash roughly 1% of its workforce, Bloomberg reported Wednesday. 

Bloomberg reported citing confidential sources who spoke on the basis of anonymity, the bank will roughly eliminate 400 positions, equivalent to about 1% of its 38,000-strong global workforce. 

Goldman will go ahead with the cuts, even though it posted a strong performance in its equity trading business in the second quarter, when revenue hit its second-highest level on record. 

A spokesperson for Goldman Sachs told Bloomberg: "At the outbreak of the pandemic, the firm announced that it would suspend any job reductions. The firm has made a decision to move forward with a modest number of layoffs."

Goldman Sachs has become the latest big US bank to announce layoffs, reflecting again how the pandemic is leaving lasting damage.

 Read More: A fund manager who's beaten 99% of her peers over the past 5 years told us why she remains bullish on growth stocks despite the recent sell-off — and listed her 3 favorite stocks for continued gains in the decade to come

CNBC reported Wednesday Citigroup's new global head of equities trading Fater Belbachir cut at least three of his most senior US trading staff. 

A number of US banks, including Goldman Sachs, joined European banks back in March in pledging that they would refrain from job cuts during the COVID-19 pandemic. 

Wells Fargo, another US bank, is under major pressure to drastically reduce costs and slash headcount.

JPMorgan has also started cutting around 80 jobs in its consumer division, and "dozens" more across other lines of business, according to a person with knowledge of the matter. 

In Europe, HSBC resumed a massive redundancy plan that had put on hold in June under which it will cut 35,000 jobs over the medium term. 

Read more: We mapped out the power structure at Goldman Sachs and identified the bank's 125 top execs. Here's our exclusive org chart.

Goldman Sachs never specified how long its moratorium would last, but CEO David Solomon in June hinted at a resumption in cuts, saying "we'll do what is right for our shareholders."

The sources told Goldman Sachs the cuts could pave the way for deeper reductions in coming months and are intended to help the bank achieve a target to save $1 billion in costs laid out in January. 

Many of the cuts are across back-office roles, one of the sources told Bloomberg. 

Join the conversation about this story »

NOW WATCH: How the suicide hotline saved my life

It's been in effect for just a few weeks, but the durability of an informal agreement between powerful private-equity firms and recruiters has already been put to the test.

A group of headhunters and their PE clients had backed off from reaching out to young investment bankers about private-equity associate jobs that start in 2022, Business Insider previously reported.

The move amounted to a ceasefire in an arms race for young talent that had been pushing the kickoff for recruiting earlier and earlier in recent years.

But according to four sources with knowledge of the situation, one recruiting firm, SG Partners, this year still started reach outs to investment banking analysts in their first few weeks on the job despite being a part of the informal agreement.  

Read more: Private equity is backing off from recruiting young investment bankers in the first few weeks on the job. Here's what triggered the reversal.

The influential recruiting firm contacted candidates via email in both August and September, sources said. That prompted PE firms to intervene and tell SG Partners to back off. Sources who spoke to Business Insider requested to remain anonymous in order to preserve industry relationships. 

The move highlights the ultra-competitive nature of the battle for the best talent, and shows how the coronavirus pandemic has upended traditional hiring pipelines on Wall Street. 

SG Partners was created in 1991 and has resulted in 2,000 successful placements, according to its website. It has recruited on behalf of some of the biggest players in the industry including Blackstone, a person with knowledge of the firm's work confirmed to Business Insider.

Sheri Gellman, the founder of SG Partners, did not respond to multiple requests for comment in time for publication. 

PE shops are still hiring out of investment banks for 2021 roles, interviewing candidates who have at least a year of experience under their belts, recruiters said.

While SG Partners' actions did not immediately spark its competitors to abandon their agreement and kick-start the recruiting season, one source did indicate that this year's agreement is only as strong as its members' willingness to abide by it.

Too many unilateral actors disregarding it could force it to fall apart, triggering a possible return to the carnage of past PE recruiting cycles, the source added.

A delicate truce in the private-equity recruiting world 

News of SG Partners' outreach to prospective candidates is said to have quickly spread across the Wall Street recruiting space.

"The information flows so quickly to everyone, and they can mobilize just as quickly," a source said.

Read more: THE GATEKEEPERS: 12 headhunting firms to know if you want to land a hedge fund or private-equity job

HR personnel at several top-tier private-equity shops also learned about what Gellman's firm was doing, according to several people with knowledge of the situation — and decided to crack down, chiding the firm for going against the broader industry pact.

Typically, rookie investment bankers are deluged with inquiries from private-equity recruiters at this point in the fall, often for jobs that won't start until two years later. But, as Business Insider previously reported, with first-year investment bankers working remotely this autumn, recruiters are concerned that the quality of their training could be diminished. 

What's more, in-person interviews and high-stakes networking events are also impossible this year, further incentivizing headhunters to wait it out until conditions improve in 2021.

For context, the private-equity recruiting scene is competitive, to say the least.

In recent years, headhunters that represent leading private-equity firms have moved up the start of the recruiting cycle as early as September, one-upping each other to nab the most attractive talent among first-year IB analysts. This year, the heads of top recruiting and PE firms coordinated with one another to jointly back off from the fight. 

See more: Private-equity firms are already interviewing 22-year-old bankers who will start in 2 years. Their earliest-ever hiring kickoff shows how crazy the battle for talent has gotten.

In August, Business Insider included SG Partners on a list of 12 leading agencies that recruit on behalf of Wall Street's biggest names in the worlds of hedge funds and private equity.

Now, the headhunting firms are waiting to see if their agreement will subsist through 2021, or succumb to individual recruiters' temptations to kick off the cycle prematurely. In spite of SG Partners' outreach, so far the other firms have upheld their consensus, and the line is holding, sources said. 

Have any tips about hiring trends at financial services firms? Contact Reed Alexander via email at rhodkin@businessinsider.com, encrypted messaging app Signal (561-247-5758), or direct message on Twitter @reedalexander. Contact Casey Sullivan via email at csullivan@businessinsider.com, encrypted messaging app Signal (646-376-6017), or direct message on Twitter, @caseyreports.

SEE ALSO: We built the first-ever searchable database of the top Wall Street recruiters for banking, hedge funds, and private equity

SEE ALSO: Private equity is backing off from recruiting young investment bankers in their first few weeks on the job. Here's what triggered the reversal.

SEE ALSO: THE GATEKEEPERS: 12 headhunting firms to know if you want to land a hedge fund or private-equity job

Join the conversation about this story »

NOW WATCH: How NASA strategically paints its vehicles for space

Actively managed funds are underperforming their benchmarks. Buckingham Wealth Partner's chief research officer and top investing author, Larry Swedroe, and Bridgeway Capital Management's head of research, Andrew Berkin, want to tell investors about it.

Berkin and Swedroe, co-authors of recently updated bestselling investing book, "The Incredible Shrinking Alpha", told Business Insider about why alpha from stock picking and active investing is shrinking.

Most investors don't know about passive investing, because financial institutions on Wall Street can earn more and gain more coverage with active investing, Swedroe said.

"Wall Street needs and wants you to believe that active management is the winning game, because that's the winning game for them," Swedroe said. "If you don't trade a lot and aren't willing to pay big fees to get alphas, they go out of business. The media is complicit because passive is a boring story. You tell once and it's done."

According to new evidence presented in the book, 80% of actively managed US large-value funds underperformed their benchmarks over a 15 year period ending June 2019. The picture is even worse for small-value actively managed funds, as 87% have underperformed their respective benchmarks. 

This underperformance is happening even before investors take into account taxes, trading fees and expense ratios.

Outperformance from active managers is shrinking

Active fund managers promise to deliver outperformance for clients, this also known as positive alpha.

Over the years, alpha has been shrinking. Berkin and Swedroe identified that one of the reasons for the decline is that much of what was thought to be alpha is, in fact, beta.

In the book, beta is defined as the exposure of a stock or mutual fund to a common characteristic such as market capitalization or high profitability. These characteristics are known as factors.

Many superstar investors, such as Warren Buffett, identified these factors long before academics. But over time as academics have discovered the factors and research has become more widely available on how successful active fund managers leverage factors in their stock picks.

Access to better technology and data combined with research has meant there are fewer opportunities for fund managers to beat the market or capitalize on market inefficiencies. 

And investors now have the more accessible option to gain exposure to these factors through indexes, or passively managed mutual funds, instead of paying high fees to a fund manager to pick the best stocks with those characteristics.

Stock picking is a zero-sum game

One of the reasons active investors have been successful throughout the years is through the exploitation of bad behavior of retail investors, who typically don't have the same discipline as big guns like Buffett. 

Individual investors typically buy stocks that go on to earn sub-par returns and sell stocks that go on to earn above-average returns, the book showed.

It is a zero-sum game for lone investors. Institutional investors often come out on top, as they make up 90% of those who trade and have better technology and expertise, Swedroe said.

"Why are you playing in a game, competing against people with far more skill, resources, time and effort?" Swedroe said. "Unless it's like going to Las Vegas, and you take $500, and it's entertainment. But I wouldn't take my IRA, or retirement account, to the casinos. And Robinhood investors should not be taking their retirement accounts to the Wall Street casino, because they are likely to lose, the research shows that the vast majority of them underperform."

 The good news is the number of individual investors in the stock market is continuing to decline, which means fewer victims for active funds to target, which also means less alpha is being generated. 

Online platform Robinhood has given rise to a new generation of retail traders. However, Berkin does not believe this will result in active fund managers seeing a significant increase in alpha, because the amount of new unsophisticated money will be spread out thinly amongst a number of forces.

What can investors do next?

For investors who are worried about the shrinking alpha from active investing, Berkin and Swedroe recommend passive investing. Investors can either explore investing in an index, such as the S&P 500, or a structured investment fund where the fund is set up to have systematic rules that define its investing strategy.

In the book, Swedroe and Berkin list a number of different funds for investors to consider depending on which factor they are interested in. For example, for market beta, investors could select Fidelity Total Market Index Fund (FSKAX) or, for momentum, investors could select the AQR Large Cap Momentum (AMOMX) fund.

In addition to reading the book, Swedroe recommends new investors explore Morningstar to understand the various aspects of funds they are considering, as well as spending more time educating themselves generally about investing.

"All factors will go through bad periods and if you don't understand it, you won't have the discipline to stay the course," Swedroe said. "I really believe that's the key -- get yourself educated. Education is the armour that protects you from your stomach. I have yet to meet a  stomach that makes good decisions. Heads make much better decisions than stomachs."

Berkin also emphasizes the importance of education - knowing what you are buying and the implications for your portfolio.

"Where you get into trouble is when your portfolio doesn't do as well and you sell out, and typically people are selling at the worst possible times," Berkin said. "And so know what you're buying and stick with them."

If you must active invest….

And if you must actively invest, then stick to a low-cost, low-turnover fund that is focused on its area of expertise and know your exposures, Swedroe said.

"I believe that what investors should focus on is putting the odds in your favour because the world is uncertain and then really the best we could do is estimate the odds of anything happening," Swedroe said. " ... And that's what the book is all about. Tell us about the odds of you winning the game of active management? The research shows - you're highly unlikely, but not impossible, that you will underperform."

Join the conversation about this story »

NOW WATCH: What it takes to become a backup dancer for Beyoncé

• Bank of America's Sell Side Indicator — which tracks Wall Street's bullishness toward stocks — rose to 56% in September, its highest since the coronavirus pandemic began.
• The reading signals an 11% gain for the S&P 500 over the next 12 months, the team led by Savita Subramanian said.
• In past instances when the gauge sat this low, returns over the next year were positive 94% of the time, they added.
• Past election seasons also saw sentiment usually increase in November and December, according to the bank.
• Visit the Business Insider homepage for more stories.

After months of virus fears, record-breaking rallies, and unprecedented stimulus, Wall Street's outlook for stocks is back to its pre-pandemic norm.

Bank of America's Sell Side Indicator — which measures stock bullishness among Wall Street strategists — climbed to 56% in September, its highest since the coronavirus crisis began. The gauge latest reading sets a 12-month S&P 500 target of 3,734, implying an 11% return for the benchmark.

The reading remains in the same "neutral" territory it entered in 2016. The bank's "buy" threshold, fell slightly to 51.4%, while the level when it recommends selling shares fell to 60.7%.

Read more:US Investing Championship hopeful Evan Buenger raked in a 131.9% return through August. He shares the distinct spin he's putting on a classic trading strategy that's led to his outsize returns.

Bank of America's indicator has a strong record of forecasting near-term market gains. In past instances the gauge sat so low, returns over the next 12 months were positive 94% of the time, the team led by Savita Subramanian said. The median 12-month return in said instances is 20%.

The indicator's uptick comes as investors and strategists alike gird for election-season volatility. Though several firms warn that delayed election results could keep markets frothy for weeks, precedent suggests the months immediately before and after the election will see sentiment turn even more optimistic.

Read more:BlackRock's investment chief breaks down why Congress passing a second round of fiscal stimulus is 'quite serious' for markets and the economy — and pinpoints which sectors will benefit in either scenario

In the eight previous election seasons, sentiment improved in 75% of Octobers, 63% of Novembers, and 50% of Decembers, according to the bank.

However, the trend could spell out a bearish swing should the coronavirus prolong an outcome. The S&P 500 sank roughly 5% in 2000 between election day and when the Supreme Court decided on the race in December. With President Donald Trump hinting he'll contest a Biden victory, a similar plunge could emerge in the final months of 2020.

Now read more markets coverage from Markets Insider and Business Insider:

A portfolio manager who's outperforming nearly all of her peers this year shares 4 high-conviction stocks driving her strong performance across 2 funds

Penn National will nosedive 57% as weak fundamentals overshadow 'internet meme' rally, Deutsche Bank says

First blank-check ETF begins trading as SPAC euphoria continues

Join the conversation about this story »

NOW WATCH: A cleaning expert reveals her 3-step method for cleaning your entire home quickly

Goldman Sachs is picking up General Motors' credit-card business for a price tag of roughly $2.5 billion, The Wall Street Journal reported Thursday, as it doubles down on its push into consumer lending.

Goldman beat out UK-based Barclays for the deal, which gives it more than one million GM cardholders and the approximately $8.5 billion they spend annually, according to The Wall Street Journal.

Goldman and GM did not respond to requests for comment.

The paper initially reported in August that Goldman was looking to acquire GM's card business away from Capital One, which currently issues GM's three cards — the BuyPower Card, a business card, and a card for GM employees and suppliers — and has a year left on its contract.

According to Thursday's report, Goldman and Capital One have reached an agreement on the general terms of the deal, such as top-line price, and plan to finalize the details in the next few weeks.

Landing GM's card business would be Goldman's second co-branded consumer credit card and another significant step into the consumer-lending business, following its underwriting of the Apple Card, which launched in 2019.

On Wednesday, Business Insider's Dakin Campbell reported that Goldman has shuffled its divisions to create a new standalone consumer division that includes its Marcus lending unit. Strategy chief Stephanie Cohen and Tucker York, the head of its private-wealth business, will co-lead the new unit, which will be named the Consumer and Wealth Management Division. The changes will go into effect on January 1.

Join the conversation about this story »

NOW WATCH: Here's what it's like to travel during the coronavirus outbreak

Happy Friday!

A while back I wrote about Goldman's reported push to acquire General Motor's credit card. Turns out the bank sealed the deal, as reported by The Wall Street Journal.

It's the second co-branded credit card Goldman has nabbed, the first being Apple. The two cards seem to be made up of very different customer segments. It'll be interesting to see where the bank goes next as it continues to push a new image of itself as a friendly consumer bank. 

If you're not yet a subscriber, you can sign up here to get your daily dose of the stories dominating banking, business, and big deals.

Like the newsletter? Hate the newsletter? Feel free to drop me a line at ddefrancesco@businessinsider.com or on Twitter @DanDeFrancesco. 

SPAC power players

2020 has been the year of the SPAC, so it's only fitting we outline the biggest players in the space.

Dakin Campbell, Jack Newsham, and Alex Morrell did just that, outlining the bankers, lawyers and investors you need to know when it comes to so-called "blank-check" companies. 

While big names like hedge funder Bill Ackman, LinkedIn founder Reid Hoffman, and "Moneyball" star Billy Beane have drawn most of the attention, these are the people that play key roles throughout the SPAC ecosystem.  

Click here to read the entire story.

Join the conversation about this story »

NOW WATCH: How the Navy's largest hospital ship can help with the coronavirus

Starting a job at a Wall Street bank or prestigious private-equity firm might look different this year, but it's not to say what it takes to be successful at those institutions has changed fundamentally.

Getting in is one thing, but standing out in a sea of bright, competitive colleagues while learning about complex markets and products is another.

We asked this year's rising stars of Wall Street to give us their best advice for people just starting out.

Take a look at some of the lessons and insights they've learned along the way.

Read our full list of the rising stars of Wall Street shaking up investing, trading, and dealmaking.

Alex Tingle of UBS: Play the long game.

For Alex Tingle, a New York-based director at UBS's investment bank, a few pieces of critical career advice stick out to him.

He tells younger employees and people he mentors, "You've got to play the long game."

It doesn't mean each position has to be forever. But "even if you were coming into banking and don't think this is what you want to do for the long term, you should be coming into work every single day asking yourself, 'How is what I'm doing contributing to what I want to do long-term? How am I building that, and getting myself there?'"

He also feels strongly about remembering the importance of reputation — "Wall Street is incredibly people-driven"— and that it's important to have fun along the way.

"Even though I don't get excited about every single task that I do every single day of the week, I do try to approach my job from the standpoint of — I'm building something here, and I'm having a lot of fun along the way," he said.

Alexis Rosenblum of BlackRock: Sit at the table.

The best piece of advice BlackRock's Alexis Rosenblum ever received came from Barbara Novick, vice chairman and co-founder of the firm who formed its public policy group in 2009.

It was, "Sit at the table."

"That was something that she pointed out, that sometimes women tend to be the ones who sit on the side, and don't sit at the table — but that in order to demonstrate leadership, to be taken seriously as a leader, you have to sit at the table," Rosenblum said. "She always would look around to her team and say 'Get over here, you're sitting at the table.'"

Rosenblum, now the firm's first chief sustainability officer, joined the firm in 2010 and has spent most of her time with the firm on its public-policy team.

Alice Leng of Bank of America: Follow your heart.

"I would say, follow your heart. It's very important," Alice Leng, a machine-learning expert that helps give Bank of America's global markets division an edge, said, adding that she found inspiration in the book "The Alchemist" by Paulo Coelho.

Two lines from the book she called out as words to live by, reciting them from memory:

"Remember that wherever your heart is, there you will find your treasure."

"No matter what he does, every person on earth plays a central role in the history of the world. And normally he doesn't know it." 

Leng also emphasized the importance of living in the present, quoting "The Prophet" by Kahlil Gibran: "The timeless in you is aware of life's timelessness. And knows that yesterday is but today's memory and tomorrow is today's dream."

Daniel Costanza of Citigroup: Try to learn something new every day.

Daniel Costanza cited a former boss and mentor of his at Goldman Sachs for his favorite piece of life advice: Never stop learning.

"Every day, try and accumulate a little bit more stuff that you know in your corner, and that will, over the long term, integrate into a really broad set of knowledge," Costanza, the chief data scientist for Citigroup's investment bank, explained.

He added that a recipe for life success is to find a pursuit you enjoy, and surround yourself with "good people" throughout the journey.

"Each day, try to fully accomplish things that build toward the broader goals," he said, "and learn something along the way."

Danielle Cooper of Annaly Capital Management: Make sure that you're a champion to others as you climb.

Annaly Capital Management's Danielle Cooper said that the best piece of advice she ever heard came from famous novelist Toni Morrison:

"I tell my students, 'When you get these jobs that you have been so brilliantly trained for, just remember that your real job is that if you are free, you need to free somebody else. If you have some power, then your job is to empower somebody else. This is not just a grab-bag candy game."

Cooper said that the quote reminds her of the mentors she's had in the life that believed in her before she believed in herself. Now that she's in a position of power as a director in Annaly's corporate development and strategy group the quote reminds her to pass it on.

"First, you have to make sure that you have champions and cheerleaders, and then you have to make sure that you're a champion to others when you climb," Cooper said.

Jay Lipman and Doug of Ethic: Find aspirational characters and pay if forward.

Ethic president Jay Lipman said his best career advice boils down to one crucial act: find mentors who will inspire you. That may not be someone you have worked with directly, but someone who strikes you as an "aspirational character."

"People that you believe have led the path that you would like to live, and then try to understand how they achieve that — that may be a mentorship or relationship that you have with that individual, where you can ask them and get that relationship," or they could be through books and admiring great leaders from afar and learning about their lives, he said.

Doug Scott, the chief executive of Ethic, said he's tried to instill a culture of "paying it forward" at the company, where employees have a sense of helping others as they take on big challenges within the investing community.

"I think that's something that we did in the early innings of Ethic, and tried to continue that spirit throughout, because I think it does create that bond as well — beyond the sort of traditional business interactions with folks," he said.

Lipman and Scott formed Ethic, a New York-based asset-management technology startup that builds values-based investment products for firms and financial advisers, in 2015.

Frederick Baba of Goldman Sachs: Strive for excellence instead of perfection, and own up to your failures.

"Think strategically," said Frederick Baba, a managing director on Goldman Sachs' systematic market making team. "Identify the big, important themes. Be sensitive to nuance without getting bogged down by trivial details."

Character is also important, according to Baba, who has helped grow the SMM team into a standalone business with its own revenue line. "Strive to be calm, low neuroticism," he said. "Strive for excellence instead of perfection, and own up to your failures. Challenge ideas, especially your own."

Baba gained fame earlier this year when he wrote an email that went viral about his experience being Black in the wake of the Minneapolis police's killing of George Floyd. He wrote it as a way to express to the people around him what he was feeling.

To some degree, he was following his own advice: "Be an effective communicator. It's important to be as effective as you are 'right,'" he said. "Many of the problems worth solving in the world are complex, and being able to communicate your ideas allows you to build coalitions around large-scale solutions."

Jennifer Fo Cardillo of Fidelity: Build relationships with people you admire.

Fidelity small-cap fund manager Jennifer Fo Cardillo isn't a big fan of the term "networking"; she prefers to think of connections more as building relationships and friendships.

"One thing that's been really important throughout my career so far has been building relationships with people that I admire," Fo Cardillo said, adding that as a mentor now herself, she recalls what it was like being more junior and taking her own mentor's advice to heart.

"I was very fortunate to have an incredible female mentor who is just a total rock star," she added. "She took me under her wing and has been there to sort of shepherd me along each step of my career."

John Curtius of Tiger Global: Doing something you're passionate about.

Leading tech investor John Curtius believes in doing something you're passionate about. It makes work much easier and gives you staying power in a competitive space, he said.

Before he started his career in finance, he cofounded an investing club at Princeton called the Tiger Trust. After stints at Silver Lake and Elliott Management, Curtius joined Chase Coleman's Tiger Global in 2017, roughly a decade after starting the Tiger Trust in college.

Kelly Wannop of The Blackstone Group: Don't be scared to ask questions.

Private-equity executives have a reputation for thinking they're the smartest people in the room. But Kelly Wannop believes that to find success in the industry, you need to first demonstrate curiosity and be willing to ask questions — even of senior executives who may be a lot more seasoned than you.

"Everyone brings a unique perspective to the table," Wannop said. "I would encourage people to not be afraid."

Lacey Vigmostad Giliberto of Credit Suisse: Make the most of the opportunities in front of you.

Accepting that not every job you hold is going to address every single one of your passions is key to career and life advancement, Lacey Vigmostad Giliberto said, if you can make the most of the opportunity in front of you.

"When I was starting my career, I was asking myself the really big questions," Vigmostad Giliberto, vice president in syndicated loan sales at Credit Suisse, said.

"What am I going to do for the rest of my life? What is my true job passion? What is my long-term career going to be?"

But more important than getting bogged down in those questions is leaning into the experience and seeking guidance from the right group of people.

"It's about finding the right place/home to start your career," she said, "surrounded by the right people who are going to help you learn and challenge you."

Lauren Goodwin of New York Life Investments: Make sure to balance out the information you're taking in and always be yourself.

New York Life Investment economist Lauren Goodwin values taking in "slow reads" alongside the "quick reads" that so often prompt market moves, exercising different muscles that can translate into stronger decision-making about investments and other areas on the job.

"It's really important to read books rather than only reading the news. Too often our industry is driven by flash data and market moves, and we make decisions based on incomplete information and hasty timelines," she said.

Throughout her career, Goodwin has also placed a premium on someone's authenticity in the traditionally staid financial-services business.

"It might sound trite, but I think that being yourself for many people is your superpower in an industry that is still working to broaden its vision and diversify," she said.

Miles Toben of The Carlyle Group: Keep an eye out for opportunities.

The Carlyle Group's Miles Toben has found that building relationships while identifying opportunities is key to success in the investing world.

He raised his hand a few years ago to help Carlyle's credit unit build out its deal coverage with private-equity sponsors. 

As Carlyle's credit division has expanded over the past few years, his role leading its direct-lending group has become more important.

"What's allowed me to progress my career at Carlyle has been a combination of being part of a growing business — with growth comes opportunity. And, I'd say, taking advantage of some of those opportunities that have been presented to me."

Mir Subjally of Deutsche Bank: Be dynamic and flexible.

"The biggest thing is to make sure you work hard. But also to make sure you're dynamic and flexible," Deutsche Bank credit trader Mir Subjally said. "Things change quickly on Wall Street. You have to be really flexible and not too rigid on what you're thinking and doing."

He said that when he was still in college and pondering a career in finance, advice he heard frequently was that you have to have a ton of conviction and stand by it.

"That's all true, but you don't have to be stubborn about it. You also have to recognize that things can change really quickly and you have to be able to move with that as well."

Paul Kamenski and Robert Lam of Man Group's Man Numeric: Learn to code but also learn to be creative.

The two people leading quant efforts in the credit space at Man Group, the world's largest publicly traded hedge-fund manager, are Paul Kamenski and Robert Lam.

Kamenski, who has been with Man Group since he graduated from graduate school, believes that programming is an "incredibly powerful tool."

Data is important to every business, but being able to program and code is a gamechanger, he added. "Get as much programming experience as you can."

As for Lam, his suggestion is to "rely heavily on creativity." The further you go in your career, the more creative you're going to have to be.

Lam, who has done stints at firms like Deutsche Bank and Apollo before joining Man, added: "There's not always going to be a proven solution, and that's part of the process — and part of the fun."

Philip Dobrin, 34, Bridgewater Associates: Build an independent worldview.

Bridgewater's Phil Dobrin believes that beating the market is really about "having views that are divergent from the consensus, and that are more right than wrong."

Dobrin, a part of the strategist team that interfaces with the hedge fund manager's large institutional clients, is all about forcing yourself to have an "independent worldview, and not get caught in groupthink."

"You're going to be wrong, and it's going to be painful, and you're going to be right occasionally, and you have to be humble," he said.

Rachel Dwyer of Apollo Global Management: Pay attention and be ready to act.

Rachel Dwyer has had an active year on the trading desk in Apollo Global Management's credit division. She's found that you need to be flexible when it comes to being a trader at a top investment firm.

"In this seat, your job changes every day," Dwyer said. "There are different headlines, different deals."

Dwyer says you need to be able to pivot and adjust quickly.

"Always have your head on a swivel," she said. "You have to have your ears open with everything. Pay attention to what everyone is saying. Form your own opinions."

Rachel Murray of Moelis: The more you put into it, the more you get out of it.

"What you put into it is what you get out of it," Rachel Murray, a VP in Moelis' recapitalization and restructuring group, said.

"The more exposure you get and the more responsibility you take on, the more you'll learn. Instead of sitting on the sidelines and waiting for someone to hold your hand, dive in and take the opportunity to learn and grow along the way."

Rayhaneh Sharif-Askary of Grayscale Investments: Take your time to do things properly.

While Grayscale Investments' Rayhaneh Sharif-Askary has been fortunate to have had her fair share of mentors over the years, one person has given her the best advice: her mother.

Two tips were regularly shared throughout Sharif-Askary's childhood.

"You should always take your time and do things properly in an organized fashion the first time, because it will save you time and the headache later," she said.

"The other one is to understand the reasoning behind something. Always ask why. Why are you being asked to do something? What is the bigger picture?"

Shaan Tehal of Morgan Stanley: Put the same amount of passion into life and work.

Shaan Tehal's best piece of advice for life is to avoid putting your personal life and career into silos. Instead, consider them with equal importance and see them as equal parts of your life — not separate, but complementary.

Tehal, vice president in global technology investment banking at Morgan Stanley, said: "If you care about your clients, you're going to want to get the best outcome for them no matter what, break down doors for them. If you care about your colleagues you're going to care about how they are and you're going to see them as family."

"If you care and you really get passionate about those things," he said, "that will get the best results out of everyone."

Sharo Atmeh of Alyeska Investment Group: Stay open to new ideas.

"Life doesn't always throw you a perfect pitch," said Sharo Atmeh, an analyst on M&A and special situations at Chicago hedge fund Alyeska Investment Group. Atmeh graduated from undergrad in 2007, and the world went through massive changes while he was in grad school.

"Keep a learning-and-growing mentality, and people will present opportunities to you to fit that mindset."

Victor Perez of Wells Fargo: Remember you're in the people business.

Wells Fargo's Victor Perez said it's important for people in finance not to lose sight of what makes the world, and the industry, go round: people.

"Don't forget that this is a people business, and at the end of the day, the most important part is the people," Perez said. "In finance people kind of think, 'Oh, it's always about making money ... and yes, it's a huge part of our business, making money, I won't deny that.

"But the relationships are what lead to making money, and if you're not building those relationships and nurturing those relationships, things are going to fall apart."

Perez also encourages people to get involved in their communities and give back.

"For me, this has been through Veterans on Wall Street, Team Rubicon, Veterans Bridge Home, and Patriot's Path," he said.

Vlad Moshinsky of Miller Buckfire: Pay attention to what makes your superiors successful.

"The No. 1 piece of advice I'd give is to look at the senior partners of whatever firm you join. Take a look at what makes them successful, understand how they interact with clients, and how they go about working within a team dynamic," Miller Buckfire's Vlad Moshinsky, who has been involved in some of the US's largest bankruptcies while with the firm, said.
 
He added: "My approach is to think about it as a career and not to think about it as a job. Even if you have other aspirations to go to another organization or industry, always think about it as a career. The things I do here will stay with me no matter where I go."

Will Boeckman of Citadel Securities: Relationships are your biggest asset.

Will Boeckman, Citadel Securities' US head of electronic sales for fixed-income assets, emphasized the importance of forming and preserving relationships. Relationships are everything, whether it's a manager, a trader, one of your clients, he said.

"Those relationships are your biggest asset. Obviously skills and talents are important, but especially when you're starting off and growing within the industry like I am, the contacts you make as an analyst at the junior level grow with you and become future industry leaders."

Happy Saturday!

Special-purpose acquisition companies — aka "blank-check" companies — are having a moment on Wall Street. The investment vehicles have raised more than $40 billion already in 2020. Just this week, Playboy joined the frenzy with plans to go public via a SPAC merger, and a new SPAC ETF started trading. 

The development of the SPAC market over the past few years is often credited to sponsors of the vehicles — the people who launch them in return for a stake in the merged company once the SPAC has found a willing seller. But there's also an entire ecosystem of advisers, salespeople, and lawyers increasingly pitching blank-check companies to investment platforms and wealthy people.

Dakin Campbell, Jack Newsham, and Alex Morrell took a look at the power players who are helping drive the SPAC boom. You can read the full story here: 

16 bankers, lawyers, and capital providers helping engineer a $40 billion blank-check craze that's fast-tracking companies to public markets

More below including this year's rising stars of Wall Street, our exclusive Goldman Sachs org chart, a deep-dive on Simon Property Group CEO David Simon, and details on layoffs at KPMG. 

Meet 2020's rising stars of Wall Street 

From helping launch game-changing groups to having a hand in restructuring entertainment giants like AMC, BI's rising stars stood out as the leaders for tomorrow.

In addition to being at the top of their class, these finalists are also trailblazing in new areas like data science and machine learning, executing on sustainability goals, and paving the way for a more diverse and equitable workforce by speaking out and taking part in recruiting efforts.

You can see our full list here. The rising stars also shared their best career advice —you can check that out here.

How real-estate titan David Simon is reshaping America's malls

Simon Property Group CEO David Simon has for years reached beyond his core business, buying retailers that occupy his company's mall spaces and branching out into other areas like e-commerce in an effort to embrace change.

Dan Geiger spoke with more than a dozen people who know and have worked with Simon to learn more about the press-shy mogul and his efforts to turn around a moribund retail industry. 

Here's how Simon is facing a make-or-break moment with a $2 billion bet on troubled JCPenney.

The power structure at Goldman Sachs

Goldman Sachs announced on Tuesday that it was shaking up its divisions and creating new units for consumer and wealth management as well as asset management. Those changes will take effect Jan. 1. 

But even before that, Goldman CEO David Solomon had made significant changes to the company's leadership team, including expanding the size of the management committee, moving a number of senior executives into chairman roles, and solidifying reporting structures. 

Dakin Campbell mapped out more than 100 of the bank's top execs. You can see the existing power structure here.

KPMG axes jobs across tax, audit, and advisory 

As Samantha Stokes reported this week, KPMG is the latest professional-services firm to lay off employees or reevaluate pay as the coronavirus pandemic has upended the economy and caused clients to rein in spending.

We have all the details, including how KPMG is also cutting some tax workers' pay.

JPMorgan inks a deal to let airlines and hotels tap their loyalty programs for capital

As Dan DeFrancesco reported this week, one of the top investment banks in the world is partnering with a startup that helps companies use their loyalty programs to raise capital from institutional lenders. 

Here's why it's a game-changer for cash-strapped companies.

Careers

• Here's how much investment-banking associates at Morgan Stanley, Goldman Sachs, JPMorgan, and other big banks are getting paid
• Wall Street's rising stars from firms like UBS, Fidelity, and Apollo share their best career advice
• Inside this year's private-equity drama: how one PE headhunter went rogue on a pact made by the industry's power players to delay recruiting young talent

Banking

• A Morgan Stanley trading desk headed up by a former NFL quarterback played a central role in Palantir's and Asana's public debuts

Real estate

• Donald Trump has for years been pressuring one of New York's largest landlords for the chance to cash out a $800 million stake in 2 skyscrapers

Fintech

• The 21-page deck that Crowdz, a startup that helps small businesses finance their invoices, used to nab an extra $2 million during a 'perfect storm' for growth
• TikTok megastar Charli D'Amelio just partnered up with a digital bank for teens backed by Nas and Will Smith. Here's how the startup is trying to grab Gen Z's attention.
• Inside the regulatory turf war over red-hot payments startups that has the big banks and the OCC at odds with each other
• Gusto, a $3.8 billion small-business payroll startup, is muscling in on fintechs like Earnin by adding a feature to let workers get paid early
• $4.3 billion Marqeta is targeting a wider range of customers for its digital cards with a new 'tokenization-as-a-service' push
• $7.1 billion Credit Karma is launching its first checking account, and execs think the new offering could be a key data source for recommending loans

Alt data

• Wall Street's interest in geolocation data has never been higher thanks to the pandemic. 7 alt-data experts explain how it's used and what comes next.

Legal

• New York's top judge is sticking with an online bar exam even as complaints of tech issues mount and other states let law grads skip the test and still practice law
• We're tracking which top law firms are delaying their first-year associate classes. Here's what you need to know about new start dates, pay, and benefits.

Odd lots

• Rent the Runway CEO Jennifer Hyman, one of the most successful female founders, is fighting to save her company
• Red Bull names its first Black CMO and shakes up its marketing team after internal Black Lives Matter controversy
• Meet the man who hooks up ultrawealthy Americans with the 2nd passports they need to leave the country. An island in the Caribbean is his most in-demand location.
• 30 young leaders who are forging a new future for healthcare in the pandemic's shadow

Join the conversation about this story »

NOW WATCH: Why NASA won't send humans to Venus

After previously vowing to hold off on layoffs during the pandemic, some of the biggest global banks have been reversing course and announcing job cuts.

When the pandemic first started to upend global markets and trigger furloughs and layoffs across industries earlier this year, millions of people suddenly found themselves out of work. But some bank executives reassured staff that they'd postpone their standard annual cuts and restructuring.

Goldman Sachs CEO David Solomon told Bloomberg TV in June that his firm had abstained from 2020 job cuts "because it hasn't been appropriate."

Read more:Here's who's most at risk once Wall Street kicks off the tidal wave of layoffs many banks had put on pause

And in August remarks, Noel Quinn, HSBC's CEO, said that "it would have been wrong to proceed with job losses at a time of significant stress for our people and communities" during the first few months of the pandemic, but that the bank had resumed cost-cutting as of the summer.

"Many countries have slowed the spread of the virus and are emerging from lockdown," he said, "and we have adapted to new ways of working."

"I therefore decided in June to lift the pause on redundancies," he added.

HSBC is not alone in pivoting back to cost-cutting. In recent weeks other firms have decided to once again proceed with cost-saving plans: Giants like Goldman, JPMorgan Chase, Deutsche Bank, and Wells Fargo have all moved forward with cuts. 

Meanwhile, the global economy has yet to regain much of the strength that it lost earlier this year. The International Monetary Fund has predicted a sharp contraction in global economic growth by nearly 5% for the year, and jobs numbers in the US illustrate the deep malaise that is underpinning recovery efforts.

The Bureau of Labor Statistics said on Friday that the US economy had gained 661,000 jobs in the month of September. That's nearly 200,000 jobs short of economists' expectations. And while the unemployment rate continues to decline from April's high of 14.7% — September saw it dip to 7.9% — it's still elevated versus 3.5% in February.

Business Insider is closely monitoring financial firms that are cutting jobs. Below, we've rounded up the latest announcements from top firms, and will continually update this list.

Have a tip on finance industry cost-cutting or job reductions on Wall Street? Contact this reporter confidentially at rhodkin@businessinsider.com, via the encrypted app Signal at (561) 247-5758, or direct message on Twitter @reedalexander. 

SEE ALSO: Here's who's most at risk once Wall Street kicks off the tidal wave of layoffs many banks had put on pause

SEE ALSO: We mapped out the top 350 Wall Street headhunters who are recruiting talent for trading, dealmaking, and investing jobs

SEE ALSO: Wall Street is getting back to work. Here are the latest return-to-office plans for 6 firms, including JPMorgan, Bank of America, and Citi.

HSBC

Europe's largest bank by assets has previously said it would cut as many as 35,000 jobs, and a spokesperson for HSBC confirmed that plan remains on track.

"We would expect our head count to decrease from the current level of 235,000 to be closer to 200,000" by 2022, the representative told Business Insider in an email.

These cuts were in the works since before the pandemic consumed much of the US and Western Europe. In February, HSBC first warned that they were coming, and by August, Noel Quinn, the firm's CEO, shed more light on the bank's shifting plans in remarks that were published in an HSBC report.

"We are moving forward with these plans wherever we can. We have already begun combining our wholesale back office operations, and brought our retail, wealth and private-banking businesses together in a single global business — Wealth and Professional Banking," he said. "Our US businesses has reduced its branch footprint, and Global Banking and Markets has made good early progress in reducing its risk-weighted assets."

Quinn noted in his remarks that he paused the job-culling efforts in March as "it would have been wrong to proceed with job losses at a time of significant stress for our people and communities, and at a point when we needed to protect our capacity to serve our customers."

But by late summer there was a shift back to restructuring. The executive explained that "we intend to accelerate implementation of the plans we announced in February," saying that HSBC would need to consider "additional actions ... in light of the new economic environment."

JPMorgan Chase

Last week, JPMorgan Chase initiated a small round of cuts in its consumer businesses group, a sector that covers consumer banking, home landing, and credit cards. 

Bloomberg first reported the cuts on Wednesday, noting that they included 80 jobs within the consumer group, "and dozens more across other lines of business."

A representative for JPMorgan Chase told Business Insider that the firm has given those individuals the chance to apply for other roles in the company. All of the employees were given at least a month's notice to decide if they wanted to reapply or depart altogether.

The cuts were not triggered by the coronavirus, the spokesperson said, but instead by other business considerations as it determines its "priorities for the year."

The consumer group has faced several cuts throughout 2020. In January, it was hit with several hundred losses, Bloomberg reported. 

Reuters previously reported that JPMorgan had cut roughly 100 jobs across the consumer banking, commercial banking, and corporate and investment banking divisions in July. 

Citigroup

In a statement to Business Insider, a spokesperson for Citigroup confirmed that the bank "is moving forward with a limited number of staffing reductions, impacting less than 1% of our colleagues globally." For context, Citigroup employs more than 200,000 people.

The spokesperson additionally noted that the cuts are spread across regions, businesses, and functions, as opposed to impacting front- or back-office workers exclusively. 

But, the spokesperson added, the firm has also invested in hiring efforts throughout the year too, employing more than 26,000 people during the course of 2020. One-third of those individuals, the bank said, are in the US.

"We expect the overall size of our firm to remain about the same when the impact of these changes, natural attrition and ongoing hiring since the start of the year are all taken into account," Citi said in its statement.

A Citigroup representative told Business Insider that the company had not previously committed to a total moratorium on job cuts through 2020, even though Reuters previously reported in March that Citi's CEO Michael Corbat "ordered a suspension of any planned staff cuts," citing "a person familiar with the matter."

Now, as the cuts are being implemented, the bank said that "we will do our best to support each person, including offering the ability to apply for open roles in other parts of the firm and providing severance packages."

Bloomberg first reported in September that Citi would implement its job-cutting plans.

Wells Fargo

A spokesperson for Wells Fargo confirmed in a statement to Business Insider that the bank is moving forward with restructuring and job-cutting plans across "nearly all of our business lines and functions" in "most geographies."

"We are the beginning of a multiyear effort to build a stronger, more efficient company for our customers, employees, communities, and shareholders," the statement said. "The work will consist of a broad range of actions, including workforce reductions, to bring our expenses more in line with our peers and create a company that is more nimble, streamlined, and customer-focused."

The statement went on to add that the bank had put a pause on cuts in March and "through the initial months of the pandemic," but that Wells Fargo made the decision to forge ahead with the reductions in August. The spokesperson said that the firm does not have a target for how many jobs could be culled.

But previous reporting has painted a picture of what could ultimately become a sweeping wave of cuts at the bank.

As many as 50,000 to 66,000 jobs could be slashed at Wells Fargo in 2020 and 2021, according to Pensions & Investments, which reported in September that the bank had begun notifying layoffs in August that their jobs would conclude in October. 

In the extreme case that as many as 66,000 people would ultimately be laid off, that would equate to nearly 25% of the firm's 266,000 employee-strong workforce, Pensions & Investments reported, citing unnamed sources.

Read more: Wells Fargo execs are setting their sights on $10 billion in cost-cuts, putting layoffs and branch closures on the table. Here's how it could play out.

Deutsche Bank

In September, Philipp Gossow, an executive who oversees Deutsche Bank's retail branches in Germany, told Reuters that his firm planned to shut down 100 physical branches in the country — equating to one-fifth of its consumer banking presence in Germany. 

In 2019, the German bank had said it would cut as many as 18,000 jobs in order to streamline its operations, but a source with knowledge of the situation told Business Insider that those job cuts will be primarily be in the consumer banking space, and, going forward, likely will not affect Deutsche's front-office or investment-banking professionals. 

In the US, the source said, Deutsche has no plans for future cuts or restructuring at this time. 

Goldman Sachs

Though Goldman CEO David Solomon had previously said that job-cutting plans were out for 2020, the firm has reversed course in recent days, indicating this week that it's moving to reduce headcount by roughly 400 positions, Bloomberg first reported in late September.

The move will trim its global workforce by roughly 1% of staff, Bloomberg noted.

"At the outbreak of the pandemic, the firm announced that it would suspend any job reductions," a spokesperson for Goldman Sachs told Business Insider in an emailed statement. "The firm has made a decision to move forward with a modest number of layoffs."

Morgan Stanley brought together five separate equity research teams to understand which European activity-based stocks damaged by the pandemic were still discounted for a post-COVID recovery, in a new research note released this week.

The investment bank is thinking ahead to recovery based on its biotech team expecting phase three vaccine results by November and a "broadly available vaccine" toward the end of the first quarter in 2021.

"Once a vaccine is widely available, we expect mobility to pick up significantly and activity-based stocks to benefit," said Morgan Stanley's equity analyst, Jamie Rollo, in the report.

The new research report finds that broadly most activity-based sectors seem cheap when comparing the 2022 EBITDA forecast to historic results.

Despite most sectors appearing cheap, Morgan Stanley recommends investors think about individual stocks instead of sectors.

"The bifurcation between winners and losers within sectors is arguably best exemplified within retail – in aggregate, the sector has been a strong outperformer this year, but this largely reflects single-stock stories," Rollo said.

Sector stock picks

Here are some of the stocks Morgan Stanley recommends considering and avoiding within each sector for a post COVID-19 recovery.

Leisure & Hotel Stocks

1) Sodexo

Ticker: SW

Recommendation: Overweight

Category: Food Services

Analyst Commentary: "While home working/learning and food delivery weigh heavily on investor sentiment, we think this mostly affects office catering, which is only 10-20% of the companies' business. Around half of Sodexo's profits are derived from relatively resilient support services and vouchers."

Source: Morgan Stanley Research

2) Basic-Fit

Ticker: BFIT

Recommendation: Overweight

Category: Fitness

Analyst Commentary:  "Basic Fit (Overweight) trades at 7.3x 2022 EBITDA, roughly 1x higher than SATS (Equal-weight) , but well below its historical average of 11.4x. We think a valuation premium is warranted given Basic-Fit's rapid roll-out plan, well located club network, low-cost proposition, modern estate and solid liquidity."

Source: Morgan Stanley Research

3) Whitbread PLC

Ticker: WTB

Recommendation: Overweight

Category: Hotels

Analyst Commentary: "We prefer Whitbread within our Hotels coverage (domestic, budget, well invested hotels, asset backing)."

Source: Morgan Stanley Research

4) Carnival PLC

Ticker: CCL

Recommendation: Underweight

Category: Cruises

Analyst Commentary: "We think that the general concept of cruising (thousands of passengers in a confined indoor space for a long duration) means this will be the last travel industry to return to normal; and that when it does, demand will take some time to recover (one-third of passengers are new to cruises every year, cruise passengers tend to skew older, and negative headlines around the cruise industry during the COVID-19 pandemic will impact demand."

Source: Morgan Stanley Research

5) William Hill PLC

Ticker: WMH

Recommendation: Equal-weight

Category: Gambling

Analyst Commentary: "The gambling stocks trade at an average 11.5x 2022 EV/EBITDA, on our estimates, a little below their 5-year historical average of 11.8x and over a turn above the 10.3x seen at the beginning of 2020. Gambling has been the strongest sub-sector in our Travel & Leisure coverage, with share prices up 40% YTD."

Source: Morgan Stanley Research

Airline Stocks

1) Ryanair

Ticker: RYA

Recommendation: Overweight

Category: Airlines

Analyst Commentary: "We prefer Ryanair and Wizz (both Overweight) at current levels, trading at a c25% discount to their EV/EBITDA average; with good growth prospects, we find the risk/reward for both names more attractive."

Source: Morgan Stanley Research

2) Wizz Air

Ticker: WIZZ

Recommendation: Overweight

Category: Airlines

Analyst Commentary: See comment above

Source: Morgan Stanley Research

A recent article from Business Insider breaks down Morgan Stanley's thoughts on Ryanair and Wizz Air in depth as well outlining the European airline stocks to avoid for a travel recovery.

Business Services Stocks

1) Applus Services SA

Ticker: APPS

Recommendation: Overweight

Category: Inspection & Testing

Analyst Commentary: "By comparison, Bureau Veritas trades below its peak multiple and Applus (Overweight) is trading 5% below its 5-year average. These differences are seemingly less a function of COVID-recovery speed and more an indication of scarcity value, balance sheet strength and dividend yield – hence, the need to be selective within each sub-sector is of paramount importance."

Source: Morgan Stanley Research

2) Eurofins Scientific Group

Ticker: ERF

Recommendation: Equal-weight

Category: Inspection & Testing

Analyst Commentary: "In particular, we believe Eurofins (Equal-weight), which is generating abnormal profit from providing COVID-19 testing lab capacity, is priced for COVID-19 revenues to recur in perpetuity to some degree. As expectations are recalibrated for a widely available vaccine in 1Q21, we would expect the strongest performers of FY20, which continue to be priced for abnormally high growth, to retrench."

Source: Morgan Stanley Research

Media Stocks

1) Stroeer SE & CO. KGAA

Ticker: SAX

Recommendation: Overweight

Category: Advertising

Analyst Commentary: "Of [the advertising] group, we see Outdoor, riding on the coattails of digital share gains, as the major beneficiary of share shift. The performance of the two stocks has been intriguing, with Stroeer (Overweight) substantially outperforming JCDecaux (Equal-weight) YTD. Stroeer's advantages are that its operations are basically in one country, Germany, whose economy is forecast to see one of the lowest dips in activity and fastest recoveries."

Source: Morgan Stanley Research

2) Pearson PLC

Ticker: PSON

Recommendation: Equal-weight

Category: Education

Analyst Commentary: "For Pearson (Equal-weight), COVID-19 has impacted physical sales in its North American courseware business, where existing structural pressures are exacerbated by a potential fall in the number of students. The disruption has also impacted the operation of Pearson's testing centres globally. On the positive side, the disruption has led to accelerated interest in the take-up of digital education techniques, which should benefit Pearson's higher multiple online programme management and virtual schools businesses."

Source: Morgan Stanley Research

Retail Stocks

1) Marks and Spencers Plc

Ticker: MKS

Recommendation: Overweight

Category: Retail

Analyst Commentary: "M&S (Overweight) also screens cheaply, trading at more than a 50% discount versus history."

Source: Morgan Stanley Research

2) H&M

Ticker: HM-B

Recommendation: Underweight

Category: Retail

Analyst Commentary: "We also believe H&M and Inditex (also Underweight) should trade at a further discount given that both were going ex-growth in our view, even prior to the pandemic and that, once COVID-19 is over, they will be over-space."

Source: Morgan Stanley Research

Join the conversation about this story »

NOW WATCH: Why some Hong Kong skyscrapers have gaping holes

The November election will determine whether our economy for the next four years will benefit working people like me or continue to enrich Wall Street millionaires. 

We already know what four more years of a Trump presidency and Republican agenda will mean: more deregulation and tax breaks for the wealthy, which only make it harder for working families like mine to put food on the table. 

So I was eager to hear from Joe Biden and his campaign when the Democratic National Convention came to my home state of Wisconsin last month. Hearing Democrats talk about building a fair economy for all, including for essential workers like myself, was a stark contrast to what we've seen and heard from President Trump and his fellow Republicans. But while the Biden campaign introduced a number of platforms to put working people first, it became clear to me that there are not yet enough concrete and permanent solutions to fight back against Wall Street's rampant greed, which is only growing during this pandemic.

Democrats, be a party that actually stands up to Wall Street.

During the Trump Administration, I was one of thousands of Shopko employees throughout the Midwest who were left unemployed, uninsured and struggling to make ends meet when Shopko was purchased by a private equity firm and bankrupted last year. 

As the New York Times revealed , wealthy investors like Carl Icahn are exploiting the coronavirus crisis to literally make money off of the demise of people's jobs and livelihoods. They're calling it the "Big Short 2.0." Instead of betting on the housing crash, as they did in 2008, Wall Street executives are betting on the demise of malls. 

It's clear Republicans will give a pass to the Big Short 2.0. The ball is now in the Democratic Party's court to demonstrate that it will chart a different course. 

However, Democrats must go beyond lip service, and offer real solutions and policies that will rein in Wall Street. Unfortunately, that was all but missing in last month's convention. 

And yet, in the Democratic party's national 2020 policy platform, Wall Street was mentioned just four times — including once in the table of contents. There is not a single mention of the pain that private equity firms inflict on our communities, as Sun Capital did with Shopko in Wisconsin, or a plan to relieve that pain  and rein these firms in. The Wall Street Journal even noted corporate America's "sigh of relief" when Senator Kamala Harris was added to the Democratic presidential ticket. 

The demise of Shopko, where I worked and found community for 14 years, is a classic example of why Wall Street is the enemy of working people. 

For more than a decade, Shopko offered me and my coworkers not just a paycheck, but a family. We were proud to work at a company that was founded in Green Bay and served Wisconsin families. 

But when Sun Capital Partners, a Florida-headquartered private equity firm, bought out Shopko in 2005, that community and my financial security were ripped away. No matter how successfully we ran the business, Sun Capital's apparent intention was not growth but profit, and they made that profit by ruining people's lives.

Over the next decade, Sun Capital executives drowned Shopko in nearly $1 billion in debt. They pushed the store into bankruptcy, leaving more than 14,000 employees desperately searching for a lifeline. Even during Shopko's liquidation, Sun Capital executives continued to collect: In total, Shopko executives paid themselves nearly $67 million in dividends and fees. My coworkers and I were offered nothing.

When Sun Capital finally shuttered Shopko's doors, they also broke commitments to Shopko workers by failing to distribute once-promised severance payments, leaving many in utter financial distress. Sun Capital pulled the same move on the state of Wisconsin, when it skipped out on $8 million in sales tax payments.

Astonishingly, Sun Capital isn't the only culprit in destroying the lives of working families and crippling our economy. Since 2009, private equity firms have destroyed over 1.3 million jobs by bankrupting retail companies and stripping them for parts. Many of the brands you used to shop at — from Toys 'R' Us, to Payless ShoeSource, Sears, and ArtVan — were destroyed the same way. In nearly all cases, workers were left with nothing. 

Even our hospitals and nursing homes are being taken over by Wall Street, leading to major staffing cuts and unsafe conditions during the ongoing COVID-19 pandemic.

As the Big Short 2.0 shows, action is urgently required, and that's why former retail employees have come together with United for Respect, a multiracial national nonprofit organization fighting for bold policy changes that improve the lives of people who work in retail, to fight for and win severance pay and demand legislators establish common sense rules for private equity firms.  

Without a specific plan to combat Wall Street's excesses and greed, the Democrats' vision for a just and fair economic recovery — and their outreach to working people like me in this election — needs improvement. They can start by adopting the Stop Wall Street Looting Act (SWSLA) in their party platform, which was introduced by Sen. Elizabeth Warren and Rep. Mark Pocan last year, and would rein in the most harmful private equity tactics.

SWSLA would accomplish this by ending Wall Street's immunity from the debts, legal liabilities, and legal violations they pile on companies after they buy them out and gut them. SWSLA would also end the federal tax benefits for private equity firms which encourage their excessive use of leveraged buyouts. And in the event of company bankruptcy, like what we experienced at Shopko, SWSLA would ensure that private equity firms like Sun Capital Partners cannot just cut and run on their paycheck, severance, and pension obligations to employees. 

It bears repeating: Democrats, be a party that actually stands up to Wall Street, and offer concrete and permanent solutions to fight back against Wall Street greed, because the strongest economic recovery — one that provides paid family leave, affordable health care and financial security— will be the one led by working people, not Wall Street.

SEE ALSO: Social-media platforms are undermining our democracy. Lawmakers need to step up and protect it.

Join the conversation about this story »

NOW WATCH: How waste is dealt with on the world's largest cruise ship

Welcome back.

If you're not yet a subscriber, you can sign up here to get your daily dose of the stories dominating banking, business, and big deals.

We are also looking for nominations for our first-ever Rising Stars of Real Estate. Get all the details on how to apply here.

Like the newsletter? Hate the newsletter? Feel free to drop me a line at ddefrancesco@businessinsider.com or on Twitter @DanDeFrancesco. 

Dan the man at D1

Not many people on Wall Street have had a run as good as Daniel Sundheim in recent years.

As founder and chief investment officer of D1 Capital Partners, Sundheim has had a string of big wins. D1's public-equity portfolio, which launched about two years ago, is returning more than 78% after fees. 

Bradley Saacks and Alex Morrell wrote this fantastic profile of Sundheim, talking to a dozen college classmates, coworkers, and people who've invested with him.  

Click here to read the entire story.

Join the conversation about this story »

NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid

The coronavirus pandemic has played a key factor in forcing payments to move online. And as more transactions happen digitally, more focus is given to speed. 

Real-time payments have exploded during the pandemic, according to FIS' 2020 Flavors of Fast report. In markets like Australia, India, and the Philippines, real-time payment volumes more than doubled this year.

India processes the most real-time payments globally. But that's largely due to the fact that the country doesn't have a massive legacy payments infrastructure like the US.

In the US, changes to the back-end tech takes time and buy-in from countless parties. But that hasn't stopped faster payments from catching on. Currently in the US, more than 130 financial institutions are implementing real-time payments, a five-fold increase since September 2019, according to the report.

"There is massive infrastructure in the US in both financial institutions and in corporations," said Laura Sullivan, a product manager at FIS responsible for ACH, wire, and real-time payments in North America. "All of that existing infrastructure was geared in, and frankly worked fairly well."

Read more: Top fintech investors see a big opportunity in disrupting how people and companies pay their bills. Here are 8 startups on the verge of breaking out.

Shifting away from a system that gets the job done is a tall ask in an industry as large as payments.

"All of that investment in monolithic, older technology systems are very hard to replace," Sullivan said. "Banks were a little reluctant. I think there was certainly some fear of cannibalization of their existing payment streams."

But FIS, a financial technology giant and one of the key players in the payments space, believes there will always be use cases for different payment streams. Adoption of real-time payments makes sense in certain areas.

In the US, there are three groups leading the way toward real-time payments.

The Clearing House, a funds-transfer and settlement system launched in 2017 and used by the biggest banks in the US, is one. There's also Zelle, a peer-to-peer service offered by the big banks themselves. And the Federal Reserve is currently developing its FedNow payments infrastructure, slated to launch in 2023 or 2024.

Here are a few of the ways real-time payments are taking off in the US.

For businesses, real-time payments can be a CFO's dream

Payments have historically been a pain point for businesses large and small. Every business manages their payables and receivables differently, and that often leads to loads of manual work when it comes time to reconcile the books. 

What's more, the delay for a supplier to get paid or the cash held back to meet unpredictable end-of-month expenses means businesses don't often run as lean as they could.

"With things like bill pay, they are really going to start to see the value of [real-time] payments," Sullivan said. 

See more: The 21-page deck that Crowdz, a startup that helps small businesses finance their invoices, used to nab an extra $2 million during a 'perfect storm' for growth

Businesses often manage their expenses in monthly cycles. For a particular vendor, companies will hold back cash throughout the month and then lump several, if not hundreds, of invoices together and make one payment at the end of the month.

And while that's easier for the payer, it can make reconciliation a bit of a nightmare for those receiving payments. It often requires manual intervention to make sure the payment is accurate. 

With real-time payments, companies could more easily pay invoices on a regular basis, reducing the friction that comes each month-end.

Small businesses, too, could benefit. Getting paid more regularly for services rendered means a vendor can reinvest that income more efficiently.

"If I can pay [invoices] on a more real-time basis, I'm not losing use of my funds for any longer than I need to," Sullivan said, "but because I'm paying [invoices] individually, I lose all of that invoice reconciliation overhead, which, in a large corporate, is a significant amount of money."

Consumers will see benefits of real-time payments through P2P and payroll

Real-time payments infrastructure isn't a top concern for consumers, but the benefits of instant payments are already being felt in some areas.

Peer-to-peer payments through platforms like Zelle are growing in popularity. Venmo offers users the ability to move money from Venmo to their bank accounts instantly, too (albeit for a 1% fee capped at $10).

Another leading use case is payroll. In the gig economy, platforms like Lyft, Uber, and Instacart offer instant payouts to their workers.

"As we're seeing in the Uber and Lyft cases, their employees are demanding to be paid real-time, and we expect to see that trend continue even in some more traditional, non-gig economy payroll use cases," Sullivan said.

See more:Gusto, a $3.8 billion small-business payroll startup, is muscling in on fintechs like Earnin by adding a feature to let workers get paid early

And it's not just the gig economy.

Fintechs like Earnin and DailyPay have gained traction offering employees access to their earned wages between paychecks. And payroll companies like Gusto, as well as Square, now offer earned wage access to their employer customers.

Many of these platforms charge fees for instant transfers, but as real-time payments grow in popularity, free instant transfers could become the norm.

"For the most part, ACH has become a standard for payroll as customers have moved from being paid by check to getting paid by direct deposit," James Colassano, SVP of real-time payments product development and strategy at The Clearing House said in the report. 

"We didn't think that this was an area in the near term that a lot of organizations and companies would see as a place to start with real-time payments, but we've seen a lot of uptick in the short term," he added.

Read more

Demand for same-day pay is exploding amid record joblessness. Here are 4 startups that could benefit.

SEE ALSO: Top fintech investors see a big opportunity in disrupting how people and companies pay their bills. Here are 8 startups on the verge of breaking out.

SEE ALSO: Gusto, a $3.8 billion small-business payroll startup, is muscling in on fintechs like Earnin by adding a feature to let workers get paid early

Join the conversation about this story »

NOW WATCH: July 15 is Tax Day — here's what it's like to do your own taxes for the very first time

SEE ALSO: We mapped out Citi's 42 most powerful investment bankers. Here's our exclusive org chart.

SEE ALSO: Wall Street job cuts are back — here's the latest on what Goldman, Wells Fargo, JPMorgan, and other banks are doing

SEE ALSO: Wall Street is getting back to work. Here are the latest return-to-office plans for 6 firms, including JPMorgan, Bank of America, and Citi.

Join the conversation about this story »

NOW WATCH: What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence

Happy Saturday!

Just six days after Morgan Stanley closed on its all-stock E-Trade acquisition, the Wall Street bank said this week that it will buy Eaton Vance in a deal valued at $7 billion. 

Rebecca Ungarino took a look at why Morgan Stanley's bid for the storied asset manager gives it a leg up on rivals and signals more deals to come across the industry. She and Bradley Saacks also mapped out 4 asset-management firms that could be the next target as consolidation pressures mount and other banks likewise look for steady businesses to counterbalance more volatile activities like trading. 

If you're not yet a newsletter subscriber, you can sign up here to get your daily dose of the stories dominating banking, business, and big deals.

More below, including a performance roundup for big-name hedge funds, a deep dive on D1 Capital's Dan Sundheim,  and the latest on Wall Street job cuts. 

Enjoy the rest of the weekend!

Hedge fund winners and losers

After three quarters of chaos from the pandemic and upcoming election, hedge funds — on average — are where they started the year: flat. But individual performance is all over the map.

Stock-picking billionaires like Bill Ackman and Lee Ainslie are soaring while quants like Renaissance and Winton struggle. Bradley Saacks gave us a breakdown of how 13 big-name hedge funds are faring.

A day in the life of @MrsDowJones

Haley Sacks, 29, is an Instagram "finfluencer" who runs the @MrsDowJones account on Instagram (162,000 followers and counting.)

From debuting a clothing line to planning to roll out her own financial e-course, Sacks has developed a unique place for herself among the Wall Street and personal finance communities. She walked Business Insider's Reed Alexander through a typical workday. 

The rise of Dan Sundheim

Dan Sundheim has quickly become an investor to follow since launching his fund D1 Capital after working as the chief investment officer at Andreas Halvorsen's Viking Global. 

Bradley Saacks and Alex Morrell talked with a dozen of Sundheim's college classmates, coworkers, and people who've invested with him. Here's how a Wharton whiz kid became the LeBron James of investing, launched one of the hottest hedge funds on earth, and minted a billion-dollar fortune in the process.

Top law firms have been taking VC-style stakes in their own clients including Peloton and Snowflake 

Venture-capital-style investments by law firms and their partners go back decades. Investing in clients has always been somewhat fraught, with some legal-ethics professionals saying it can cloud a lawyer's professional judgment and lead to conflicts. That's why firms that do take a stake in clients often take a relatively small one and often just for part of the fees that they charge, with the rest paid in cash.

As Silicon Valley's growth has continued, recent public disclosures have made clear that the practice hasn't died down. Jack Newsham dug through SEC filings to map out dozens of these kinds of bets. 

Private-equity giants are racing to sell assets before year-end because they're worried about a bigger tax hit

Large private-equity firms are feeling pressure to sell assets before year-end to take advantage of a business-friendly tax regime they fear could change in 2021.

The thinking is that if Joe Biden is elected president and there is a Democratic majority in Congress, it will unleash a wave of larger taxes on corporations and wealthy individuals who manage them. And if Donald Trump remains in office, experts said that taxes may very well increase so that the government could fund COVID relief efforts. 

One private-equity insider told Casey Sullivan that, in some deals, "it's just time" to sell. But he noted that selling on Dec. 31 versus Jan. 1 "would be a big delta in tax leakage if you believe rates are going up."

Future of the office

• IBM released a request for proposals this week to the New York City real-estate market in search of an office of up to 500,000 square feet. The move comes as leasing activity has plunged and tenants hold an upper hand in lease negotiations, which could allow IBM to extract discounts. The new space will allow IBM to do more with less, catering flexibly to different functions and allowing workers to rotate in and out in a model that could become commonplace post-pandemic.  
• Large banks have put stakes in the ground over the issue of working from home versus returning to the office. "It's complicated, and it's different for everybody,"Goldman Sachs CEO David Solomon said in a recent town hall with employees, according to a partial transcript provided to Business Insider. "People have different obligations. I'd really like to encourage people to try to spend some time in office and try it out."

Careers

• Turnaround consultant AlixPartners is 'recruiting like crazy'. Its restructuring group leaders lay out how the firm is prepping for an influx of work and the benefits of virtual war rooms.
• Wall Street job cuts are back — here's the latest on what Goldman, Wells Fargo, JPMorgan, and other banks are doing
• Tech is coming to eat the $200 billion management-consulting industry's lunch. Here's a look at 4 factors disrupting how elite firms like BCG and McKinsey do business.
• 5 top law firms like White & Case and Mayer Brown run through their summer associate recruitment plans, from using '3D resumes' to interviewing students from lower-ranked schools

Fintech

• Real-time payments in the US have increased five-fold in the past 12 months, according to a recent FIS survey. From payroll to bill pay, here's how companies are using the tech.

Real estate

• Booming demand for lab space is a rare bright spot for real-estate developers. But a steep learning curve means some 'stupid money' investors could get burned.
• An inside look at Harbor,a new disaster prep app developed by Headspace and GoodRx alums that helps you get your home ready for hurricanes, wildfires, and other catastrophes
• Compass, the SoftBank-backed real estate brokerage,just acquired a startup that brings it one step closer to becoming a one-stop shop for buying and selling homes
• More energy costs are being footed by employees working from home. Here's what this means for office landlords and how one provider is working with employers to pay the difference.
• We're looking for nominations for our first-ever Rising Stars of Real Estate. Get all the details on how to apply here.

Legal 

• Greenberg Traurig just poached 5 more privacy and data-security lawyers, bulking up in a practice area that's booming as clients rush to navigate new regulation and safeguard sensitive information
• The head of the biggest immigration law firm in the US explains how a recently acquired Y Combinator-backed startup will play a key role in its plans to compete with the Big 4
• How litigation financing startup Legalist plans to leverage its tech to scale up to $1 billion in assets under management
• #DropExxon: Pressure is mounting on Big Law to combat climate change as 600 students pledge to boycott Paul Weiss for defending the oil giant

Pitch decks

• Here's the pitch deck that Koala, a startup bringing an Airbnb-style marketplace to the wonky timeshare industry, used to raise $3.4 million
• An instant-paycheck startup used this 11-slide pitch deck showing a big opportunity in hourly workers' 'liquidity gap' to nab a $4.5 million seed round led by Upfront Ventures

Join the conversation about this story »

NOW WATCH: Why Pikes Peak is the most dangerous racetrack in America

• Jeff Gundlach, the billionaire investor known as the "Bond King," predicted in a RealVision interview published on Friday that stocks would crash in less than 18 months.
• The DoubleLine Capital CEO also said the US dollar would dive in the long run, argued that tech stocks like Apple and Amazon were the only US equities worth owning, and questioned bitcoin, welfare, and Chipotle's valuation.
• Here are Gundlach's 10 best quotes from the discussion.
• Visit Business Insider's homepage for more stories.

In a RealVision interview filmed on October 1 and released on Friday, the billionaire "Bond King" Jeff Gundlach said stocks would crash within 18 months, predicted that the US dollar would tumble in the long run, and voiced his doubts about bitcoin.

Gundlach, the founder and CEO of DoubleLine Capital, also called out Chipotle's valuation, criticized welfare, and argued that the only US equities that made sense to own right now were the largest technology stocks.

Here are Gundlach's 10 best quotes from the conversation, condensed and lightly edited for clarity:

1. "Valuation makes absolutely zero difference when you're in a true, brutal bear market. You just go to prices that you just can't believe."— on the tricky 1994 bond market and how it prepared him for the financial crisis.

2. "I'm actually long the dollar now, even though I don't believe in it at all. It's a good investment for the next five years." Gundlach added that he was "very, very negative long term on the US dollar" because of the ballooning budget deficit and the prospect of higher inflation, and that he sees betting against it as "the big trade for the years ahead."

3. "If I want it to invest for my great-great-great-great-grandchildren, I'm positive that certain real-estate investments and certain resource investments would be obvious winners. Who cares about your great-great-great-grandchildren?"— on the need for fund managers to balance the lower risks of a longer investment time frame with investors' impatience.

Read more:GOLDMAN SACHS: Buy these 15 stocks set to deliver the strongest possible profit growth and subsequent returns through year-end

4. "If you want to own US stocks, you should own those six knowing that you're going to take a bloodbath if you overstay your welcome ... You've just got to have your finger on the exit button or pretty close by, but I think that's your only chance of making money."— advising people that they should own Apple, Amazon, and the other "big tech" stocks that have driven the market in recent years.

5. "The one that just blows my mind is Chipotle. I just can't understand why the stock has tripled over the last six months. It just baffles me. Isn't the price-to-earnings ratio like 150 or something? That's a lot of tacos."

6. "I do think that within 18 months it's going to crack pretty hard. When the next big meltdown happens, I think the US is going to be the worst-performing market."— predicting a stock-market crash that would be exacerbated by a weakening dollar.

Read more:'The largest financial crisis in history': A 47-year market vet says the COVID-19 crash was merely a 'fake-out sell-off' — and warns of an 80% stock plunge fraught with bank failures and bankruptcies

7. "It's comical how people talk about modern monetary theory or universal basic income as some wacky idea. We've been doing it since the 1960s. What do you think welfare is? It's universal basic income, just for a certain subset of the population. It hasn't exactly solved the problems. In fact, in my view, it's made it much worse."

8. "I don't believe in bitcoin. I think that it's a lie. I think that it's very tracked, traceable. I don't think it's anonymous." Gundlach later added that he was "not at all a bitcoin hater."

9. "I prefer things that I can put in the trunk of my car. I prefer my Mondrian on the wall to a digital entry that has the same value."— on his preference for physical investments.

10. "It will be quite a pleasant experience to not be in the car on the first wheel of the roller coaster that's coming."— on his cautious approach to investing in anticipation of a crash.

Read more:Bank of America lays out its scenario for how the next big top in stocks will form — and pinpoints the trigger that could cause a meltdown shortly after

Join the conversation about this story »

NOW WATCH: July 15 is Tax Day — here's what it's like to do your own taxes for the very first time

Morgan Stanley's investment-grade credit trading desk has reaped nearly $1 billion in revenue so far in 2020, well outpacing Wall Street rivals amid a record-breaking year for corporate bond issuance and a surge in algorithmic and portfolio trading, according to sources familiar with the matter.

It's been a booming year for trading at Wall Street banks, especially within their fixed-income divisions. Heightened volatility and wider spreads have spurred trading and increased client activity, as has the rush of corporate borrowing amid the Covid-19 pandemic. 

While many trading desks have benefited, Morgan Stanley has led the way in investment-grade trading, with other top high-grade credit competitors behind by at least 20%, the sources said. 

In the US, the investment-grade desk at Morgan Stanley has accounted for more than $700 million, the sources said. That team is coheaded by Chris May and Saju Georgekutty and overseen by Ed Bayliss, who runs all of investment grade, index products, and portfolio trading. 

A Morgan Stanley spokesman declined to comment. 

Read more:Giants like JPMorgan, Morgan Stanley, and Tradeweb are embracing a credit-trading revolution to move multi-billion-dollar bond portfolios in minutes

New debt issuance tends to go hand-in-hand with increased business on trading desks, and US companies have issued record amounts of bonds this year — nearly $1.5 trillion through the first three quarters of 2020, according to Dealogic. 

Morgan Stanley has a strong investment-grade debt underwriting business, though it trails the industry's top-3 players. The firm's nearly $170 billion in global deal volume as a bookrunner is still a distant fourth on the league table behind JPMorgan Chase, Bank of America, and Citigroup, each of which has more than $200 billion to its name. 

But despite that disadvantage, the team led by Bayliss has been a perennial contender for top honors in IG trading since the bank overhauled its fixed-income trading business in 2015. 

That year Morgan Stanley lopped 25% off the broader fixed-income unit's headcount, cut back on risk, and remolded the business with consistent results in mind, rather than the lumpy performance that resulted from taking bigger swings. It aimed to produce at least $1.25 billion each quarter, prizing speed and routinely turning over its trading book and avoiding large, illiquid positions.

In the second quarter of 2020 —a bumper period for most Wall Street fixed-income operations— Morgan Stanley's overall fixed-income, commodities, and currency-trading business brought in more than $3 billion in revenues, 168% more than it did in 2019. 

The investment-grade team, which industry insiders say has strong traders across sectors and a deep sales force, has been a key feature in that success.

Bayliss, who started his career with Citi in the early 1990s and has been with Morgan Stanley since 2008, is considered a shrewd risk manager and gifted at developing young traders, industry sources said. While making large bets isn't the firm's style, sources familiar with the desk say they'll turn the dial up on risk strategically.

"It's intelligent risk. And they have smart hedges so they don't get beat up so bad," one industry insider said. 

For instance, heading into the market shocks in March, the IG desk had very light balance sheet exposure, according to people familiar with the matter, and then scaled up to capitalize on what amounted to a fire-sale on corporate debt as well as frenzied trading activity among clients. 

Also helping the firm's cause: Morgan Stanley has one of Wall Street's top operations in algorithmic and bond portfolio trading, allowing the firm to price and sell large bundles of bonds in one fell swoop. It's a burgeoning corner of the credit trading industry that has accelerated amid the volatility of the coronavirus panic. 

Read more: As credit liquidity evaporated, some investors pounced on a bond fire-sale with the help of electronic trading platforms. Insiders explain how a wild 2 weeks unfolded.

Morgan Stanley was one of the first movers in portfolio trading, setting up a dedicated team within its credit division in March 2018. It's evolved into a critical component of their bond-trading business, and volumes have increased 20% so far this year, according to a source familiar with the matter. Algorithmic credit trading volumes were up 50%, the people said. 

After the blockbuster trading results in the second quarter, Wall Street banks including Morgan Stanley were quick to caution that such levels weren't likely to persist.

But in September, Morgan Stanley CFO Jonathan Pruzan said at a conference that trading had remained strong, thanks in part to continued strength in both equity and debt underwriting.

"There was no real slowdown in August, and we've seen very, very constructive markets across all of the different components of the sales and trading and investment banking business," Pruzan said, according to a transcript from financial data provider Sentieo.

We'll have more clarity on just how well the fixed-income trading franchise performed when Morgan Stanley reports third-quarter earnings results Thursday.

More Morgan Stanley news: 

• A Morgan Stanley trading desk headed up by a former NFL quarterback will play a central role in Palantir's and Asana's public debuts
• Morgan Stanley just shook up its tech and operations team with 2 senior promotions as Wall Street looks to double down its efforts around cyber and fraud
• Snowflake's mega IPO resulted in more than $100 million in fees for investment banks. Here's how much Goldman Sachs, Morgan Stanley, and 8 other banks each made.

SEE ALSO: Morgan Stanley hired a top trader away from Deutsche Bank in distressed credit — an area primed for a boom as corporate debt gets crushed

SEE ALSO: A Barclays trading desk lost more than $60 million this year amid a bloodbath in distressed assets

SEE ALSO: Why Morgan Stanley's $7 billion bid for a storied asset manager gives it a leg up on rivals and signals more deals to come

Join the conversation about this story »

NOW WATCH: Why babies can't eat honey

• As Joe Biden's lead in polls widens, Wall Street is warming to the prospect of a Democratic sweep in November.
• Goldman Sachs and UBS recently advised clients to prepare for a shift to cyclical and value stocks from growth favorites, as a Biden victory would increase the odds of additional fiscal stimulus.
• The yield curve could steepen as investors prepare for rising inflation and stronger economic growth, UBS added.
• Morgan Stanley recommended investors buy a knee-jerk dip in stocks and sell long-dated Treasuries in the event of a Democratic sweep. Once investors gain insight into future tax policy, fresh stimulus would restart stocks' upward trajectory, the bank's strategists added.
• Visit Business Insider's homepage for more stories.

Wall Street is warming to the idea of a Democrat-led government and the tax policies, spending initiatives, and regulation it may bring.

It wasn't long ago that major banks deemed a second term for President Donald Trump the best option for the stock market. His 2017 tax law drove stronger profits, and deregulation helped companies boost efficiencies.

But polls suggest the president is lagging significantly behind the Democratic presidential nominee, Joe Biden, with little time left to eke out a lead. Meanwhile, Wall Street giants have rethought their forecasts and found reasons to believe a Democratic sweep on Election Day could drive stocks higher.

Read more:MORGAN STANLEY: Buy these 44 cheap stocks poised to surge as the economy continues to recover and reopening expands.

The market sentiment about a so-called blue wave "completely flipped" over the past two weeks, UBS said Monday. The government's failure to pass a stimulus measure makes it increasingly likely that Democrats would prioritize pushing a larger bill in January. Doing so would punt tax reform into 2022, allowing investors to reap the benefits of fresh stimulus and continued economic growth through the next year, UBS said.

Biden's widening lead in polls is already helping stocks, UBS added. Recent weeks' gains temper election uncertainties, and an overwhelming victory would likely reduce the chance that Trump fights the result.

"Investors may have initially feared a Blue Wave, but a delayed or contested election outcome is even more unsettling," the bank said.

Recovery and reflation

With polls increasingly pointing to a Democratic sweep in November, Wall Street is preparing clients to position for such an outcome. UBS expects a blue wave to drive a reflation trade. Increased fiscal relief would provide a shot in the arm for the US economic recovery and lead investors to take on more risk in hopes of greater gains.

Value and cyclical stocks would gap higher after languishing through the virus slump, according to the bank. Sectors still struggling to reach pre-pandemic levels of activity would thrive through the rebound, and investors would shift capital from the growth favorites that saw outsized crowding over the summer.

Continued recovery would also normalize the Treasuries market after months of historically low yields, UBS said. The yield curve would steepen as investors prepare for rising inflation and stronger growth.

Read more:A fund manager beating 90% of his rivals told us why he actively avoids companies with giant profit margins — and shares 5 stocks he thinks will keep winning for years

Goldman Sachs echoed the forecast, saying in a note in late September that a Democratic sweep would increase the chance of a market rotation toward cyclical sectors. Cash parked in mega-cap growth stocks would move into riskier corners of the market as investors bet on a return to pre-pandemic levels of output.

A Biden administration plan for major fiscal expansion would lift profits for growth-sensitive cyclicals and offset headwinds posed by higher taxes, the bank added.

In all, a stimulus boost would add to an "already above-consensus outlook for the US economy," strategists led by David Kostin wrote. A Democratic government would drive a "modestly positive net impact" on corporate profits, the team said. S&P 500 earnings per share could reach $222 by 2024, according to the bank, a 4% increase from a baseline forecast that assumes no change in policy.

Goldman expects the S&P 500 to climb to 3,800 by mid-2021, implying a 7.5% gain from Monday's closing level.

'Dip to buy'

While firms increasingly expect a Democratic sweep to lift cyclicals and drag on growth stocks, Morgan Stanley expects outsized volatility before postelection trends solidify. The broader stock market would initially fall in the event of a blue wave as investors square off against tax-policy uncertainties, the bank said. Emerging-market equities would gap higher, as the stocks avoid such uncertainties and benefit from a greater likelihood of US dollar weakness.

But US stocks represent one of the bank's "detour" trades for a Democratic sweep. A blue wave would drive a short-term deviation from Morgan Stanley's base case, "creating an opportunity to buy a dip or fade a rally," the strategists said in a Friday note.

Read more:Goldman Sachs says buy these 35 stocks for big gains right now as they offer double-digit sales growth and explosive margin expansion

The S&P 500 represents such a "dip to buy" trade, and investors with cash on the sidelines should be ready to hop in at temporarily lower levels, they added.

"We expect fiscal expansion to provide some offset" to higher taxes, the team wrote, "but until the market knows the type of fiscal expansion after a Democratic sweep, expect that equity risk premium could remain elevated into January."

Morgan Stanley's strategists suggest shorting long-dated Treasuries and buying West Texas Intermediate crude futures, as "straightaway" trades are unlikely to change depending on the election's outcome.

Now read more markets coverage from Markets Insider and Business Insider:

Morgan Stanley lays out its 5 favorite trades for investors looking to dominate a looming V-shaped recovery, even if a stimulus deal takes until 2021

IMF lifts global growth outlook for 2020 but lowers next year's forecast on fears of persistent social distancing

Citigroup reports 3rd-quarter earnings that beat profit and revenue estimates amid trading surge

Join the conversation about this story »

NOW WATCH: Why it's okay to eat the brown part of an avocado

Digital transformation has become a major focus for CEOs over the last decade. Defined as the adoption of technology to replace manual processes, digital transformation promised to fundamentally change how businesses delivered value to customers.

But for years, digital transformation was more hype than reality, and the vast majority of companies failed to successfully 'transform' their businesses. As recently as October 2018, a McKinsey study found less than 30% of companies had succeeded in digitally transforming their businesses. 

One good thing about 2020 is that this year is shaping up to be a transformative one for digital transformation. The pandemic and the resulting economic volatility has accelerated the adoption of the various technologies that are foundational to driving transformation, especially with respect to cloud adoption.

At the beginning of 2020, a KPMG study found 67% of CEOs expressed concern about migrating all of their business to the cloud. Now, that hesitation has nearly vanished. Changing consumer behaviors, work from home, and volatile economic conditions necessitate a new generation of digital solutions for customers and employees alike. 

While digital transformation finally seems to be transitioning from buzzword to reality for many corporations today, CEOs must start preparing for the next big transformation on the horizon — a kind of transformation that may require an even more fundamental reorganization and rethinking of what it means to be a business: sustainable transformation. 

Stakeholder capitalism 

Sustainable transformation goes hand in hand with stakeholder capitalism, an idea that has gone from fringe to mainstream over the last few years, with prominent supporters such as Marc Benioff, CEO of Salesforce.

Stakeholder capitalism is the idea that companies should serve the interests of all stakeholders, not just shareholders. While simple in principle, it is quite a departure from the kind of capitalism that has prevailed in the post-war era. Stakeholder capitalism at its core is about sustainability. 

The long-term viability of a corporation depends not just on maximizing profits for shareholders, but making sure the interests of consumers, employees, and the environment are maximized as well.

While results so far have been mixed, proponents believe stakeholder capitalism is good business. They believe companies can generate sustainable profits while simultaneously practicing a 'kinder form of capitalism' and avoiding risks that may pose existential threats to their businesses. 

For example, consider a mining company harvesting materials underground on an island. If the company solely focuses on maximizing short-term profits by digging in the most efficient manner possible, they will soon run out of minerals to extract.

Read more:Big investors like Apollo and Carlyle are clamoring for a piece of the $30 trillion ESG space. We spoke to 15 insiders about how they're ramping up hires, raising money, and striking data-driven deals.

After the last ton of earth is extracted, there is no more source of profits. The land is bare. The negative externalities of the digging are severe for inhabitants and for the environment. So after maximizing short-term profits, there is no more business for the mining company and all stakeholders are worse off. 

Stakeholder capitalism is about thinking about the broader constituents of a corporation, not just its equity shareholders, in making decisions. The idea is that by taking a wider range of stakeholders into consideration, companies become more viable over the long run.

It impacts duration as companies plan for the next quarter century, not just the next quarter. It impacts actions, as companies think through second and third derivative consequences of their activities. 

Going back to the mining example, without digging sustainably, the company will run out of fertile mines or productive miners. Without considering the environment, residents and employees alike will be left with an uninhabitable land. Without engaging community groups, archaeologically significant sites may be accidentally destroyed and elicit negative feedback from customers, regulators, and the media.

Beyond the negative headlines, doing such a thing will likely have long-term impacts on operations as mining businesses are fundamentally dependent on local government licenses. While destroying historically important sites for profit may seem extreme, it isn't. A mining company was recently accused of doing just that after failing to engage all stakeholders. The CEO resigned as a result. 

Digital transformation is a necessary condition for sustainable transformation 

If you distill to the core what digital transformation was about, it was about efficiency and agility. Despite the challenges associated with moving from a legacy technology stack to a digital one, it still fits neatly into a narrow paradigm of profit maximization.

Sustainable transformation builds on top of efficiency and agility by also mandating operational changes, organizational realignment, and expanding the dimensions of strategic planning. Simply put, the challenge for CEOs is that sustainable transformation is harder than digital transformation because it is a departure in terms of both mindset and prioritization. 

See more:Investors are clamoring for pandemic bonds. Here's how Wall Street banks are responding.

The good news is that the foundational building blocks of digital transformation (cloud, big data, open source, and AI) are also the critical components necessary for building a more sustainable business.

However, while businesses were given a decade to undergo their digital transformations, CEOs do not have the same luxury for sustainable transformation. 

Recent events have shown that taking a comprehensive, stakeholder-driven approach to your business is a 'must have', not a 'nice to have.'

For example, the CEO of Lululemon told Fortune CEO Alan Murray in mid-September that the company currently had more US stores temporarily closed due to climate issues (fires and hurricanes) than for Covid-19. The systemic risks associated with climate change, geopolitical risks, and shifting consumer/employee expectations will require transformation on a much shorter timeline.

Sustainable transformation requires rethinking and reorganization 

Consider a bank that makes housing loans.

Let's say that the bank holds onto the loans until maturity. Today, the mortgage underwriting and risk management process relies on data tools and human processes that digital transformation enabled. The underwriters analyze data about the customer (credit score, income history, etc) as well as basic data about the home itself (single family home, value of nearby homes, etc) to make decisions.

But going forward, this paradigm is likely not robust enough. Simply put, a lot of things can change during a typical 30-year duration of a fixed-housing loan (rising sea levels, changing weather patterns, wildfires, etc). 

For this bank to remain viable and to manage risks effectively, it must bring sustainability to the core of its operations.

Read more:Credit-card data is broken. Here's how hedge funds and banks are being forced to rethink one of the earliest alt-data plays.

Sustainable transformation happens when the bank leverages the tech infrastructure gained from digital transformation to convert millions of addresses tied to mortgages into geo coordinates. The bank then merges the latitude and longitudes with topographical information at scale to index how many feet above sea level each home is. Finally, the bank runs billions of simulations on how changing weather patterns (from rising sea levels to hurricanes to wildfires) impacts the default probabilities or the underlying collateral values of those loans. 

Sustainable transformation is when underlying mortgage risk no longer just about credit scores or income levels. It requires new ways of thinking and processes. It changes the mindset and skill sets required for an underwriter to make better decisions. It's not about just short-term profits, but about building a more sustainable and viable business model so that the bank can continue to underwrite profitable mortgage loans into the future. 

Conclusion 

Digital transformation was about efficiency and agility. Sustainable transformation adds duration and action to the matrix.

It is about thinking through the multi-dimensional impacts of a business decision and having the technological tools to analyze and act on them. It's about building a future-proof business model. 

CEOs can take comfort in knowing that digital transformation has created the building blocks for sustainable transformation. The on-going efforts of the last decade enable it when paired with the right human capital, priorities, and data tools.

But time is not on their side. Consumer expectations, shifting environmental patterns and investor demand will necessitate that business leaders move quickly. Sustainable transformation is the next big thing, but the amount of time afforded to companies to achieve it will not be as large.

Junta Nakai is the global industry leader for financial services at Databricks. In his capacity, he is responsible for driving the world wide adoption of the Unified Data Analytics Platform across Capital Markets, Banking/Payments, Insurers and Data Providers. Prior to joining Databricks, Junta spent 14 years at Goldman Sachs, where he most recently served as the Head of Asia Pacific Sales for the Americas in the Equities Division. 

Correction: A previous version of this story did not specify that the comments from Lululemon's CEO were made in mid-September and related to the current temporary closures of US stores due to environmental issues versus Covid-19.  

SEE ALSO: How Microsoft is using AI to make the planet greener — and what other companies can learn from its environmental game plan

Join the conversation about this story »

NOW WATCH: Why some Hong Kong skyscrapers have gaping holes