NYTimes: Merrill’s Chief Defends Recent Sale
Source: http://www.agustingonzalez.com/my_weblog/2008/08/nytimes-merrill.htmlPosted on Tuesday, August 5th, 2008 | In Market Commentary, Stocks to Watch
Thain still cleaning up O’Neal’s mess
Over the past year, Merrill has written down over $40 million in bad debt. This on the heels of selling $31 billion at a fire sale price of $6.7 billion, while also serving as the lender of $5 billion to the buyer, Lone Star, a private equity firm in Dallas. And, of course, most of this overarching risk-taking was done under the Stan O’Neal regime. O’Neal, as everyone at Merrill would say, seemed to be a cold, calculating and a “spreadsheet” guy. He axed jobs, backstabbed his fellow executives, and increased firm risk all in effort to transform the firm into a “Goldman Sachs” firm. At the end of it, he wanted Merrill to be like Goldman.
Instead, Merrill should have stayed Merrill and not worry about Goldman. O’Neal wanted Merrill to be Goldman so bad that even if it meant increasing the risk profile on the trading desk then so be it. Unfortunately, it all backfired. He should have taken better care of the firm’s crown jewel: the firm’s army of 15,000 brokers.
Will Merrill survive this trouble? I think so, but unfortunately, at the cost of value destruction. They have probably raised enough capital by now but they real key would be if you see them selling their Blackrock stake. If they do then I would immediately say “new ballgame.”
NYTimes: Merrill’s Chief Defends Recent Sale
Last 5 posts by Agustin Gonzalez
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 About Agustin Gonzalez (http://agcapitalmgt.com/)
Agustin Gonzalez is Founder/Portfolio Manager of AG Capital Management in Dallas, Texas. He trades primarily domestic equities and options for his clients. Prior to starting his own firm, he advised high-net-worth clients in investment strategy and portfolio management at Merrill Lynch Global Private Client Group. Mr. Gonzalez attended the United States Air Force Academy between 1994 and 1997 before receiving an Honorable Discharge. He then graduated with a Bachelor of Science (BS) in Management Science in 2000 from the Southern Methodist University's School of Engineering and Applied Sciences in Dallas, Texas. He is also near completion of his Masters in Business Administration (MBA) from the Southern Methodist University's Cox School of Business with a dual concentration in Financial Consulting and Corporate Finance. |
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