Goldman's New Critics: Hedge Funds
Senior Editor, CNBC.com
It's not just regulators in Washington DC or protesters on the streets of New York who have it out for Goldman Sachs. Hedge fund managers and hedge fund investors are also leveling harsh criticisms of the bank.
"They've lost their way, fallen for the trap of short term profits, and abandoning clients," one hedge fund manager told me over cocktails in the casino of the Bellagio Hotel in Las Vegas last night.
The Bellagio is hosting the second annual Skybridge Alternatives Conference, an invitation-only convention for asset managers, high net worth investors, and hedge fund managers. A host of big-names—including former President Bill Clinton—are set to take the podium in the Bellagio's ballroom to discuss current global issues, investment ideas, and the future of hedge funds.
But the real action, of course, takes place outside the ballroom—in the hallways, the Bellagio's restaurants, and around the bars—where hedge fund managers network with the asset managers they hope will allocate some capital in their direction. And not many of them have kind words for Goldman Sachs.
"It's not the same firm it was a decade ago," said one of the attendees.
"They've now got a 'rip your eyes' out culture," another agreed.
None of them would speak on the record—a testament to the power Goldman still wields on Wall Street. But privately, quite a few are saying that the SEC's case against Goldman has confirmed what they had come to suspect. Namely, that Goldman Sachs no longer puts its clients first.
"Maybe it was legal. But it was wholly unethical," another hedge fund manager said of Goldman's Abacus CDO deal.
Hedge fund critiques of Goldman Sachs are nothing new, of course.
Goldman trades competitively with hedge funds, which means that those knocking the firm have an interest in seeing it taken down a notch.
But if the attendees at the Skybridge conference are an indication, the anger at Goldman is now much more widespread and deeply felt.