Ken Moelis, founder and CEO of the boutique investment bank Moelis & Co., has represented many high-profile clients over his decades as a corporate dealmaker — from Ted Turner and Steve Wynn to Donald Trump and the rulers of Dubai and the Saudis. When he started on Wall Street, liquidity was a major issue for C-suites, and access to good stock market information was hard to come by.
"We used to dial the phone at 4:01 p.m. in the afternoon and make calls to CEOs and say, 'We saw a lot of buying and selling, and the stock closed at ...' It was magic just telling them that," Moelis said at the Baron Funds conference in New York City on Nov. 9. "Today's client knows more about capital markets than I do because of the time it took me to cross the street on the way to a meeting with them," he said.
Ron Baron, the billionaire founder of the mutual fund company, has been an investor in the banker's company since Moelis took it public at $25 a share in 2014. The stock was trading at $41 on Monday and had reached as high as $61 earlier this year — Moelis briefly became a billionaire himself during that runup — before the entire banking sector slumped over the summer and, even more precipitously, since October.
Moelis is less worried about his business than those corporations that have loaded up on cheap debt during the era of low interest rates.
"Access to capital was the whole thing in the '80s. The world has changed," Moelis said at the Baron conference. "Liquidity in the world markets is unbelievable today. Capital is no longer a barrier. Capital is being thrown at you by multiple sources."
And that may soon become a big problem, Moelis said, due to the direction in interest rates. He provided a note of caution about debt at the Baron conference, as well as some other lessons on capital markets deal-making, a few of them unconventional.