Best of 2007 : Goldman Stacks
Trader Monthly Magazine Feb/Mar 2008
Introducing the Trader Monthly Awards — recognizing the most outstanding sell-side performances of 2007, a year in which Goldman Sachs romped and Interactive Brokers surprised.
Best Prime Broker
44% Goldman Sachs
11% Interactive Brokers
7% (TIE) Credit Suisse/Morgan Stanley
Goldman flat-out crushed the competition, largely on the strength of its penchant for total-package service — order execution, research and sales coverage, technology. “They’ve got a truly holistic front- and back-end platform,” explained one admirer. “GS made money from their PB, the only metric that should count,” added another respondent, while yet another mused that “Goldman is the best in PB — always has been.”
Few will be shocked to learn that Goldman is the top dog in prime brokerage, but Interactive Brokers’ second-place finish (one buy-sider hailed its “deep liquidity and broad coverage”) sends a strong message to the Street: Thomas Peterffy’s gang in Greenwich (the one you thought was just electronically making markets in options) is eating your lunch.
Interactive Brokers decided to expand further into prime brokerage in a big way only a year ago, building a new real-time portfolio-margin system that Steven Sanders, the firm’s product-development head, calls “one of the only real-time options on the Street.” IB also purchased FutureTrade, enhanced its automated give-up and added other reporting features. “Customers shouldn’t be forced to utilize multiple brokers,” Sanders says.
Best Execution (Equities)
18% Goldman Sachs
15% Interactive Brokers
14% Liquidnet
This race was one of the closest, and while Goldman pulled out the victory, it’s worth noting that Interactive Brokers once again pops up (in second place) where one might instead expect a big-name bank. “Low cost with good fills,” explained one respondent of Interactive Brokers’ prowess. Added another: “Broad range of market interfaces seem to get the best possible price, whether buying or selling.” For the first half of 2007, Interactive Brokers was able to achieve 14.85 percent price improvement on marketable customer option orders in the United States, against an industry average of 0.57 percent, according to Sanders, citing an independent study conducted by TAG Audit. But a win is a win — and Goldman, once again, deserves credit. We’ve heard groans about its alleged trading habits (using info and its position of power to run over competitors), but those complaints are certainly not reflected in these results. (Unless people are trying to suck up, of course.)
Best Execution (Commodities)
21% MF Global
20% Goldman Sachs
15% Interactive Brokers
The sole category in which Goldman failed to finish first, commodities execution is still something the firm does well. Goldman missed a total sweep by just a hair’s breadth, but hats off to MF Global — which, as one reader pointed out, “rose from the ashes of Refco.” Traders lauded the firm, formerly called Man Financial, for being exceptionally adept at clearing and settling, while pointing to a back end unmatched for speed, efficiency and flexibility.
Best Alpha-Generating Ideas (Equities)
26% Goldman Sachs
13% Deutsche Bank
11% Credit Suisse
It’s been a long road, but Deutsche Bank’s decade-plus effort to be a dominant player on the equities scene seems finally to have reached fruition. Nevertheless, Goldman (yet again) drew the loudest applause. Said one respondent: “They didn’t put me in any binds in 2007.” During an awful August, when the subprime mess first began to seep into the broader market, Goldman was able to steer clients to safety with insight and prescience.
Best Alpha-Generating Ideas (Commodities)
31% Goldman Sachs
17% Deutsche Bank
8% (TIE) Lehman Brothers/Morgan Stanley
Congratulations to Deutsche Bank yet again for an impressive silver-medal performance in the competitive commodities alpha-generation arena. DB troops hold themselves highly accountable for their ideas, buy-side traders insist, pointing also to top-notch customer service. That wasn’t nearly enough to challenge Goldman (described as “the cream of the crop” by one buy-side respondent), but DB logged more than twice the tally of co–bronze medal winners Lehman and Morgan Stanley.
Best Algos
27% Goldman Sachs
21% Liquidnet
14% Credit Suisse
In another close race, Goldman edged out Liquidnet, which acquired Miletus Trading last year. “They’re amazing,” said one respondent of Liquidnet. Added another: “Reliable.” Of third-place Credit Suisse, meanwhile, one buy-sider said, “the most reliable, has the best dark-pool liquidity, the best support . . . by far the best.”
Best Overall Fixed-Income Needs Provider
39% Goldman Sachs
22% Lehman Brothers
8% Deutsche Bank
And the winner is . . . Goldman, of course. The second-place finisher, Lehman, which has long been known as a fixed-income shop, scored points for its wide array of skills — breadth, service, research, trading. “Any fixed-income need you have, [Lehman] can provide,” said one respondent. Deutsche Bank’s bronze was likely due to Greg Lippmann’s shrewd subprime call, which made the firm a mint last year. “Lippmann knew two years ago how to trade against subprime,” said one fan.
Firm of the Year
35% Goldman Sachs
11% Liquidnet
5% Credit Suisse
“They kept their nose clean of the mortgage mess.”
“The smartest guys in the room.”
“Savviest.”
Those were just a handful of the many glowing comments with which our buy-side readers hailed Goldman Sachs when placing their votes for the most prestigious category of all the 2007 Trader Monthly Awards. The firm’s stellar performance last year — seven gold medals and one silver — is likely to make its competitors more envious than ever. Its dominance is reminiscent of that high-school overachiever who rarely scored lower than 99 percent on tests, won every award on Senior Day, was accepted to every Ivy League school to which he applied and later beat you out for that prized analyst job . . . at Goldman Sachs. |
