A hedge fund meltdown, a collapse for WeWork, and Goldman partner buyouts

Hello readers,

This is Meredith filling in for Olivia. We had an action-filled week as we dug into two meltdowns: one that took place on the public markets, and another that could cast a chill over unicorns that are still grazing on heaps of private funding.

August was not a kind month for hedge funds, who had to position around a Fed rate cut, an Argentine election upset and various other geopolitical woes. Insiders told us about the carnage, and it may not be over yet — a massive unwind from long positions in high-flying momentum stocks could continue to play out for months, according to a memo that we saw from Morgan Stanley's sales desk.

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That could also weigh on equity trading revenues at big banks, as sharp market moves drive clients to the sidelines. Morgan Stanley CFO Jonathan Pruzan told analysts at a conference this week that the bank's equities business was running below 2018 for the third quarter, adding that there's “a lot a lot of uncertainty around what's going to happen next.”

Meanwhile, WeWork has been forced to take an axe to its eye-popping, SoftBank-rolled $47 billion valuation. It's still to be seen where the money-losing coworking company officially winds up, but recent reports suggest it may have to go as low as a $10 billion valuation to pull off the IPO.

We covered the drama unfolding around the coworking company, and examined the wider implications of such a massive valuation meltdown. We had touched on the topic this summer, when we wrote this now-prescient story about the dangers of startups growing too large (and in some cases, too freewheeling) outside of public scrutiny.

This week, we talked with private wealth execs and UBS and JPMorgan, who explained why they're doing more lending to provide liquidity for “Silicon Valley guys” as big startups stay private longer. We also took a look inside the massive Dock 72 project in Brooklyn where WeWork will be a top tenant. The office has everything: self-driving cars, themed murals, and some 30,000 square feet of amenities. But as WeWork's valuation crumbles, the project that has been in the works for years could stand as a monument to an age of coworking excess.

And on Friday, we had a pair of scoops that touched on big changes rocking entry-level banking jobs and the most elite ranks on Wall Street.

At Goldman Sachs, CEO David Solomon is offering buyouts to cull the bank's herd of partners. And on the other side of the career spectrum, analysts at investment banks that started only weeks ago are already being interviewed by private equity firms looking to fill their 2021 associate class.

Finally, I'd like to welcome Shannen Balogh, who joined the BI finance team this week. She'll be covering payments, credit cards and consumer banking. She's already hit the ground running with a story about how MoneyGram is playing catch-up with Venmo.

Have a great weekend,

Meredith

Apollo is behind a $600 million loan to a public company, and it's the latest sign that it's serious about taking on big banks in the lending business

When public companies want massive loans to finance their operations, they typically go to a group of large banks that can lend hundreds of millions of dollars by banding together pools of money.

But lately, a big private-equity firm has been taking their place.

Apollo Global Management said on Wednesday that it would provide $600 million as the sole lender to YRC Worldwide in a refinancing of the $2 billion shipping company.

It's just the latest deal that illustrates how Apollo and other large private-equity firms are increasingly becoming lenders, even in some rare instances, to big public companies. Apollo in particular has been doubling down on its lending push.

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D.E. Shaw is going to trial over the sale of a litigation finance portfolio company, shining a light on a side-pocket deal at the secretive hedge fund firm

A new lawsuit between D.E. Shaw and a former portfolio company CEO unveils both the complicated dealmaking that has come to be a part of many large-scale hedge funds and the difficulties in valuing private companies (as shown recently through scrutiny around WeWork's value).

The suit alleges that the $50 billion hedge fund sold off a litigation finance unit at a discount and that the unit's founder did not receive the same payout as other equity holders.

Here's exactly what it takes to get a job as a banker at Goldman Sachs, according to Wall Street recruiters, current and former employees, and the head of HR

Goldman Sachs is the most prestigious investment bank.

Goldman receives 1 million applications for midlevel jobs each year. About 0.5% of those hopefuls — just 5,000 people — get hired. That makes the bank nearly 10 times as selective as Harvard.

We asked its head of human resources and career experts how to land a job as a midlevel investment banker.

UBS is upping the ante on its workplace wealth-tech tools. That comes months after Morgan Stanley's $900 million Solium deal.

UBS' wealth management unit is rolling out changes to its equity compensation plan's servicesand digital offerings, a move that comes months after Morgan Stanley's deal to buy cloud-powered equity administrative platform Solium Capital.

The move to enhance the service highlights several key themes underpinning the wealth industry's evolution: technology used by advisers and customers alike is improving rapidly, and fees are falling across many wealth management platforms.

All the while, players from traditional wealth managers to new robo-adviser entrants like Betterment and Wealthfront are competing in an increasingly crowded ecosystem, and workplace wealth offerings are gaining steam at big banks.

READ MORE HERE>>

Meet the 8 Blackstone dealmakers who insiders say are the firm's future

Blackstone, with $545 billion of assets under management, has its hands in everything from real estate, to private equity, credit, and hedge funds.

Business Insider spoke with industry insiders, including recruiters, bankers, and competitors to compile a list of rising dealmakers at the private equity giant.

Now WeWork wants to be a manufacturer: the coworking company is opening a 200,000-square-foot New Jersey plant to make its signature aluminum and glass walls

WeWork is hiring at least 50 people in Edison, New Jersey, to work at a new 200,000-square-foot manufacturing facility, according to job postings.

The jobs appear aimed at creating a manufacturing operation from the ground up, including roles in technical operations, supply chain management, quality assurance, human resources, and finance.

In a departure from its focus on technology, the company will make modular glass and aluminum systems.

WeWork has been preparing to go public, which turned into a rocky process as the company's lofty valuation and corporate governance comes under fire.

Wall Street move of the week:

Izzy Englander landed a quant team that was managing hundreds of millions for billionaire Michael Platt.

In markets:

The stock market is experiencing a jarring shift seen only twice in history, and not since the tech bubble. Here's where JPMorgan's quant guru says investors should look to capitalize.

This is the pitch deck that helped convince Blackstone's Tony James, NerdWallet's cofounder, and Sequoia Capital to invest in the seed round of a startup disrupting retirement investments

Billionaire hedge-fund founder Leon Cooperman just called private equity a 'scam'

In tech news:

PayPal's CTO says data is the secret sauce to help it tailor payments for customers and beat out competitors like Stripe and Square

Insiders say once-buzzy Quartz is on track to lose money again this year as it faces a subscription shortfall

Other good stories from around the newsroom:

Walmart is opening health clinics, but that's just the start. We got the full story from the exec leading its push into the $3.5 trillion US healthcare industry.

The founder of private-jet charter company VistaJet reveals why a recession would be good for his business

WeWork is preparing to move into this massive, flashy Brooklyn building as its IPO plans crumble. We took a look inside.