Goldman loses top trader whose pay rivalled Solomon’s $110m

Nighthawk · Apr 13, 2023

https://www.afr.com/companies/finan...e-pay-rivalled-solomon-s-110m-20230307-p5cpx8

Index-rebalancing business....you gotta love his job with several hundred billion $ in stock inventory at GS....

BTW: clever guy - quits now that QE has ended and QT not to end for foreseeable future ;=)

Pekelo · Apr 13, 2023

For subscribers only. Care to copy it here.

zdreg · Apr 13, 2023

Marc Rich all over again. Did Goldman cheat him on part of bonus?

mervyn · Apr 13, 2023

He made his big bonus is 2021, not exactly a genius.

ETJ · Apr 13, 2023

Came out of the options business working for Hull. He has a right to be exhausted.

ph1l · Apr 13, 2023

Pekelo said:
For subscribers only. Care to copy it here.
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Goldman loses top trader whose pay rivalled Solomon’s $110m
Sridhar Natarajan
Mar 7, 2023 – 7.26am

Goldman Sachs is losing stock-trading rainmaker Joe Montesano, a key player in its ascent to the industry’s No. 1 rank in equities for two straight years.

The 46-year-old recently informed the firm he is stepping down as head of equities trading for the Americas and leaving to take a break, according to people with knowledge of the situation. He has yet to line up another job.

He’s among a group of top producers at Goldman whose pay has rivalled the more than $US75 million ($110 million) awarded to chief executive David Solomon over the three-year Wall Street trading frenzy set off by the pandemic.

The business Joe Montesano led pushed Goldman to the No. 1 rank in equities. AP

In 2021, Montesano even out-earned Mr Solomon’s $US35 million package, nudged ahead by his global oversight of the bank’s lucrative program-trading business, the people said, asking not to be named discussing confidential information.

The program-trading desk generated more revenue per employee than almost any other team at the investment bank that year. And the firm’s broader equities business pulled ahead of JPMorgan and Morgan Stanley’s in both 2021 and 2022, with cumulative revenue of almost $US23 billion.

The business is expected to slow down this year with analysts expecting an additional decline of roughly 6 per cent in equities revenue at Goldman. That would still leave it substantially higher than what it was posting before the pandemic.

A company spokesperson declined to comment.

Montesano joined Goldman in 1999, the same year it went public, working for a subsidiary, Hull Trading, known for quantitative- and technology-driven strategies. He bounced around various equities posts before snagging the top US-based equities-trading job.

What Goldman calls program trading is better known in the industry as an index-rebalancing business. It develops systems to predict which stocks will be added or knocked out of benchmarks because of mergers, earnings growth or slowdowns. That business had breakout years in 2020 and 2021 before cooling.

To keep ahead of rival banks and vie with the world’s most sophisticated hedge funds in that arena, Goldman assigns traders and coders to help develop mathematical models and software tools that it uses to deploy its own capital. Traders on the team are compensated with an eye on keeping them from being poached by other banks or buy-side shops, making it one of the most envied spots at the firm.
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newwurldmn · Apr 13, 2023

There was an article that Millennium's most profitable pod is their index rebalancing group.

traider · Apr 13, 2023

newwurldmn said:
There was an article that Millennium's most profitable pod is their index rebalancing group.
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how does an index rebalancing group add alpha?

TheDawn · Apr 13, 2023

traider said:
how does an index rebalancing group add alpha?
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He was able to buy the stocks to be added to the index at cheaper price and unload the stocks from the index at higher price thus making +ve profit. That would be my guess.

newwurldmn · Apr 14, 2023

traider said:
how does an index rebalancing group add alpha?
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by earning money trading the index rebalancing.