The first half of 2023 saw the largest banks in the US spend over $1 billion on severance costs, highlighting the high price of unwinding the overexpansion of Wall Street during the pandemic. In this edition of Due Diligence, we discuss various topics including merger arbs’ emotional rollercoaster, Michael Moritz’s departure from Sequoia Capital, and Blackstone’s achievement of reaching $1 trillion in assets under management.
Merger arbitrage traders received some relief when Microsoft and Activision Blizzard agreed to extend the deadline for their $75 billion tie-up. However, even with this extension, the merger arbs are not completely satisfied. The special dividend authorized by Activision’s board to calm investors’ nerves did not meet expectations.
The trade of merger arbs has been affected by regulatory roadblocks and a slowdown in dealmaking, leading to a decline in the shares of funds managed by companies such as Kite Lake and Alpine. Meanwhile, the S&P 500 has posted a significant return in the first half of the year.
Sequoia Capital announced that Michael Moritz will be stepping down after a four-decade career as a tech investor. This, coupled with the firm’s split from its China arm last month, has raised questions about the future of Sequoia. Roelof Botha, Sequoia’s current leader, downplayed the significance of Moritz’s departure and stated that Moritz will focus on running Sequoia Heritage, a separate wealth-management fund.
Blackstone Group is set to announce its second-quarter results, which may show that it has surpassed $1 trillion in assets under management. This milestone highlights the growth of private markets and the expansion of investment firms into various sectors. However, Blackstone is currently facing challenges such as heavy redemptions from its property fund.
In other news, Warburg Pincus has named Jeffrey Perlman as its next president, Tesla chair Robyn Denholm has joined the board of Harrison.ai, and Houlihan Lokey has appointed Jonathan Jameson as a managing director.
Overall, the first half of 2023 has been a challenging period for the financial industry, but there have also been moments of success and growth. It remains to be seen how these trends will continue to evolve in the future.
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