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As McKinsey Sells Advice, Its Hedge Fund May Have a Stake in the Outcome

nytimes.com

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Re: As McKinsey Sells Advice, Its Hedge Fund May Have a Stake in the Outcome

#81

Post by lordnacho »

akozak wrote: post #72
crazygringo wrote: post #71

Earlier quoted context omitted.

The idea that there is no problem because both McKinsey and the company want to make money seems... ludicrous to me, and completely misunderstands insider trading. The problems would be: 1) McKinsey learns about non-public good things on the inside, and so buys even more stock than they otherwise would (pretty much the definition of insider trading) and/or sells competitors' stock 2) McKinsey learns about non-public…

Insider trading would be bad and illegal. But absent evidence that it's happening, I think his point is that merely having a stake by holding securities isn't inherently problematic.

Well then McKinsey should just say which firms they have positions in, and everyone can be satisfied that there's no problem?

Re: As McKinsey Sells Advice, Its Hedge Fund May Have a Stake in the Outcome

#82

Post by AJRF »

leroy_masochist wrote: post #29

Former investment banker here with lots of experience consulting for professional investors. The substance of the article strikes me as, "potentially really bad, but no obvious smoking gun". MIO is a special situations hedge fund, meaning that it looks for companies that desperately need capital for one reason or another, and who have been poorly served by the market for capital because some aspect of their story is…

> MIO is a special situations hedge fund, meaning that it looks for companies that desperately need capital for one reason or another, and who have been poorly served by the market for capital because some aspect of their story is messy and/or tough to understand, and provides them capital on terms that give MIO a lot of upside if the company gets back into good shape.

You have to hand it parent here, thats an amazing amount of wanker-y to play off Too-Big-To-Fail tom-foolery like this.

From a fundamental standpoint how could you ever believe this situation is anything other than what it looks like on the surface, insider trading?

Re: As McKinsey Sells Advice, Its Hedge Fund May Have a Stake in the Outcome

#84

Post by rhizome »

tribune wrote: post #47

From Matt Levine of Bloomberg: Here is a New York Times story about the “McKinsey Investment Office, or MIO Partners,” the in-house hedge fund of consulting firm McKinsey & Co., which invests employee money, including in companies that McKinsey advises. “That web of relationships underscores the unusual nature of McKinsey’s hedge fund, and the potential for undisclosed conflicts of interest between the fund’s investm…

>That web of relationships underscores the unusual nature of McKinsey’s hedge fund, and the potential for undisclosed conflicts of interest between the fund’s investments and the advice the firm sells to clients,”

That's a lot of words to say "sketchy-ass shit."

Re: As McKinsey Sells Advice, Its Hedge Fund May Have a Stake in the Outcome

#85

Post by whatok »

AJRF wrote: post #82
leroy_masochist wrote: post #29

Former investment banker here with lots of experience consulting for professional investors. The substance of the article strikes me as, "potentially really bad, but no obvious smoking gun". MIO is a special situations hedge fund, meaning that it looks for companies that desperately need capital for one reason or another, and who have been poorly served by the market for capital because some aspect of their story is…

> MIO is a special situations hedge fund, meaning that it looks for companies that desperately need capital for one reason or another, and who have been poorly served by the market for capital because some aspect of their story is messy and/or tough to understand, and provides them capital on terms that give MIO a lot of upside if the company gets back into good shape. You have to hand it parent here, thats an amazin…

I don't understand your assertion here. Should private individuals not be able to invest/lend money to others?

Re: As McKinsey Sells Advice, Its Hedge Fund May Have a Stake in the Outcome

#87

Post by b_tterc_p »

gaze wrote: post #44
b_tterc_p wrote: post #30

Seems highly unlikely that there’s any actual secretive insider trading happening here. It would be a HUGE risk for practically no gain, distributed across many individuals, committed by primarily people who wouldn’t stand to benefit. The firm should probably switch to vanguard or whatever... but the existence of this hedge fund does not mean the firm is using its insider knowledge maliciously. Most consultants won’t…

How do you think McKinsey even makes money?

Charging massive consulting fees

Re: As McKinsey Sells Advice, Its Hedge Fund May Have a Stake in the Outcome

#88

Post by TheTruth321 »

b_tterc_p wrote: post #30

Seems highly unlikely that there’s any actual secretive insider trading happening here. It would be a HUGE risk for practically no gain, distributed across many individuals, committed by primarily people who wouldn’t stand to benefit. The firm should probably switch to vanguard or whatever... but the existence of this hedge fund does not mean the firm is using its insider knowledge maliciously. Most consultants won’t…

I know I'm shadow banned but FUCKING HELL ...

This is supposed to be a smart BBS ... how is this the top comment?

Naiva af and dumb as.

Re: As McKinsey Sells Advice, Its Hedge Fund May Have a Stake in the Outcome

#89

Post by b_tterc_p »

FabHK wrote: post #33
b_tterc_p wrote: post #30

Seems highly unlikely that there’s any actual secretive insider trading happening here. It would be a HUGE risk for practically no gain, distributed across many individuals, committed by primarily people who wouldn’t stand to benefit. The firm should probably switch to vanguard or whatever... but the existence of this hedge fund does not mean the firm is using its insider knowledge maliciously. Most consultants won’t…

> a HUGE risk for practically no gain Eh? A few dropped words during a social dinner, or even a knowing glance, you call that a huge risk? And a hedge fund getting (even only 1 bit of) information from some well-informed people, allowing them to adjust their position on a firm, can lead to substantial gains, obviously. > Most consultants won’t even know what other people on their team is working on, and most are in a…

I don’t disagree that there’s opportunity for bad actors. This exists for everyone. But the NYT is trying to imply with no evidence that there is a habitual firm policy of leveraging client secrets for insider trading at the firm’s hedge fund. That doesn’t make sense. If you’re going to commit fraud, you don’t do it in a fund to be allocated across thousands of partners, you do it for something that’s actually going to matter for you in some way. Like the guy who got caught.

The only evidence of badness within this they could find was a pharma company invested in by an outside firm.

The NYT has also released another article about why they’re writing these hit pieces.

https://www.nytimes.com/2019/02/19/reader-center/mckinsey-he...

Basically it boils down to them having a hunch that a big private company is bad. And have they really found anything? No, not really. They just keep churning out pieces that say this could be bad if the firm has no internal controls though they can’t find anything to suggest it’s true, or one off studies that are linked to bad outcomes. Their reporting isn’t factually incorrect, but it’s being written with their own stated bias to find bad things. They’re not hearing leads and digging further. Given that this is true, their investigation has found basically nothing.

Re: As McKinsey Sells Advice, Its Hedge Fund May Have a Stake in the Outcome

#90

Post by gotocake »

paganel wrote: post #37
FabHK wrote: post #33

Earlier quoted context omitted.

> a HUGE risk for practically no gain Eh? A few dropped words during a social dinner, or even a knowing glance, you call that a huge risk? And a hedge fund getting (even only 1 bit of) information from some well-informed people, allowing them to adjust their position on a firm, can lead to substantial gains, obviously. > Most consultants won’t even know what other people on their team is working on, and most are in a…

> a HUGE risk for practically no gain The same thing happened in the Libor scandal, those involved took a very big risk for not such a big gain and look what that caused: a market worth hundreds of billions of dollars (if not more) being manipulated in exchange for stuff like Champaigne bottles and some fancy dinners out (all of the latter worth at most $10,000).

The LIBOR scandal was predicated on them using online chat rooms, instead of just the kind of proven “wink and a nod over drinks” that’s being alleged here. In essence, they took an even bigger risk than what is being described in this article, and as you say, for lesser rewards.
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