Hedge Fund
Their team at Goldman Sachs has bet against companies through short selling, or the sale of borrowed securities, and while investments are supposed to last for months they sometimes end early, according to half a dozen former members.
“MSI is very much like a hedge fund,” said Ashkan Marsh, 30, who worked for the unit before leaving the firm in 2008.
Goldman Sachs, the fifth-biggest U.S. bank by assets, doesn’t report on the holdings or performance of MSI, or of the Special Situations Group in which it’s housed. That parent group, which uses the firm’s funds to profit from distressed and middle-market companies, has been a major profit center at the bank, sometimes the biggest, former executives told Bloomberg in 2011. Its holdings that year included debt of Melville, New York-based pizza chain Sbarro Inc.
Slaughtered Pig
“SSG had its own culture from Goldman, one of those things where everyone had sharp elbows, but in a good way,” said Ryan Frankel, 29, who worked in the division until 2008 and is now CEO of VerbalizeIt Inc., a New York-based translation company. “It was definitely the place to be. I felt very honored and excited and lucky to be there.”
Marsh, now a Harvard Business School student, recalled a trip with colleagues to Texas with paintball, portfolio analysis and freshly slaughtered pork. The team paid “an extreme amount” to a farm that “killed the pig that day and barbecued it for us,” he said. “We would go boating, we’d go golfing, I really felt very much that they were friends.”
Tamin Pechet, 34, who worked in a predecessor group before he left the bank in 2005 and has stayed in touch with former co- workers, said MSI still has similar people and strategies.
“In spite of all of these things which seem like exogenous factors that would mean that a group like this couldn’t possibly continue, there’s actually quite a bit of continuity,” said Pechet, now CEO of Banyan Water Inc., a San Francisco-based commercial water manager.
He recalled a “passion for and understanding of how to make money” among “extraordinarily commercial” colleagues.