GS vs MS Hunger Games - Who Takes It?

Kimura's picture
Rank: Senior Baboon | 234

Came across this interesting article on Bloomberg yesterday (link inside post), it has some interesting insights into leadership of both organizations and strategy.

What do you guys think, who takes it in the a) mid-term, b) long-term (given their differing strategies?)

Blankfein vs Gorman

One grew up in Brooklyn public housing, the son of a postal worker, and shared a bedroom with his grandmother. The other was born half a world away, in Australia, the son of an engineer and the sixth of 10 children in a comfortable Melbourne household.
One was a tax attorney who became a precious metals salesman. The other spent years at McKinsey & Co. before going into banking. One is short, bearded, and has a joke for every occasion. The other is tall, cleanshaven, and matter-of-fact.

Gorman always held strategic roles, advising Merrill Lynch & Co. as a McKinsey consultant before jumping to the Wall Street firm as head of marketing. Blankfein was a currency salesman in the middle of the trading floor and later ran his own book to gain the respect of the traders he oversaw.
Blankfein rose to power in part because of the fixed-income trading profits in the years before the financial crisis. Gorman's ascension was aided by losses on bond-trading desks when markets collapsed in 2008.

Tale of the Tape

Still, investors have latched onto Morgan Stanley's turnaround story, pushing its shares to greater gains than Goldman Sachs's in back-to-back years for the first time since Goldman Sachs went public in 1999.

"People find Morgan Stanley really attractive because there is this transformation in place," says Steven Chubak, an analyst at Nomura Holdings Inc. in New York. "The bull thesis on Goldman Sachs is that if anyone can adapt well to the current challenges, it's going to be Goldman, because they have a proven track record of doing that time and time again."

MS's Retail Brokerage

Gorman, in the middle of his sixth year as CEO, pushed for a get-big-or-get-out strategy in wealth management even before he rose to the top and seized a chance to buy Smith Barney from Citigroup during the financial crisis.

Morgan Stanley's retail brokerage stretches from an office in Bangor, Maine, to one in Anchorage, Alaska, and serves 4 million customers who on average have about $500,000 with the firm. With 16,000 advisers, it has brought in $9.6 billion in pretax profit in the past five years without posting a losing quarter, has a 20 percent margin, and requires only $5 billion of regulatory capital. It's a good fit with new banking rules.


For Goldman Sachs, the comparable money-making engine is the business that houses the firm's investments. It's largely composed of loans, stakes in its own private equity and hedge funds, and a secretive principal-investing team called the special situations group.

The human requirement is small, accounting for fewer than 10 percent of the company's partners, but the investments, which include everything from distressed loans bought from European banks to a stake in an Israeli company that makes software for self-driving cars, have earned $15.2 billion in pretax profit during the past five years on a margin of more than 50 percent.

Comments (2)

Jun 26, 2015

Interesting info here. I'm mostly surprised by their work experience than anything else.

Jun 26, 2015