Google Launches Trading Floor to Manage $26.5 Billion in Cash Reserves

According to Google Treasurer Callinicos, the firm has started a trading team and is currently hiring for entry level and experienced trading positions. Callinicos is very well respected in the finance and technology industries, after serving as Treasurer of Microsoft at a time where the company was generating 7% cash returns. In 2004, the company was able to pay out a one-time $32 billion dividend.

Specifically, Google is looking for bond traders and portfolio analysts. The firm currently has the 3rd largest cash reserves of any company, after Microsoft and Cisco. The trading team will also be used to buy back shares after Google purchased AdMob in a $750 million stock transaction recently. The transaction was cleared on May 21st. Surprisingly, Google has been public about not returning cash to shareholders, and instead internally generating value.

The trading floor at Google opened up in January. Traders at the firm have a primarily role of preserving capital and generating reasonable returns, so that Google has adequate capital to continue to make acquisitions. The investment team has grown from six people at the outset to 30 people as of today. Many of the traders at Google are from Goldman Sachs and J.P. Morgan. Google's technology allows traders to see 98% of positions in real time, whereas most bank can only monitor 60-70% of transactions in real time.

Google has pulled away from U.S. government notes and has moved $4.9 billion into corporate bonds and agency mortgage-backed securities. The company has also invested in emerging market sovereign debt. Unfortunately, Google's trading salaries are not as lucrative as those on Wall Street, but the company culture is much more laid back and focused on capital preservation.

The firm is currently looking for risk analysts, sovereign debt traders, and MBS traders. A recent hire, Ranidu Lankaj, had a full ride at Yale, worked for 2 years at Lehman Brothers, and published his first Sri Lankan rap record at age 19. (Source: Bloomberg Businessweek)

WSO Elite Modeling Package

  • 6 courses to mastery: Excel, Financial Statement, LBO, M&A, Valuation and DCF
  • Elite instructors from top BB investment banks and private equity megafunds
  • Includes Company DB + Video Library Access (1 year)

Comments (37)

May 30, 2010 - 9:05pm

Yeah, this is going to go over well. If a company cannot deploy it's cash in a productive business use then it should give it back to shareholders in one way or another. If I was a google shareholder I would be royally pissed. If I wanted to invest in a trading firm I would look elsewhere. What next? Proctor and Gamble deciding to do LBO's because they get bored?

  • 1
May 30, 2010 - 9:26pm

WTF? This is the stupidest thing I've ever heard. If I wanted to have my money traded I could give it to a hedge fund.

-------------------------------------------------------- "I do not think there is any other quality so essential to success of any kind as the quality of perseverance. It overcom
May 30, 2010 - 9:32pm

Google is not stupid, I'm sure they know what they're doing. besides coffeebateman will receive a knock on his door at 3am tonight and they'll have a little "talk" I wish I could tell you more but I hear

========================================= We are excited to formally extend to you an offer to join Bank of Ameria
May 30, 2010 - 9:41pm

Retarded idea. PJC you want Google to diversify away into energy because "they know what they are doing". Does that sound a little bit like Enron? It would be hilarious if the largest search engine would be wiped out in the next financial crisis.

PiperJaffrayChiang:
Google is not stupid, I'm sure they know what they're doing. besides coffeebateman will receive a knock on his door at 3am tonight and they'll have a little "talk" I wish I could tell you more but I hear
May 30, 2010 - 9:33pm

What is with people fucking up a good thing? Look at facebook. Great concept, loved it in the beginning. Now Zuckerman is scrambling to undo all the BS he has been doing.

Google, please, stick to what you do best. If I owned goog I would be really wondering if there is anything left for them to do. I mean are there not related companies which they could be buying to strengthen their core business vs branching off into something totally unrelated.

  • 1
Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
Best Response
May 30, 2010 - 9:50pm

Your all commenting from a bad link.

The proper businessweek article was posted earlier this week on here. It explains clearly how Google has no desire to be a hedge fund. As well the huge advantage google has in checking their money market situations over ngiht, based on all the technological power in servers they have.

Similar to their entrance into energy trading this is all about control over their competitive advantage.

Most F50 companies in the world have their own treasury department, and they invest their money in various markets and banks overnight to 90 days. If your google and you can afford to make the same thing in house versus givng 2% to all the banks out there? Why not? Especially since you think you can do it better already by as the guy mentions seeing 98% of your exposures in real time vs 70% a bank gets.

May 31, 2010 - 12:14am

A key part of Exxon's dominance is their great treasury arm, and that's what google is trying to do. They do not want to become a prop firm or anything

Reality hits you hard, bro...
May 31, 2010 - 1:31pm
eliteculture:
trading firms could get royally screwed....imagine all those top bracket quants they can hire...haha

I hope you're kidding... they only added 24 people. How can trading firms get "royally screwed."

If I'm a shareholder I really don't have a problem with this. 97% of Google's revenue comes from online ads. They have all that cash sitting on the sideline for a strategic merger or takeover that can open up new opportunities for growth and diversification. I'd rather have them trying to earn 5-7% on that cash instead of 1-2%.

May 31, 2010 - 2:39pm
tgtrader:
hmmmm, this is definitely interesting.... could this be a better seat than one at a BB trading desk? Any experienced guys have any opinions on someone fresh in their career changing paths over to this?

All depends on compensation and what strategies they will use

May 31, 2010 - 2:41pm

this is basic cash management; having the flexibility to make a game changing acquisition or having cash stowed away for rainy days is key in technology due to the disruptive nature of new technology; so it doesn't necessarily make sense to dividend back cash immediately as it would in stable cash flowing industries.

you all may think stuff like android is not core, but it absolutely is...mobile is the new computing platform, and search/ad networks will make a killing in this space...

May 31, 2010 - 3:00pm

My initial understanding of what Google is doing was wrong. I think this is a solid move on their part. I am sure many more companies are (or should be) partaking in these activities. With so many firms flush with cash on their balance sheets I would hope they would be intelligently managing it.

May 31, 2010 - 10:00pm

Your initial assessment was right. GOOG has an above-average beta and an above-average cost of equity capital. Getting "5-7%" return on cash ain't good enough for its shareholders. I hate companies that are too arrogant to pay a dividend.

May 31, 2010 - 10:25pm

Just FYI, the article also mentioned that GOOG is offering way below WS pay packages for these people. Quite frankly, it sounds like a pretty boring job (stable, though).

May 31, 2010 - 11:19pm

Hmm.. you would think they would offer at least market comp to get some top talent. Unless their hours and work life would be significantly better, I cant see another reason to do it besides to be employed by Google.

May 14, 2011 - 12:07am

Google is really a wealthy company but the question if their investment will pay off.

May 25, 2011 - 1:38am

Just to address a couple of points (given that I work at a F500 tech firm in the bay area that also has a similar treasury team).

Marcellus Wallace nailed it in terms of the reasons behind why these kinds of companies have these kinds of groups.

Most F50 companies in the world have their own treasury department, and they invest their money in various markets and banks overnight to 90 days. If your google and you can afford to make the same thing in house versus givng 2% to all the banks out there? Why not? Especially since you think you can do it better already by as the guy mentions seeing 98% of your exposures in real time vs 70% a bank gets.

regarding comp, hours, hierarchy, etc....

Generally someone who has ~ 2-3 years of experience on Wall Street can expect to come into these types of treasury teams as an "associate portfolio manager" (hierarchy is APM, then PM, then Sr. PM, then Group PM, then PM Director, then MD, then VP / Treasurer)...where you are likely responsible for a small P&L and focused on a specific asset class (commodities, foreign exchange, fixed income, equities, other alternatives, etc.). Comp at the APM level is generally ~$85-100K base, 0-20% bonus (average tends to be around 12-15%), and stock comp which can vary significantly but at that level you can generally expect to get ~$10-30K in stock which vests over 5 years. So all-in you're likely getting anywhere from $100K - $150K. From an hours perspective, you are normally in the office a little bit before the market opens (so on the West Coast probably in at 6:00am) and then leave a few hours after market close - after you've closed your books, etc. So generally 6am to 3-4pm...meaning ~45-50 hours.

Note that titles & comp can vary by company and comp will also vary based on location.

May 25, 2011 - 2:41am

@harvardgrad08

Do tech firms (doesn't have to be google, could be smaller idc) take many applicants directly out of school for their treasury? Or do you need the IB stint to be competitive?

This job sounds like it has the perfect work/life balance.

Making money is art and working is art and good business is the best art - Andy Warhol
May 25, 2011 - 3:10am
dwight schrute:
@harvardgrad08

Do tech firms (doesn't have to be google, could be smaller idc) take many applicants directly out of school for their treasury? Or do you need the IB stint to be competitive?

This job sounds like it has the perfect work/life balance.

At least from what I've seen at my firm and at places where friends work (primarily in tech), most places generally tend to hire folks with at least a few years of BB experience. That said, I have noticed that most of the these large companies have finance leadership programs / rotation programs for entry level college hires which generally tend to have a rotation through treasury. At least at a few of the companies that I know people from these programs I've noticed that treasury groups tend to hire at least 1-2 FLDP analysts per year - many times in lieu of experienced hires. So an option to get into these groups is to go through the firm's undergrad finance program.

May 25, 2011 - 3:11am

Google's Trading Operations (Originally Posted: 05/28/2010)

Has anybody heard much more about Google's new trading operation?

http://www.businessweek.com/magazine/content/10_23/b4181033582670.htm

I've seen them post jobs on LinkedIn for traders with experience in trading government bonds. It will be interesting to see if Google uses their trading group for more than just managing their cash. They obviously have a ridiculous roster on quants, programmers, and access to top technology. How hard difficult for the company to create a prop trading operation to play around with a few billion in capital?

May 25, 2011 - 3:12am

I don't think it would be hard for them to do it, but the biggest issue is I think their shareholders might have an issue with a search company deriving revenue from advertising becoming a prop shop.

  • 1
May 25, 2011 - 3:14am

I will say this to all the people still in school. A lot of companies actually have some pretty cool finance related jobs. I stumbled on a position at Comcast that involved hedging and capital markets. Rolls Royce has a lot of capital markets type positions. Sometimes you can find some great positions if you look at less obvious areas.

  • 1
  • 1
May 25, 2011 - 3:16am

A little off topic but there was a good thread on 2+2 about Google becoming a hedge fund.

http://forumserver.twoplustwo.com/30/business-finance-investing/why-can…

There'd be some serious conflicts of interest as one of the largest sources of information tries to become a hedge fund. Granted Google is a really ethical company, which isn't saying much because they make so much money that they're never really put in a tough spot, but if Google was a hedge fund they would be incentivized to perhaps control the flow of information. Perhaps delaying the dissemination of some market breaking news by nanoseconds so their trades can be placed in first.

May 25, 2011 - 3:17am

Quis rerum et voluptatem. Quisquam ut placeat veritatis et. Vel tenetur accusantium neque laudantium nulla consequatur.

Sunt beatae culpa sequi. Exercitationem et repudiandae quibusdam voluptas sit. Quisquam aut amet est excepturi. Molestiae perspiciatis odit sunt aut pariatur ipsum.

Non fuga harum voluptatem ratione modi aperiam. Magni praesentium ut quaerat et enim. Ratione est vero dolor optio consequatur voluptates adipisci.

May 25, 2011 - 3:18am

Voluptas voluptate alias ut ut est. Molestiae corporis earum sint nulla sequi sunt quo. Debitis quia natus sequi omnis numquam quasi laborum in. Deserunt reprehenderit cupiditate ipsum commodi et.

Id ut alias quia perspiciatis optio. Ipsam deleniti doloremque quia omnis amet quaerat.

Magnam voluptas blanditiis rerum debitis non at. Sunt modi modi voluptatem. Ipsam sed atque illo nemo quidem. Blanditiis totam eligendi asperiores mollitia officia ipsum. Est porro eum tenetur.

Distinctio non fuga fugiat. At reiciendis quo et laborum neque quo voluptatem. Quia illo vel molestiae rerum saepe sequi. Veniam enim eaque rerum.

Start Discussion

Total Avg Compensation

November 2021 Investment Banking

  • Director/MD (10) $853
  • Vice President (40) $360
  • Associates (236) $235
  • 2nd Year Analyst (144) $156
  • 3rd+ Year Analyst (34) $154
  • Intern/Summer Associate (107) $146
  • 1st Year Analyst (514) $136
  • Intern/Summer Analyst (394) $84