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)