Shock and Awe | Blankfein Flunks Asset Management as Jim Clark Vows No More Goldman Sachs (Bloomberg)
By - Jan 24, 2011 5:00 PM MT
Bloomberg Markets Magazine
Lloyd Blankfein, chief executive officer of Goldman Sachs Group Inc., speaks at a banking conference in Germany, on Wednesday, Sept. 9, 2009. Photographer: Hannelore Foerster/Bloomberg
Jan. 25 (Bloomberg) -- Goldman Sachs Asset Management remains a persistent problem for Goldman Sachs Group Chief Executive Lloyd Blankfein. Last June, Jim Clark, a founder of such technology icons as Netscape Communications Corp. and Silicon Graphics Inc., yanked roughly $400 million in investments from the asset manager, citing what he considered bad advice and poor performance. Clark isn’t the unit's only only unhappy investor. Bloomberg's Deirdre Bolton reports in today's Movers & Shakers. (Source: Bloomberg)
March cover of Bloomberg Markets magazine
On Jan. 2, Jim Clark, a founder of such technology icons as Netscape Communications Corp. and Silicon Graphics Inc., was at home in Palm Beach, Florida, when he got an e-mail from an executive at Goldman Sachs Group Inc.’s private wealth management division. Goldman was offering Clark a chance to invest in the closely held social-networking company FacebookInc. The deal -- through a fund overseen by Goldman Sachs Asset Management -- was being offered to other Goldman investors at the same time, Bloomberg Markets magazine reports in its March issue.
The firm would levy a 4 percent placement fee on clients, plus a half percent “expense reserve” fee. It would also require investors to surrender 5 percent of any profits, known as “carried interest,” according to a Goldman Sachs document.
Clark, 66, turned Goldman down. In June, 2009, he had yanked most of the roughly $400 million he had invested with the firm due to what he considered bad advice and poor performance, including a big hit from GSAM’s Global Alpha hedge fund. This offer, he says, just irked him further. A few months earlier, he had purchased a stake in Facebook through another firm for a lower price, he says, and without the onerous carried interest.
“I don’t think it’s reasonable,” Clark says. “It’s just another way for them to make money from their clients.”
$840 Billion
Clark isn’t the only investor unhappy with Goldman Sachs Asset Management. GSAM (often pronounced gee-sam) managed most of the $840 billion in assets Goldman oversaw in December, a figure that dwarfs the money managed by brand-name firms such as Legg Mason Inc. and Franklin Resources Inc. Yet the evidence shows that the behemoth inside the 141-year-old investment bank is generating subpar returns for investors and is a persistent headache for Chairman and Chief Executive Officer Lloyd Blankfein.
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