Google opened up their own trading floor

[Scooot]

I just heard a report on Bloomberg that Google has been hiring traders, among others, from Wall St. lately and are currently in the process of opening up a new trading floor on their CA campus.

The purpose of the trading floor will be to manage it's large amount of cash it currently has.

Has anyone else heard this or have any more info on it?

I wonder how well a company like Google could do in the markets. I think they certainly have the ability to do very well if they put the work and investment into setting up a solid system.

Thoughts?

 

[IlyaKEightSix]

Two words:

Holy sh!t

Take RenTec, and multiply by, oh, 30 (?) in terms of the sheer manpower?

Uh...wow...just...wow is all I have to say. I wish them all the luck in the world, actually, since Google can do no evil...at least its motto is not to *be* evil...

 

[bob]

Your assumptions about what they are doing are, as far as I know, mistaken.

 

[Scooot]

Bob,

What have you heard?


This is from theflyonthewall.com:

Google started trading floor to manage cash position, Businessweek reports
Google started a trading floor to manage its $26.5B cash and short-term investments position, Bloomberg Businessweeek reports.

 

[Andy Nguyen]

One of the company's goals is to improve the returns on its money, which until now has been managed conservatively. Google doesn't disclose its rate of return on investments or the targets it has set, but analyst Aaron Kessler of ThinkEquity estimates the company's 2010 return (including interest income and realized and unrealized gains before tax) at around 2.5 percent. That's a higher return than some other large Internet outfits, such as Yahoo! and Amazon, he says.

Google is using some of its money to buy back shares in the wake of its $750 million acquisition of mobile advertising firm AdMob, which was an all-stock deal. The transaction was cleared by U.S. regulators on May 21. Investors have been wondering what else the company intends to do with its cash. IBM (IBM) recently announced plans to spend $20 billion over five years on acquisitions. Hewlett-Packard (HPQ) just bought Palm (PALM) for $1.2 billion. "Google could do 10 Palm kind of deals," says Michael Yoshikami, president and chief investment strategist of YCMNET Advisors, which owns Google shares. "That would be a pretty decent use of their money." Beyond the AdMob buybacks, Google has said it has no plans to return cash to shareholders.

Google's trading room opened in January. The plan is to keep the war chest growing safely and ready to be deployed should the right mergers-and-acquisitions opportunities arise. The investment team has grown to more than 30 people, up from six three years ago. Many of the new arrivals are former Wall Streeters who left lucrative careers at Goldman Sachs (GS), JPMorgan Chase (JPM), and other banks. The man in charge is Brent Callinicos, Google's 44-year-old treasurer, who joined from Microsoft in 2007, back when Google had $11 billion in cash. "This isn't fast money, this is patient money," he says. His crew works in a recently remodeled finance building on the company's corporate campus in Mountain View, Calif., complete with a rock climbing wall, massage chairs, murals of tropical sunsets, and bamboo wall panels. In a second-floor space accessed by key card—the trading room—the Wall Street vets tap out trades at desks with six computer screens.

Google's Latest Launch: Its Own Trading Floor - BusinessWeek

 

[IlyaKEightSix]

Bah! Google can do better than that! Just buy up RenTec and DESCo's quant wing XD. Okay, I kid...but honestly, what's stopping Google from nomming everyone's lunch in the quant hiring department and turn into the biggest most badass quant fund?

 

[bob]

Nothing. But the guys over there are pretty smart: They've seen companies like GE fall prey to scope creep and pay the price for it.

The description Andy has cited above is accurate.

 

[joel_b]

The mandate is to earn a better return on their money than 2.5%, but preservation of captial is just as critical and they need the liquidity to get the cash for acquisitions as needed. I can't see them getting too aggressive with their strategies.

 

[AZPalta]

To add some direct color to the conversation, I actually had a quick introductory phone interview for a position with their Risk Management Team a few monmths back. Didn't get pass the HR Recruiter stage.

From the job description I appeared qualified (quant finance degree, pursuing CFA, and fixed income Risk analyst experience), so either my salary quote was too high for the junior position or my GPA /GRE scores not up to snuff for the Google Hiring algorithm.

Looks like they are interest in filling positions dealing quant risk modeling/analysis on Fixed income assets (Mainly US treasuries & Agencies , MBS, and global govt bonds) in their Risk Management/Corporate Treasury department.

The traders are either coming from Wall Street or locally from BGI (now Blackrock) who were pushed aside.

From what I was told it wasn't market hours (5am PDT/PST) for the quant support positions and not as demanding as Wall street in terms of expected work hours. So, the attitude I got was less Hedge Fund returns, but more optimal use of existing capital/cash reserves.

 

[Dragunov]

I can't help but think that google might be setting up an electricity trading operation. Their data centers consume greater than 5MWh in an hourly interval and it would make sense if they bid on electrical spot prices.

That said, I heard somewhere that google is making bilaterals with hydroelectric station to shield some of its exposure to the market. given that their servers' collective load profile is relatively stable, Alternative energy will really help.

 

[Joy Pathak]

I can't help but think that google might be setting up an electricity trading operation. Their data centers consume greater than 5MWh in an hourly interval and it would make sense if they bid on electrical spot prices.

That said, I heard somewhere that google is making bilaterals with hydroelectric station to shield some of its exposure to the market. given that their servers' collective load profile is relatively stable, Alternative energy will really help.

Google uses bloom energy to run most of their stuff. Bloom Energy | Be The Solution