The Count looked at him and nodded thoughtfully. He was about to say something when he was distracted by a woman standing in the doorway. She was in her mid-twenties, slim, her lithe body enshrouded in a sparkling black dinner gown. Al thought that he might have recognised her from some advertising hoarding somewhere. If she wasn’t a model then she looked like one. She fixed the Count with a blank expression and tapped her wrist.
‘Marissa, here a moment.’ She looked reluctant to enter the room and assumed a certain haughtiness. ‘You know Vittorio.’ Vittorio was on his feet and took the limp beautifully manicured hand that was held out to him.
‘Hello again Marissa, lovely to see you.’
‘Hi.’
‘And this is Al Denham who works with Vittorio at Hartmann’s.’
Al stood up and took Marissa’s hand. ‘Hello, nice to meet you.’
‘Nice to meet you too, Al.’ It was impossible to place the accent. It sounded European by way of the US. Either she had spent plenty of time in America or she had been taught English by an American. She might have been the Count’s daughter – the age difference was about right – but the way they behaved towards each other meant that they were clearly not related.
Al watched her as she turned away back to another part of the suite, a bedroom perhaps, and out of their world. But as she did so, she looked back at him and smiled. It was over in a flash. Blink and you’d miss it. But it was enough to make Al blush. Was she checking him out? He had no time to process this information before the Count stood up and called: ‘Barrs, would you do the honours with the tie?’
As the butler made his way towards him with a bow tie, the Count whispered, ‘Willie’s man. When he popped his clogs last year, I poached him. Managed to get him before anyone else did.’ It was presumed that Al and Vittorio would know who Willie was. Vittorio nodded and smiled. Al did the same.
While Barrs tied the dickie-bow around his winged collar, the Count said, ‘So Al, I’m sorry, I interrupted you. You were talking about carry?’
Here was Al’s third act. This was where he needed to pull it all together and make the right impression.
‘I think the opportunity to utilise Yen funding is extremely attractive against owning a basket of dollars, marks and sterling. I know a lot of people are trying to fade the Asian sell-off. But I am sceptical. I’d also be long Russia but with an extremely tight stop. The key element is the yen short.’
The Count raised his head to the ceiling to allow Barrs to manoeuvre the dickie-bow into position. ‘There are lots of people pushing trades there that don’t look particularly good risk reward to me, particularly Asia. I like your idea with the Yen. That makes sense. Anyway, La Bohème beckons I’m afraid.’ He looked at Al. ‘Why don’t you give me a call tomorrow and we’ll talk about that some more.’
They said their goodbyes and as Al walked out of the suite, Vittorio patted him on the shoulder. That’s all it took. He was part of the team. Outside Claridge’s, Vittorio climbed into the back of a cab and said to Al, ‘I’ll see you in the morning.’
Al reciprocated and as walked out onto the pavement, he slipped his new Nokia 8110 cell phone from his pocket and made a call.
‘Sophie, it’s me.’
‘How did it go?’
‘It was fine.’
‘How was ‘the Count’?’ She said it in that faux Transylvanian accent that he had found so annoying when he had told her about his meeting earlier on. But he let it go. Their relationship was all too new and fragile to start digging her out about little things like that. Besides, she was quite a catch. Attractive, exquisitely educated – Cheltenham, Lady Margaret Hall – and her father was a High Court judge.
‘It was fine.’
‘You haven’t forgotten dinner.’
‘No, of course not.’
‘Where would you like to go?’
‘I tell you what, Sophe, I’m going to leave it up to you – wherever you fancy – I’ve made so many decisions today that I really don’t think I can make another one. Just make sure that it’s somewhere nice.’
‘But of course.’
‘Oh and Sophe?’
‘Yeah?’
‘Not too many buttons on the dress, OK?’
USD/KRW: 1485
USD/MXN: 8.495
5yr UK Gilts: 6.13%
During his first year at Hartmann Milner, Al did plenty of travel in Europe, visiting clients with his new colleagues. Zurich, Milan, Vienna, Paris, Monte Carlo, amongst others. He even went to Lichtenstein. It felt as though he had been catapulted into another realm. This was a very different world from the one that he was used to at Trenchart Colville or indeed in his entire life to date. He had meetings on yachts and travelled by private jet and helicopter if the schedule demanded it. His horizons were expanding and with them, commensurately, was his business. The products he was selling were becoming steadily less vanilla and he found generating ideas using exotic options very stimulating and highly profitable. On one trade from one client alone, he made the bank in excess of a million dollars.
Vittorio was rapidly becoming something of a role model to him. With an Italian father and a German mother, he could speak five languages and liked to say that he could get laid in any of them. They made a dynamic team as they travelled through Europe together because they complemented each other so well. Vittorio’s product and technical skills were almost non-existent but that was OK because Al’s were strong. Vittorio’s key to success was that he had charisma to burn and people trusted him. Al found that Vittorio’s easy manner was rubbing off on him too but it was Al’s production knowledge and attention to detail that made them such a devastating combination.
Al could feel himself changing. On his and Vittorio’s last trip to Zug, they had been joined by another member of the team, Pierre Dupuis. Pierre was something of a legend at Hartmann Milner, as was his alcohol consumption. He had a massive temper and would regularly destroy phones and computer equipment when deals didn’t work out quite as he had planned. He was also known as something of a sexual predator.
‘It’s a relationship business,’ Pierre had said to him at the Widder Bar in Zurich on their first night away. ‘I like good relationships with all my clients – especially the female ones.’ Even just a few months previously, Al would have found Pierre’s attitude extreme, conforming to every stereotype of those outside the City looking in. Al’s acceptance of their differing approaches reflected his more pragmatic approach to professional life. The fact was, the how wasn’t important; booking trades was all that mattered.
At the end of a trip to Zurich in April 1998, one in which Al and Vittorio had finally managed to get a meeting with representatives of the Saudi royal family, Al had had to pick up the Beamer from Heathrow and make his way down to Poole for dinner with his mother and father. The event was his father’s sixtieth birthday. It had been a particularly tough trip and as Al made his way around the M25, his eyes feeling gritty and tired, he wished he had scheduled things differently and arranged for celebrations to take place in London instead. Still, it would be good to get back to the family home. He hadn’t been there since he had discovered the truth about Miles and Imogen.
When Al arrived in Poole, instead of going straight to the restaurant to meet his parents, he decided to take a drive along the harbour. Never the most attractive waterfront, Al preferred its more industrial appearance to those twee waterfronts that Britain possessed that seemed to have been produced entirely for the cute picture postcard they would make. There was a big cruiser being worked on in the dock. It was a good hundred feet long but shared the same torpedo lines as a speedboat. Its gleaming white flanks shone tangerine pink in the dying rays of the sun from across the second largest natural harbour in the world. Who did the boat belong to? Possibly someone who had started out doing the same thing that he did. The thought pleased him and he took a look at himself in the rear-view mirror and smiled.
He was only twenty minutes late for his parent
s in the restaurant in Poole’s old town. Amici’s had been a childhood favourite of his. They used to go there as a family, four or five times a year, on special occasions. Al had always ordered the same thing: salami pizza and a Coca-Cola. It had become something of a family joke.
‘Hi Mum, happy birthday Dad – you don’t look a day over fifty-nine.’ Al had a kiss from his mother and a playful thump on the shoulder from his father. ‘Sorry I’m late, the plane was delayed from Zurich.’
‘How was your trip?’ asked his mother when they were seated at the table in the corner of the restaurant, the same one at which they always used to sit.
‘It was good. A bit tiring.’
‘Nice hotel?’ asked his Dad, for whom good travel accommodation was always paramount.
‘The Widder Hotel, same as usual. It’s nice, it’s got a great whisky bar. But we didn’t eat there. We were out to dinner with the Swiss National Bank; went to the Sonnenberg Hotel next to the FIFA headquarters overlooking the lake. They do a veal cutlet there that’s to die for. And the claret ...’ Al kissed the air. His parents were smiling at him; he enjoyed the fact that they were impressed. Their son had done pretty well for himself. All the hard work they had put in to give him a good education. It was a good investment. It was paying out handsomely.
‘New watch?’ His dad asked looking at his wrist.
‘Yeah, what do you think?’ He pulled up his shirt sleeve and held out his arm to present the watch to his parents’ admiring gaze.
‘Does that say Rolex?’ asked his mum.
‘Yeah, it does.’
‘Oyster?’
‘Daytona. I got it from the jeweller friend of a grateful client.’
‘I bet it still cost a bit,’ said his dad.
‘It wasn’t cheap but I like watches. You remember when I was little, I always liked to wear watches.’
‘You had crazes,’ said Al’s mother wistfully.
‘Yeah and it’ll never go down in value.’
‘One year it was watches and another year it was cars. Model cars.’
‘Well, history is repeating itself because at some point, I’m going to have to get a 911.’
‘Porsche?’ asked his dad. ‘Seriously?’
Al loved the expression on his father’s face. It was a picture of warm generosity. There was no hint of jealousy, something he had noticed when he had mentioned this piece of information to old friends from university with whom he still kept in touch.
The waiter distributed menus and took the drinks order: a gin and tonic for Al’s mum, a beer for Al’s dad and a large Stolly and tonic for Al.
‘I wonder if he’s related to old Giovanni?’ said Al. Giovanni was an elderly waiter who used to serve them when they came to Amici’s back in the old days. He was the archetypal jolly Italian grandfather. In Al’s memory, he always had a smile on his face.
‘Maybe it’s his son,’ said Al’s mum. ‘He was great wasn’t he? He always made a fuss of you, Alistair. You adored him.’
‘So, are you going to have your usual Americano salami number?’ asked Al’s dad.
Al chuckled. ‘No I don’t think so. A bit too greasy for me.’
When the waiter returned with the drinks, he took their food orders: Bruschetta followed by pizzas for his parents and stuffed mushrooms and a medium-rare sirloin for Al who also took charge of the wine list.
‘What do you fancy?’ said Al sharing the list with his father who looked at the top of the list while he was surveying the bottom.
‘Why don’t we have the Valpolicella?’ asked Al’s dad.
‘Well, no, it’s a bit …’
‘Come on, let’s get it, my treat. I’m getting this.’
‘Stop, call off the dogs,’ said Al, turning to waiter. ‘I’ve got it.’
Before his father could object further, Al had pointed to the wine list and said: ‘We’ll have a bottle of this Montelcino 93 please. It’s not too cold is it?’
‘No, it’s fine.’
‘Great, we’ll have that then.’
‘That’s a sixty-five pound bottle of wine,’ said Al’s father as the waiter made his way back towards the kitchen. He sounded almost affronted.
‘That’s fine. Don’t worry. Like I said, it’s my treat for your birthday.’
‘It’s still a lot of money.’
‘Not really. It’s a great bottle of wine and anyway I was drinking Champagne cognac last night that costs about ten grand a bottle.’
‘Ten thousand pounds!’ His mother sounded shocked.
‘That’s obscene,’ said his dad and this time he really did sound offended.
‘It’s not really. It tastes incredible.’
‘Nothing tastes that incredible.’
‘You get what you pay for.’
Al could see that attitude in his father that he had inherited. When riled, it was impossible for him to leave a subject alone until the issue in question had been resolved. But this was his birthday; he didn’t see his son very often and he was struggling with himself.
‘There’s more to life than money.’
‘Very true, Dad, but it certainly helps smooth the path.’
The waiter had returned with the wine. Al nodded as he showed him the label and as the wine was being poured, he said: ‘I’d like to propose a toast to the best dad in all the world on his sixtieth birthday.’ Al really should have given some more thought to what he was going to say on the way down from the airport. But no matter, his father was beaming at him, raising up his glass of Montelcino. The ten grand brandy appeared to have been forgotten.
15 The Master
Nasdaq: 1860
Hang Seng: 7950
AUD/USD: 0.595
Miles sat at his desk at Galbraith Partners. Earlier in the day, he had taken delivery of his new Jeffrey West shoes. They felt great. The leather was soft; it didn’t need breaking in. While Miles was reflecting on what good value the shoes were, Karl put his head around the door of his side office.
‘Have you got a minute?’ he asked.
‘Sure,’ said Miles. ‘I’ll be there right away.’
Miles stood up from his desk and walked across the trading floor to Karl’s side office. His shoes felt even more comfortable as he road-tested them across the beige carpet. You can’t put a price on quality. Karl was seated at his desk wearing his shorts that had become his favoured attire during the summer months. Miles had questioned him about his choice of trouser only to be told, ‘I wear them, not just because they’re comfortable and cooler in the summer months but because we aren’t City stiffs working for a bank anymore. This is Mayfair and it’s our company. We can do what the fuck we want.’
Miles enjoyed the absence of a dress code at the fund. It allowed him to experiment a little more with his wardrobe. He wore Prada, Gucci, Hermes and Valentino and mixed them up with English shirts and old style City suits – when the occasion demanded it – Gieves & Hawkes, Turnbull & Asser. Appearance was less important than it had been at Trenchart Colville. All that mattered was returns. Nothing else. Even so, Miles still liked to dress well.
The fund had launched on July 1, almost exactly a year previously with 400 million dollars of capital under management. The fast start they had hoped for became a reality and within the first six months, they were up ten per cent with low volatility. During the autumn of 97, Karl had been hectic procuring additional capital for the fund while managing the largest block of risk. By the spring of 1998, Galbraith Partners were managing 800 million dollars with a further 500 million waiting to be allocated once they had completed a solid first year.
At first, Miles had found the environment challenging after his time at Trenchart Colville. The lack of client flow was unnerving as was his constant hunger to take positions and ‘get invested’. He never forgot what his grandfather had said to him on one of those numerous Saturday mornings that he spent with him in his office at the bank: ‘Never forget, Miles, flat is a position too.’ And it was a position
that Miles didn’t tend to hold for very long. That was not why Nick Stevens had fought so hard for him to come and work there. As his grandfather was also wont to say: ‘You’re not paid to not trade.’ But Miles was nothing if not adaptable. Once he had started to accrue some P and L, he felt increasingly comfortable with his decision process. He relished the freedom the fund gave him and the thrill of seeing his trades surging into the black. The market debates that the four of them had – Karl, Toni, Nick and himself – were fascinating. He was absorbing new approaches, new ways of thinking and it felt good.
After twelve months, he had cemented his position within the firmament of Galbraith Partners. He was primarily focused on fixed income, currencies and commodities. He was personally responsible for managing 300 million dollars of capital. Improving his ability to manage volatility was a key focus and Karl’s advice had been invaluable. In the past few months, he felt he was getting a handle on it, learning when to be aggressive, when to be defensive, when to say that he didn’t understand the price action, when to get in and when to get out, when to reduce and when to add. He honed his timing skills. Lots of people have good ideas but it’s all about timing. As John Maynard Keynes had said: ‘When the facts change, I change my mind.’
And then there was the money. Miles’s full year P and L was 30 million dollars of which he earned 15% personally. Four and a half million dollars was a lot of money. But to Miles it didn’t really mean anything. It was Monopoly money. This perception was exacerbated by the fact that nobody even seemed to talk about money in terms of exact numbers. This was true throughout the rarefied climate of Mayfair hedge funds. All they ever spoke about was returns. ‘I’ve got a billion dollars under management; my five year rolling mean annual return is 14.5% with a Sharpe ratio of two.’ Nobody talked about bonuses either. Banks did bonuses; funds did returns. When working in the hedge fund business, the questions that mattered were: What is my equity? What are my fees? What are my returns? What’s my vol? What’s my Sharpe ratio? How much do I have under management?
Shadow Banking Page 20