Big Wall Street firms might be laying off by the thousands, but smaller firms like Houlihan Lokey and Cantor Fitzgerald are doing the opposite. Hoping to capitalize on the dislocation of Wall Street's best and brightest, New York-based private firm Cantor Fitzgerald plans to hire least 200 people in 2012.
The firm is seeking to capture market share "where opportunities arise," Chief Executive Shawn Matthews told FINS in a interview. Cantor is scooping up refugees from other firms, particularly in investment banking, asset management and in London.
FINS caught up with Matthews to find out what he's looking for in applicants this year.
Julie Steinberg: How many people did you hire in 2011 and how many are you planning to add in 2012?
Shawn Matthews: We had a 20% increase in 2011 to bring us to somewhere around 5,000 people. We're looking to take that number much higher. Around 200 people is a reasonable number to shoot for in 2012. We want to be talking to as many talented people as possible.
JS: Why are you able to hire as others lay off?
SM: The financial landscape is changing aggressively. Financial institutions are having a much more difficult time with regulatory environment. They have to shed talented people. Smaller firms can't compete and you see them close and lose market share. We're sitting right in the middle. The real opportunity is set for us to gain significant market share in the next five to 10 years. We are the premiere mid-tiered investment bank. We're going to continue to grow our market share where opportunities arise.
When we look at the global picture, we're expanding our presence in a lot of areas. We're aggressively growing in London as people pull back. As we continue to grow and control our franchise it's time for us to make significant strides.
JS: Can you elaborate on how the volatility on Wall Street is working to your advantage?
SM: Right after the financial crisis there were big opportunities. Wall Street firms came back aggressively, they were making lots of money, returns were high. Now as the regulatory environment changes, there's a structural change in how these businesses are going to work. They don't have enough regulatory capital. Their return on equity will go to 7%. At 7% ROE people are questioning business lines.
We're seeing banks talking about scaling out of business lines. The Street will continue to shed jobs, which will take a few years, and we'll take advantage of that.
If the regulatory situation doesn't change drastically, I think there will be longer-term retrenchment. The financial services world grew substantially until three years ago. Wall Street was becoming bigger and bigger. Now that the regulatory environment has changed, Wall Street will have to look like an eighties-style broker dealer. It's a much smaller world. While everyone retrenches, we have a clear opportunity to gain talent and human capital.
JS: What businesses are you planning to grow ?
SM: We're building out our investment banking area, we're adding to our asset management business, we're growing in every facet of the business. We want to aggressively grow asset management. There's a real opportunity there.
We filled the equities positions we were advertising for in 2011 but we're still looking to hire for equities. We are aggressively looking to hire in Europe for the equities space. We're excited about fixed income and the opportunity out there. It's a difficult market environment but we're highly committed to growing the franchise. Markets are cyclical in nature and they always come back. We have plans for prime services to launch in London that will target middle-market firms.
JS: Anywhere else besides Europe?
SM: We're continuing to hire in Asia. We hired 15 people in the past few months in Singapore and we're looking to 30 more. We're looking to build a world-class investment bank and looking to get better. There's a lot of talent we probably wouldn't have seen three or five years ago. We're at a point on Wall Street where people are cutting very talented people.
JS: What type of talent are you looking for?
SM: Salespeople and traders in equities and fixed income. All our trading businesses are in growth mode. We are looking for seasoned talent. That's where the opportunity is at this point in time. When you think how compensation has changed on Wall Street, we think seasoned talent will want to come here. Compensation is moving so fast and changing. We have a relatively simple model as a percentage-based payer. We're willing to pay employees a percentage of the money they're bringing in.
JS: How about the research group? Any hiring there?
SM: We've added 15 people in the five or six months. We're going to be selective there. We think now we have offer strong diversified global access to quality research.
JS: Did you hire anyone from MF Global after it went bankrupt?
SM: We have brought on people from MF global. I can't say numbers but certainly more than two handfuls.
JS: What makes you different than say, Houlihan Lokey, another smaller investment bank that is also hiring?
SM: Houlihan is specialized in the niche part of investment banking. They're more attuned to bankruptcy.
Write to Julie Steinberg at Julie.Steinberg@dowjones.com