A Bourkoff Strategy for Making It in 2022

Brace yourself: There’s another wave of the pandemic. There are top financial firms telling staff to stay home to exercise caution, and the reality of higher interest rates is starting to pierce a market exuberance that’s only multiplied for 20 months.

What does that mean for 2022? Wall Street is searching for answers. “We’re entering a period of discernment, where growth alone is no longer sufficient,” Aryeh Bourkoff, the longtime dealmaker and founder of investment bank LionTree, wrote in his annual letter this week.

Bourkoff’s firm is focused on innovation, and has expanded to more than 130 employees with more than 200 entrepreneurs as clients since its founding almost a decade ago. He now sees a moment of massive transition that’s going to be challenging for corporate leaders. He, like many others, is discerning what the new economy means for the longevity of his clients. Who will be here in 20 years?

“Pick your spots, because I do think that we’ve had a wave of activity and growth buoyed by stimulus and now with a bit more of choppy waters ahead of us, it’s going to be a stock picker’s market,” Bourkoff said by phone. “Companies, as they navigate the world of innovation that’s necessary in a digital economy, there are going to be difficult choices associated with that. And that movement is not always going to be a smooth one.”

The trick will be finding investors for the long term to back CEOs willing to transition into a new era, to grab a greater share of a $100 trillion digital economy, according to LionTree estimates. It will require financial flexibility, Bourkoff said.

“If you’re going into a moment of massive transition, if you’re going into the new economy, moving from a dollar-based generation into the crypto generation, it’s not for the faint of heart,” he said. CEOs may need a strategy around digital finance. Bourkoff himself is considering creating a token for LionTree and weighing accepting crypto as payment for investment-banking services.

“Adaptability is necessary for any company in this new digital world,” he said. “Currency is going to be part of that, tokens are going to be part of that. The ability to operate in physical and virtual worlds.”

Bourkoff -- like many CEOs -- carries a relentless optimism. But concerns are indeed mounting among investors. Mike Novogratz, sitting in a fresh new headquarters for his Galaxy Digital overlooking the Hudson River, told a client by phone that he’s worried about the world right now.

“We had a Fed printing money non-stop, Powell gets reconfirmed and decides he has to act like a central banker, we’ve had just completely wrong Fed policy. They should have tapered a long time ago, they should have raised rates a long time ago,” he said in an exclusive television interview, following his client call. “People are starting to sell things. Everyone I talk to feels nervous right now.”

The things that were really holding up the market, “those things are really breaking down.”

More on Wall Street

• Scott Minerd tells Bloomberg Television that the Fed chooses to ignore the shape of the yield curve, and that “we are now setting ourselves up for a recession in 2023.”
• Leon Kalvaria, the chairman of Citigroup’s institutional clients group, says clients are looking at how they can cut expenses or pass costs onto consumers and inflation remains a top worry. Here’s his television interview.
• Kathryn Wylde, the CEO of the Partnership for NYC, says “it’s a lot more tenuous” when it comes to returning employees to offices by late January. “The longer this Covid goes on, the harder it’s going to be to get back to what we call normal.”
• Dragonfly Capital’s Tom Schmidt explains how crypto can be utilized in the real world.
• Large executive pay awards continue: JPMorgan’s Daniel Pinto was granted options worth around $25 billion for the firm’s desire to have him “continue his outstanding leadership in this new role for a further significant number of years,” Bloomberg’s Hannah Levitt reports. Jefferies granted stock awards to CEO Richard Handler and President Brian Friedman this week as well.

More to come, with just two short weeks left to the year. Send your tips and opinions to [email protected], and please join us next week for Bloomberg Television where I’ll be filling in as an anchor from 2-5 p.m. ET on Monday, Wednesday and Thursday, as well as 10 a.m. to noon that Thursday. Be safe, and have a great weekend.