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Andrew Hall does not deserve $100 million from Citigroup

Last month my colleague Zac Bissonette posted If Andrew Hall made Citigroup money, why shouldn't they pay him? and I have been pondering this myself for a while. As a very active participant in the investment world and a supporter of capitalism, I did not want to make a knee jerk response.

A Mr. Andrew J. Hall, who heads Phibro, LLC, a subsidiary of Citigroup Inc. (NYSE: C) thinks he deserves $100 million for being in charge of this division because it made over a $650 million profit -- and he is lobbying very actively for the cash.

So here is what I concluded: The $100 million payout is outrageous!!!

Continue reading Andrew Hall does not deserve $100 million from Citigroup

If Andrew Hall made Citigroup money, why shouldn't they pay him?

The Wall Street Journal reports (subscription required) that "A top Citigroup Inc. (NYSE: C) trader is pressing the financial giant to honor a 2009 pay package that could total $100 million, setting the stage for a potential showdown between Citi and the government's new pay czar."

The trader involved is Andrew J. Hall, who heads Phibro LLC, a Citi-owned energy trading division. But here's the kicker: His compensation is determined by the profitability of his unit so if he is to receive a $100 million payout, it will be because he generated far more than that in profits for Citigroup.

Continue reading If Andrew Hall made Citigroup money, why shouldn't they pay him?

Andrew Hall, Citigroup's quarter-billion-dollar oil trader

The Wall Street Journal [subscription required] presents a fascinating study of Andrew J. Hall, a Citigroup Inc. (NYSE: C) trader who made $250 million in 2007 due to a successful bet beginning in 2003 that anticipated a change in the way the world valued oil. And his money and attitude have put him in some street fights with his Connecticut neighbors over his $100 million art collection.

What was Hall's trading insight? In 2003 he concluded that long-term and short-term energy prices would soon abandon their historical relationship with one another. For more than a decade, oil had ranged from $10 to $30 a barrel. But he concluded that demand growth -- driven by China and India -- would outstrip supply.

He bet on this trend by investing in the extremely long-term market in which traders buy and sell oil to be delivered years in the future. Back in 2003, oil for future delivery was as much as 20% cheaper than oil in the current -- or "spot" -- market. Hall told traders to bet that this relationship would reverse itself. He bet on this by buying all the oil futures he could for delivery three to five years out along with "call" options that gave him the right, but not the obligation, to buy oil at lower prices in the future. .

Continue reading Andrew Hall, Citigroup's quarter-billion-dollar oil trader

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Last updated: November 24, 2009: 08:26 AM

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