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A Talk with Robert O’Shea, Co-Founder of Fordham’s O’Shea Center for Credit Analysis and Investment

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On Oct. 21, members of the Fordham community heard how a unique idea helped Robert “Bob” O’Shea, GABELLI ’87, become one of the youngest partners in Goldman Sachs history before establishing his own firm.

O’Shea was featured in a virtual fireside chat with Michael Gatto, an adjunct professor at Columbia Business School and Fordham’s Gabelli School of Business, as a part of the Gabelli School’s Centennial Speaker Series. The pair also gave an update on the new O’Shea Center for Credit Analysis and Investment at the Gabelli School of Business, which was founded thanks to $2 million in donations from O’Shea; his wife Michele, FCRH ’88; and Gatto, who will be the center’s director.

Pounding the Pavement

O’Shea was a “quintessential Fordham student,” according to Gatto. He’s one of five children, his dad was a New York City police officer, and he attended on a scholarship. While studying at Fordham, he decided he wanted to go into investment banking.

“I applied [for jobs]  at every single major investment bank on Wall Street. And every single investment bank rejected me,” O’Shea said. “I used to hand deliver my resumes; I would take the D train down and try to hand them in to the human resources department in hope of getting an interview.”

O’Shea said that he was rejected by “a minimum of 50 firms,” but with some persistence he landed an interview at Security Pacific and impressed them enough to get a job working in the leveraged loan market. O’Shea said that while working there he had an idea for trading loans on the secondary market, where one investor purchases debt from another, and pitched this idea to other firms, including Bear Stearns.

“Bear Stearns, as a firm, was less focused on pedigree—it was a gritty firm, a very entrepreneurial firm, a firm that wanted young, hungry, driven people,” O’Shea said. “So when I came in and walked them through this idea that I had, and explained that I thought this was a really large market, and no one was really involved with it, they were the type of firm that would take the shot.”

One of the Youngest Partners at Goldman Sachs

After working at Bear Stearns for a few years, O’Shea was invited to dinner by a partner at Goldman Sachs, who told him that they wanted to start a bank loan business. O’Shea said that the partner laid out their plan, which was to underwrite bank loans the way they previously had with stocks and bonds.

“I told him, ‘If I were you, I wouldn’t do it that way,’” he said. “What I would recommend is that you go in and become the number one market maker in loans [and]  create an institutional product around bank loans.”

O’Shea said that the partner loved the idea and brought him on board to do it.

O’Shea “created the secondary trading market of bank loans,” Gatto said. “That opened up a whole bunch of new industries, especially for people like me who specialize in distressed debt investing,” he said.

At Goldman Sachs, O’Shea built a team to cover the bank loan industry and, at age 29, became one of the youngest people in the company’s history to be named a partner. He went on to run the company’s high yield business and their collateralized loan obligation business.

But O’Shea said as he was moving up, he began to notice that “the more senior that I was getting, the further away that I was getting from the business itself.”

Launching His Own Firm

In 2002, that prompted him and one of his partners at Goldman Sachs, Edward Mulé, to launch Silver Point Capital, a hedge fund based in Greenwich, Connecticut, that focuses on “credit and special situations investments.” Today the firm manages about $15 billion in assets.

O’Shea credits the company’s success to hiring the right people, including Gatto, who came on three months after they launched and became the firm’s first non-founding partner.

“It’s all about the people—if you hire exceptional people, and you build a culture of teamwork, you can produce exceptional results,” he said.

Launching the Credit Analysis Center: ‘Not One Other University’ Focused on Credit Training for Undergrads

In their work, both Gatto and O’Shea said that they began noticing a need for training in the credit markets.

“Credit drives our economy, the global economy, the U.S. economy—if you look at the history of the country, credit markets are at the center of the growth of the U.S. economy,” O’Shea said. “Without credit, businesses can’t grow at the same rate.”

Previously, banks handled the credit lending process, Gatto said.

“[The banks] put them through a six month credit training program, because it’s technical, but now, banks are no longer the driver of leverage lending—it’s private lending funds, public business development companies, and they’re not training people,” he said. “There is a demand for credit-trained people, and not one other university is focused on it today at the undergraduate level.”

Established in 2020, the center will formally launch next year. It will emphasize three main components—education, networking opportunities, and connection to industries.

“There is no concentration that combines accounting, finance, and how to assess companies’ credit profiles—that skill is tremendously valuable even if you were going to leave the credit world and go into the equity world. It’s a competitive advantage to understand,” O’Shea said.

Donna Rapaccioli, Ph.D., dean of the Gabelli School, said the O’Shea Center will be “a center of excellence that bridges the gap between academia and financial markets.”

“A critical part of the center’s work,” she said, “will be helping students to gain a competitive edge in an underserved financial area.”

Joseph M. McShane, S.J., said that the center would be “bringing our students and professors together with the professional world and the evolving realities of 21st-century finance.”

“We believe this sort of collaboration is essential for the Gabelli School’s mission, and what that mission is, is the education of compassionate business leaders that drive positive global change,” he said.

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