Cabrera Capital Markets CEO Martin Cabrera joins Yahoo Finance’s On The Move panel to weigh in on diversity in the workplace of the financial services space.
- Martin Cabrera-- he is the founder and chief executive officer of Cabrera Capital Markets as well as Cabrera Capital Partners. Good to have you here, Martin.
MARTIN CABRERA: Thanks, Adam, for having me.
- And we should point out that you are one of the largest Hispanic-owned broker dealers in the United States, transacting about $1 billion in securities every day. So I wanted to ask you, based on a conversation you and I had, about Wall Street and the inclusion of whether it be Latino or Latino-owned firms or African-American-owned firms, because we had Mr. Rogers on last week. Does Wall Street allow these firms to have access to the trillions of dollars that are, in any given year, moving through the system?
MARTIN CABRERA: I think some of them do, and there are some companies that have been more inclusive. I think it's still a work in progress for most corporations as they're inviting more firms like myself and others to participate in some of the underwriting deals, whether it's AT&T or a Charter Financial or Charter Communications. But I think for the most part, the numbers are still low. And that's where a lot of firms, minority-owned firms, woman-owned firms are looking to get a bigger bite of the pie and to participate and compete.
So I think it kind of comes from Wall Street but as well as from some of the other pension funds around the country that you're seeing the pension fund market, which is roughly about a $72-trillion market, and the lack of access to capital to some of those pension funds by some of those money managers, whether they're fixed income money, managers equity money managers, or private equity kind of firms that are out there. So I think there are some firms that are doing a good job. There are others that are working on it.
I think the tech sector has become a very big player in the investment banking space. I think they're working on other programs to be more inclusive and how do they include firms that are on the institutional side, participate in some of their debt deals as well as their equity IPOs when they're coming to market.
JULIE HYMAN: Martin, it's Julie here. How do you crack all this open, right? Because this is sort of the longstanding, insular network of white, Ivy League-educated dudes who know each other or have grown up in the same network. So how do you sort of break that up, open that up to other firms outside that tight network?
MARTIN CABRERA: I think it doesn't happen overnight, Julie. It comes with time. But I think there are some of the biggest firms-- BlackRock-- you can use that example. $7-trillion firm. They're making it intentional about being inclusive on the brokerage side as well as on the money management side. And they are looking at, whose assets are they managing? Who are the folks that are putting money into the pension fund systems, that are putting their checks in every two weeks?
And they're looking beyond just the pension fund clients, but who are those individuals putting the money into those pension funds who they're managing their assets, whether it's defined contribution plan or defined benefits plan? And it is folks of color. You can look at California, where the population is 42% Latino, 10% African-American, 15% Asian. But when you look at all of their pension fund systems, it's probably less than a half of 1% when you look at the fees, being able to participate.
So I think cracking into it, you have to have firms that are going out there and competing. There are firms that are going to do well and rise to the top and perform, and there's others that aren't going to perform. I think with the firms that are minority-owned firms, they want an opportunity to compete for the business, manage those assets. And if they don't perform, fire them, just like you would any other firm.
But it is kind of cracking that insular network of individuals that typically has not been folks of color. So I think you have to be intentional about it. I think there are a lot of CEOs that have put out letters-- and that's wonderful-- over the last two weeks. But they have to have a plan in place, and they have to have metrics to see if they're being successful or not.
- And Martin, just thinking about that intentionality, when you look at this small business group, Latinos and Latinx population are really fueling that growth. I'm here in Los Angeles. You mentioned that 42% statistic. And just seeing how they can actually accumulate more wealth. What is your kind of pitch? How can you get folks who are running, driving businesses, perhaps pre-COVID, to say, hey, it's worth investing that money into the market?
MARTIN CABRERA: I think the Latinx community is growing substantially. So the US Latino GDP is about $2.3 trillion, roughly 10% of the overall US market. And it's continuing to grow every year. But that is a huge segment.
And you have the educated population in the Latino community as well that they are going to be 27% of the graduates coming out of the class of 2022. So you see all these individuals that are going to be having new jobs, that are going to be contributing into the 401(k)s, into the buying power that continues to grow. And you see this whole wave. It's like a Latino tsunami taking place, a buying power that's coming.
So there's opportunities. And some of them will later start businesses, but they need the access to capital, whether it's going to come from a VC firm or private equity firm or even a bank that's going to be able to lend to some of those business that are growing at exponential rates. So it is a huge market that continues to grow, and it's going to be fueling our US economy. And there's just great buying opportunities in those areas. But also, for those that get access to capital, they're going to be able to scale their businesses.
JULIA LA ROCHE: Martin, hi. It's Julia La Roche. Thank you so much for joining us for this conversation. I do want to shift and talk a little bit about business. You all are involved in some of the municipalities of-- I guess debt for municipalities. We've been talking about this space for a while. I'd love to get your read on it. What are you seeing? What do you think needs to be done next when it comes to this?
MARTIN CABRERA: So I think in this issue, we are able to lead deals out there in the municipal bond market. We just led three lead deals, about a $153-million Montebello, California deal, a city of Inglewood deal, and also a city of Carson deal. And we have great pricing. So we love competing against the bulge bracket firms. There's times they're going to outperform us. There's times we're outperforming them. There's times that we're working with them as well on other kind of corporate bond yields.
But I think for the municipalities, you're starting to see that even with COVID, all of the issues, some of them are falling very short on their sales tax collections, the revenues that they were generating from entertainment. So they're looking at their budgets, their cash-- what they have in cash. So their first priority is always to pay off their debt holders. And then they have to look at their employment and their employees and paying them.
But I think for most of them, we've encouraged them to look at their cities and their states like a business. Hoard your cash and just be prepared for the next few months that are going to be rough. And so we try to help them with some of their solutions and their planning and their debt issuance as well, and having the distribution not just here. A lot of the munis are becoming taxable munis. So it allows us to not just market here in the States, but also to our taxable buyers in Europe and Asia and Latin America.