The bear market’s message to MBA graduates – tough luck.

MBAs who graduate during a bear market may never get the chance to start a Wall Street career, which means they would earn significantly less over their lifetime than those who graduated when things were rosy around them, a Stanford business school study shows.

The proportion of graduating MBAs who manage to get hired into lucrative investment banking positions shrinks or expands depending on how well the stock market is performing in a given year, according to the study by Paul Oyer, an associate professor of economics at the Stanford Graduate School of Business. The study is based on the long-term career choices and salaries of the school’s graduates over 35 years.

More than a quarter of Stanford MBAs who graduated two years before the stock market crash of 1987 became investment bankers, but only 17 percent graduates two years after the crash took that career path. And investment bankers were estimated to make a lot more over their lifetimes than those who went on a different path.

(Photo: Graduating student Abel Charron displays a “Hire me” sign before the 2007 USC School of Cinematic Arts commencement at the University of Southern California in Los Angeles, in this May 11, 2007 file photo. REUTERS/Mario Anzuoni/Files)

With just days left to complete deals to slash labor and debt costs or face bankruptcy, Chrysler has won union concessions aimed at paving the way for a deal with Fiat and the U.S. government to save the privately held automaker. The UAW said that deal must be ratified by Wednesday and meets conditions mandated by the Treasury as part of an emergency loan program for Chrysler. Treasury’s deadline is Thursday.

“The patience, resolve and determination of UAW members in these difficult times is extraordinary, and has made it possible for us to reach the agreement we will present to our membership,” UAW President Ron Gettelfinger said in a statement. The UAW represents about 26,800 Chrysler workers in the United States. The company also has a contract buyout offer on the table for those workers, which expires today. GM is expected to announce a fresh round of cost cutting later this morning.

The U.S. Treasury was expected to make a new debt restructuring offer to Chrysler’s lenders, who are owed $6.9 billion, as soon as today. Attention has shifted back to creditors. Whether they will show patience, resolve and determination remains a question.  Whether doing so will produce a deal is an even bigger one.

Deals of the Day:

* American International Group has received second-round bids from three groups for its aircraft leasing business, valuing the unit at under $5 billion, a source familiar with the matter said.

* Shares of Japan’s Shinsei Bank and Aozora Bank soared after sources said the two money-losing lenders were in merger talks to form Japan’s sixth-largest bank.

* Japanese brewer Kirin agreed a $2.5 billion buy-out of Lion Nathan, Australia’s second-largest beer maker, in a move that could pave way for Kirin to expand further into Asian markets.

* Japan’s Mitsubishi Rayon said it aims to complete its buyout of unlisted British chemicals maker Lucite International by the end of May, saying antitrust authorities worldwide had given the deal the go-ahead.

* HSBC Private Equity and Actis Capital LLP are preparing rival bids for a stake in Franklin Offshore International, sources said, as struggling private equity firm 3i Group Plc seeks to sell its majority stake in the oil services company.

* Poland’s largest bank PKO BP may sell its minority stake in Bank Pocztowy as the state treasury fears a conflict of interest between the two, daily newspaper Gazeta Prawna quoted a state official as saying.

* Anheuser-Busch InBev has picked private equity firm Kohlberg Kravis Roberts & Co (KKR) [KKR.UL] as preferred buyer of South Korea’s Oriental Brewery (OB), a company official said, confirming a report.

* Japan’s NEC Electronics and Renesas Technology said they were in talks to merge next year to create the world’s third-biggest chipmaker after Intel Corp and Samsung Electronics.

(PHOTO: Fiat workers assemble cars at an automobile factory in the southern Italian town of Pomigliano January 30, 2009. REUTERS/Stefano Renna/Agnfoto)

The fund of hedge funds concept took a serious knock last year with Bernard Madoff’s $65 billion fraud, leading high net worth investors to pull out money over concerns that the due diligence hadn’t been quite as diligent as one would hope.

Even managers who weren’t exposed to Madoff had to calm client fears. This has prompted the bigger, more institutional groups to seek ways of gaining more control over assets that the underlying managers are running.

Goldman Sachs Asset Management (GSAM) is currently building out its separate account platform with the aims of improving hedge fund transparency and ensuring that hedge fund managers’ interests are properly aligned with those of their clients. “It gives you much greater leeway to shape the investment guidelines and terms,” says Charles Baillie, co-head of alternative investments and manager selection at GSAM, who oversees some $19 billion in hedge fund assets.

Separate or managed accounts are usually separate vehicles specifically set up for a larger investor. They give the investor more scope in setting the liquidity parameters, and control over the underlying assets. Baillie says more fund of hedge fund managers had started looking at this model but that the higher costs and back office requirements have discouraged many from pursuing it.

“Under this structure you can see your assets and choose your own custodian,” Baillie says. GSAM is also trying to ensure that its managers have a lot of their own money invested in their funds, and where the investment horizon is longer, is looking to extend the period over which carried interest is paid.

This means that managers would only be able to pay themselves profit participation fees when profits have actually been booked, rather than paying them every year on the notional value of the assets.

Baillie says his team is now looking at opportunities to restructure the fees and liquidity terms of credit hedge funds - amongst others - on the platform, following large outflows from such funds last year. “We are currently in discussions with a number of funds both in the US and Europe,” he confirms. 

If the separate account approach gains momentum it is likely to support the further institutionalisation of the hedge funds business, as investors seek ways to sleep better at night.