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jerryking : vulture_investing   19

Paul Singer, Doomsday Investor
August 27, 2018 | The New Yorker | By Sheelah Kolhatkar.

Paul Singer, ,
The head of hedge fund Elliott Management, has developed a uniquely adversarial, and immensely profitable, way of doing business.

Bush had co-founded Athenahealth, a platform that digitizes patient medical records and billing claims for hospitals and health-care providers, in 1999, and he had built it into an enterprise with more than a billion dollars in revenue. One of the firm’s marketing taglines was that it freed doctors and nurses to spend more time doing what they loved—practicing medicine—and less time on paperwork. Athena served more than a hundred thousand health-care providers...... Paul Singer, the founder of Elliott Management and one of the most powerful, and most unyielding, investors in the world. Singer, who is seventy-three, with a trim white beard and oval spectacles, is deeply involved in everything Elliott does. The firm has many kinds of investments, but Singer is best known as an “activist” investor, using his fund’s resources—about thirty-five billion dollars—to buy stock in companies in which it detects weaknesses. Elliott then pressures the company to make changes to its business, with the goal of improving the stock price.....Hedge funds, especially activist hedge funds, are established users of private-investigation services.....The investor acknowledged that Bush was far from perfect, and said that “there is a role for activists to hold managements accountable.” But the investor worried that the focus on the bottom line would undermine the innovative spirit that had made Athena successful. “.....The idea that companies exist solely to serve the interests of shareholders—rather than also to serve workers, customers, and the larger community—has been dominant in the business world in the past thirty years. As the field of activist investing becomes increasingly crowded, many investors are going beyond their original mission of finding ailing or mismanaged companies and pushing them to improve. Instead, some have been targeting larger, financially prosperous companies, such as Procter & Gamble, Apple, and PepsiCo. ......Often, activists advocate for measures that drive up the stock price but can have negative effects in the future, such as the outsourcing of jobs, the elimination of research and development, and the borrowing of money to buy back a company’s own stock. The wisdom of these tactics has come under increasing scrutiny. Some of the most successful businesses to emerge in recent decades have staved off short-term pressures, forcing their investors to be patient with uncertainty and experimentation. The founder of Amazon, Jeff Bezos, wrote in an early investor letter that building something new “requires you to experiment patiently, accept failures, plant seeds, protect saplings.” ........Over time, this lack of long-term vision alters the economy—with profound political implications. Businesses are the engine of a country’s employment and wealth creation; when they cater only to stockholders, expenditures on employees’ behalf, whether for raises, job training, or new facilities, come to be seen as a poor use of funds. Eventually, this can result in fewer secure jobs, widening inequality, and political polarization. ..........Bush spoke about his last day in the office, when he had sobbed during his final address to Athena’s employees. He had also written a farewell letter. “I believe that working for something larger than yourself is the greatest thing a human can do. A family, a cause, a company, a country—these things give shape and purpose to an otherwise mechanical and brief human existence,” the letter read. “The downside about things that are larger than ourselves, of course, is that we who have the privilege of serving them ourselves are fungible. It is the fundamental definition. You can’t have the grace of the one without the other......Throughout our conversations, Bush returned to a theme that consumed him. He talked about how investors like Singer—financiers who take the assets built by others and manipulate them like puzzle pieces to make money for themselves—are affecting the country on a grand scale. A healthy country, he said, needs economic biodiversity, with companies of different sizes chasing innovation, or embarking on long, hard projects, without being punished. The disproportionate power of the Wall Street investor class, Bush felt, dampened all that, and gradually made the economy, and most of the people in it, more fragile.
distressed_debt  Elliott_Management  financiers  hard_goals  hard_work  hedge_funds  investors  long-term  patience  Paul_Singer  profile  shareholder_activism  Sheelah_Kolhatkar  time_horizons  vulture_investing  Wall_Street 
august 2018 by jerryking
Wilbur Ross brings art of restructuring to Team Trump
JANUARY 21, 2017 | FT| by: Philip Delves Broughton.

“When you start out with your adversary understanding that he or she is going to have to make concessions, that’s a pretty good background to begin.”

So all this stuff about tariffs and walls and protectionism turns out to be pure gamesmanship.......In his career as an investment banker at NM Rothschild and then running his own business, WL Ross & Co, he has shown repeatedly how he can dive into an industrial dung heap and emerge with a fistful of dollars and not a speck on his silk tie......... Working on his own account, Mr Ross’s most famous deal was his purchase of an ailing group of US steelmakers in 2002, shortly before President George W Bush imposed tariffs on imports of steel. Mr Ross used the protection to fix the operations, cut debt and draft new contracts with workers. He was able to take the company public in 2003 and sell it two years later to the Indian steel mogul Lakshmi Mittal.

He has pulled off similar tricks, mostly successfully in coal mining, textiles and banking, immersing himself again and again in new industries and the minutiae of the laws, trade rules and contracts that govern them.

As a student at Harvard Business School, Mr Ross was mentored by Georges Doriot, a pioneering advocate for venture capital, who said: “People who do well in life understand things that other people don’t understand.”
For bothering to understand things that most people don’t, Mr Ross deserves more credit than he gets. He is often easily dismissed as a vulture or someone who buys low and sells high. But what he has done is hard. The devil in restructuring is in the grinding detail of voluminous contracts and difficult, often highly emotional negotiations.
arcane_knowledge  bankruptcy  contracts  detail_oriented  dispassion  emotions  gamesmanship  Georges_Doriot  hard_work  imports  HBS  inequality_of_information  Lakshmi_Mittal  leverage  messiness  minutiae  moguls  negotiations  new_industries  Philip_Delves_Broughton  preparation  protectionism  restructurings  sophisticated  steel  tariffs  thinking_tragically  unsentimental  vulture_investing  Wilbur_Ross 
january 2017 by jerryking
Steven Mnuchin’s Defining Moment: Seizing Opportunity From the Financial Crisis - WSJ
By RACHEL LOUISE ENSIGN, ANUPREETA DAS and REBECCA BALLHAUS
Updated Dec. 1, 2016.

Federal officials expected to suffer as much as $8 billion in losses from IndyMac. That left regulators looking for someone to take over the bank and mitigate the damage. Speed was essential, since the FDIC was bracing for a wave of additional bank failures.

Mr. Mnuchin assembled an all-star cast drawn from his years on Wall Street, including Mr. Soros, hedge-fund manager John Paulson, billionaire Michael Dell’s investment firm and several former Goldman executives, including J. Christopher Flowers. They signed up on the basis that Mr. Mnuchin would personally run the bank, according to people familiar with the matter.

By now, he knew that few bidders would be willing to buy all the failed bank’s assets. And he knew he was taking a giant risk.

At the end of 2008, Mr. Mnuchin persuaded the FDIC to sell IndyMac for about $1.5 billion. The deal included IndyMac branches, deposits and assets. The FDIC also agreed to protect the buyers from the most severe losses for years. That loss-sharing arrangement turned out to be a master stroke.
turnarounds  financial_services  Steven_Mnuchin  Goldman_Sachs  opportunistic  Carpe_diem  economic_downturn  vulture_investing  kairos  seminal_moments  rainmaking  defining_moments 
december 2016 by jerryking
Newton Glassman, a private man in the stressful world of private equity - The Globe and Mail
Dec. 06 2013 | The Globe and Mail| BOYD ERMAN.

Newton Glassman has spent the past 11 years running hard to build what has become Canada’s second-largest private equity firm....Mr. Glassman’s firm, Catalyst Capital Group Inc., now runs $4-billion of assets that it mostly puts to work in messy distressed situations, trying to take control of struggling companies and turn them around....Investing in distressed debt is a gritty, confrontational business. Mr. Glassman's firm typically buys bonds issued by a troubled company, spending countless hours searching for the securities that will provide the most influence, then tries to gain control when the company is restructured. The goal is to buy in cheap, seize power if necessary, fix the business and reap the rewards. It can be a rough job, because there is rarely enough money to go around and someone usually loses out.

When he was at Cerberus, founder Steve Feinberg warned him about the personal cost of building a firm, telling him: “There is a massive difference between being one of the key players and being THE guy in charge.”

Catalyst’s charitable arm also is building a knowledge centre that will work with universities to provide investors, lawyers and judges with more education about credit markets. Mr. Glassman has harsh words for the way credit markets sometimes work in Canada, as judges have sometimes upset the traditional order of restructurings...

Mr. Glassman says that at the time, he thought Mr. Feinberg was “just yakking.” But if he knew then what he knows now about building his own firm, he says he probably would have stayed at Cerberus. “The job of being the guy is if you take your responsibilities seriously, it is all encompassing.”
private_equity  Newton_Glassman  Bay_Street  Boyd_Erman  Catalyst  personal_cost  distressed_debt  turnarounds  Cerberus  vulture_investing  restructurings 
december 2013 by jerryking
Vulture Funds Serve Purpose
Dec 20, 2006 | National Post | Marie Beaudette.

Harbinger said Crescent declared "thermonuclear war” by resisting the hedge fund's advances. But the rule of

mutually assured destruction doesn't apply in bankruptcy: Crescent eventually conceded to a hedge fund determined to win.
Regulators are starting to question the role hedge funds play in Chapter 11 cases. The Securities and Exchange Commission has expressed concern about whether hedge funds have lied to gain leverage in bankruptcy cases and traded on sensitive information gained through the process.
New York University Professor Edward Altman estimates there are at least 160 investment funds in the US. specializing in distressed-company securities. "A new breed of distressed-debt investors, called ‘vulture funds,‘ has emerged as one of the fastest- growing sectors of the burgeoning hedge fund and private equity field," Mr. Altman wrote in a recent study.
vulture_investing  bankruptcies  distressed_debt  restructurings  SEC 
september 2012 by jerryking
Why Flush Financiers Court Unloved Businesses - WSJ.com
APRIL 9, 2007 | WSJ | By KAREN RICHARDSON and SERENA NG

Relatively Cheap Entries, Potential for Rich Exits Draw Bargain Hunters to the Turnaround Game.

Veteran financiers flush with cash are turning their sights on industries shunned by the stock market, tapping into tax benefits, newfangled loans and an ability to borrow far more money than public shareholders would tolerate.

...These deals offer a chance for successful restructuring of companies and industries struggling to meet the challenges of globalization, modern technology or economic cycles. As private enterprises, they can undertake union talks and financial restructuring outside the glare of public scrutiny and without worrying about the impact on small shareholders.
boring  Sam_Zell  turnarounds  Wilbur_Ross  restructurings  private_equity  privately_held_companies  financiers  vulture_investing  economic_cycles  unglamorous 
october 2011 by jerryking
Failure Chronicles -
April 2011 Harvard Business Review by Roger McNamee,
Elevation Partners.

The idea behind Silver Lake was to create a new kind of private equity.
Instead of a typical financial engineering strategy of using high
leverage to squeeze cash out of mature companies, we focused on “midlife
venture capital”—helping mature tech companies create new products that
would transform their businesses. Our approach was based on two
insights: Mature tech companies had low valuations, and investors
overestimated the cost and complexity of product transformations. At any
other time, Silver Lake’s radical idea might have scared investors, but
in the spring of 1999, institutional investors—state pension plans, in
particular—were desperate to put money into the tech sector. It’s hard
to imagine better circumstances in which to test a new investment
strategy.
failure  private_equity  Silver_Lake  fallen_angels  midlife  turnarounds  vulture_investing  Roger_McNamee  insights  institutional_investors  valuations  technology  financial_engineering  transformational  overestimation  radical_ideas 
april 2011 by jerryking
Facing Budget Gaps, Cities Sell Parking, Airports, Zoos, Other Assets - WSJ.com
AUGUST 23, 2010 | Wall Street Journal | By IANTHE JEANNE DUGAN.

The privatization trend is being spurred by a cottage industry of consultants, lawyers and bankers. Allen & Overy, a New York law firm, dubs it "rescue investing" and recently provided investors a booklet on "jurisdictions of opportunity"—municipalities whose laws, budget woes and credit ratings make them most likely to make deals [jk: unexploited_resources ].

"More public-private partnerships for public infrastructure in the U.S. have reached commercial and financial close than during any comparable period in U.S. history," the booklet says.
airports  assets  austerity  cities  cottage_industries  cutbacks  deal-making  dealmakers  divestitures  entrepreneurial  fallen_angels  infrastructure  investors  law_firms  lawyers  municipalities  opportunities  opportunistic  parking_lots  pitches  PPP  privatization  prospectuses  rescue_investing  unexploited_resources  vulture_investing 
august 2010 by jerryking
Avenue Capital's Chief: Don't Call Him a 'Vulture' - WSJ.com
MARCH 27, 2010 | Wall Street Journal | by By MIKE SPECTOR.
Avenue Capital's Investor in Chief--He's Prescient. He's Well-Connected.
Just Don't Call Marc Lasry a 'Vulture'.
moguls  vulture_investing  investors 
march 2010 by jerryking
The art of bringing order - and healthy returns - out of chaos
Mar 19, 2007 | Financial Times pg. 5 | PETER SMITH.Nothing attracts the interest of private equity more than a distress signal
private_equity  distressed_debt  vulture_investing  signals 
june 2009 by jerryking

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