These are frothy, giddy times at Third Point. Read more »
Point: “Our enthusiasm about MS’s turnaround benefits from our generally macro views. We expect CEO confidence to rise and global corporate activity levels to increase markedly in 2013. Morgan Stanley, with its sterling reputation, talent pool, and record in execution in investment banking advisory and capital markets, is uniquely positions to benefit from this improvement.” Counterpoint: “Even in early 2010, however, it was clear to many inside the firm that [James Gorman] would have his work cut out for him. Every Wednesday, executives from various corners of the bank who belonged to what was known as the asset liability committee would meet at noon to examine the cost to the firm of everything from looming credit-rating downgrades to regulatory changes. ‘It was the most depressing meeting ever,’ said one attendee who spoke on the condition of anonymity. ‘It was very clear the Morgan Stanley we knew was never coming back.’”
As many of you know, around these parts we are constantly debating the merits of various financial services employees’ food eating challenges. Historically, we’ve detracted points for allowing the participants far too much time to complete the task at hand (opening bell to close, might as well just make it limitless), an insufficient volume of food (a box of Munchkins, considered by many to be a snack), and lack of originality (vending machine challenges have been done). On the flip side, we’ve applauded creativity (an investment banker and 500 Starburst enter a room and there’s a webcam involved),* obscene amounts of food and enough sugar to cause hyperglycemia (244 oysters, a cupcake of death), and topicality (the delicacy that is the Sausage Pancake Bite: yes! Double Downs: double yes!).
Which brings us to this: the Herbalife Food Eating Challenge. New York Observer reporter Patrick Clark noticed that while the Herbalife story has been covered by many an angle so far (the blood-sucking pyramid scheme angle, the grandma angle, the Dan Loeb/UWS hedge fund manager on UWS hedge fund manager angle), the most important angle of all had yet to be explored: the actual ingesting of this stuff angle. Read more »
An important truism in the financial markets is that there’s no such thing as a “toxic asset,” tout court; everything is toxic/dangerous/Bad at some (high) price and attractive/safe/Good at some other (much lower) price and there’s a wide area in between where things mostly live and you fight about their pricing. You can apply that insight to junk bonds or CLOs or really any number of things, and you should, but today it’s sort of fun to apply it to Herbalife. As far as I can tell the argument over Herbalife goes something like this:
Herbalife opponents: Herbalife is a horrible pyramid scheme that preys on disenfranchised, mostly poor and minority people and convinces them to part with their life savings through misleading advertising and high-pressure sales techniques.
Herbalife supporters: True! And … ?
Opponents: And therefore it will be shut down by the FTC and the stock will go to zero.
Supporters: That’s … wow, that’s just hopelessly naive. I’m gonna go buy some HLF.
Today CNBC’s Herb Greenberg has a good statement of the “horrible pyramid scheme” case, which of course has been most memorably taken up by Bill Ackman, who is betting a billion dollars on “shut down by the FTC and go to zero.” And last week Bronte Capital’s John Hempton gave the classic statement of the “hopelessly naive” case.1 As one Herbalife shareholder put it when I asked if he thinks HLF is a pyramid scheme, “in the colloquial sense, yes; in the legal sense, no.”2
You can! Provided you pay up, as he’s offering to grace you and four friends with his presence as part of an auction on CharityBuzz, the proceeds of which go to the Surfrider Foundation, whose mission is “the protection and enjoyment of oceans, waves and beaches through a powerful activist network.” Will he tell you about what it was like the moment he and his team discovered that Scott Thompson was an academic charlatan of the highest order? Bid and find out.
What’s been happening at Third Point lately? Glad you asked! The hedge fund just released its Q3 letter to investors and it’s got lots of exciting news to share. In addition to being up 6.8 percent for the quarter, the firm found inspiration in the lyrics of Tupac Shakur, whose face will henceforth float alongside a new unofficial slogan adopted by TP on desktop screensavers, a giant banner displayed in the lobby, and company letterhead.
Tupac wasn’t the only 90s musical act Third Point looked to for guidance during the idea generation process these last three months. Read more »
Even more telling, Ryanism’s alarming ascendancy has stripped the veneer off some centrist groups long-believed by some on the right to front for liberal policies. For example, the cofounder of the nonpartisan self-described “moderate” organization Third Way has described Ryan as a “radical and a bomb-thrower.” (So shrill have the organization’s attacks on Ryan been that they provoked long-time Third Way donor and trustee Daniel Loeb, a New York financier, to resign his board membership in disgust, writing, “I can no longer support a group which is in the back pocket of this administration.”) [TWS]
Yahoo Names Marissa Mayer, Who We Hope For Her Sake Really Graduated From Stanford With A B.S. In Symbolic Systems, CEOBy Bess Levin
The Third Point founder is reportedly looking for a buyer for his 10,674-square-foot penthouse at 15 Central Park West. If that sounds like something you’d be interested in, people hear that Loeb “wants $100 million,” which would represent a 122.22% return (DL and his wife bought the place for $45 million in 2008). While perhaps a tad pricey, consider that back in November, Sandy Weill was able to get $88 million for his 15CPW apartment, a relative dump at 6,744-square-feet.* Read more »