His home wasn’t foreclosed on so I’m not sure this technically falls under the category of “ironic” but I think we can definitely consider it rich: John Paulson, who made a killing shorting the individual mortgages of down-on-luck friends out East, has been forced to slash the asking price of his Southampton home. The 6,800 square foot house is now going for the bargain basement price of $16.9 million, after sitting on the market for four months at $19.5.
John Paulson’s Southhampton Price Cut [City File]
Late last year, an 18,000 square foot Bridgehampton house suffered the humiliation of foreclosure, an indignity that’s supposed to be reserved for Ed McMansions in California. Adding insult to injury is the news that the home, which features 8 bedrooms, 9 ½ baths, a pond, elevator and “flower-cutting room,” all set on 4-acres, has just seen its asking price reduced from $27 million to $19.5 million. The only thing that could possibly make this sad situation even worse is if Lenny Dykstra is able to successfully sell his Thousand Oaks home for the delusional price of $24,950,000 (i.e. 33% more than what he bought it for less than a year ago) before this place goes (which might actually happen, considering Nails is throwing in some deal-clinching extras, such as his “Discarded Dips of Distinction,” a collection of chewing tobacco from the great moments of one illustrious career, tastefully encased in a white gold-flecked display case). The silver linging? John Paulson, now shorting the individual mortgages of down-on-luck friends in the Hamptons, is going to make a killing on this one.
$19.5 Million Hamptons Mansion In Foreclosure [WSJ]
There’s a lot of bitching and moaning going on, of late, about how hedge fund mangers like James Simons and private equity giants like (OXYMORON ALERT:) Stephen Schwarzman* make too much money. But bitching and moaning on their own only go so far, which is why, every once in a while, there has to be a report that gives a little weight to the “it isn’t fair” argument that Schwarzman earned one hundred billion dollars last year and our compensation is one belly rub per post (and a scratch behind the ears for every “after the jump,” because page views = money, people).
Today’s (essentially) scientific study comes courtesy of the Institute for Policy Studies (IPS) and United for a Fair Economy. It found that in 2006, the top 20 hedge fund and private equity bosses (Simons, Cohen, Griffin, Schwarzman, Kravis, etc) earned an average of $657.5 million, versus the $29,544 average raked in by U.S. workers. This translates to the former making 22,255 times that of the latter. But, obviously, that’s not the best part. The report notes that the discrepancy between the two groups “dwarfs”—that’s a direct quote—the discrepancy between CEOs and workers (corporate execs, on average, earn a measly 365 times that of U.S. workers). Actually, no, that’s not the best part, which is the statistic that last year, the Top 20 earned more money in ten minutes than U.S. workers made the whole year. The blatantly passive aggressive subtext here is that there’s something wrong with this.
Douglas Lowenstein, president of the Private Equity Council reminds us that “Income disparity is an important issue, but studies driven by sound bites don’t advance a national debate about how our nation should respond” and, personally, as people who are practically deaf when it comes to sound bites, we think he’s dead right. Hedge fund lobbyist John Gaine, of the Managed Funds Association, notes that HF compensation is “fee-based and directly attributable to…performance.” Also right. Sarah Anderson, a director at IPS, decidedly not assisting us in our quest for a hat trick, criticizes the gap, and argues that Congress ought to increase the tax on private equity firm’s earnings from 15% to 35%.
Rather disturbingly, there seems to be a growing contingent in this country that agrees with Ms. Anderson. Individuals and groups who take issue with what they subjectively regard as astronomically bloated pay. People (Ben Stein, the New York Times) who have a “problem” with the so-called tax “loophole” (which, if you take off your shades of cynicism for a moment, will see is actually just a “business model”), open only to managers, and not ordinary Americans.
Thankfully, an organization known as SHAME (Southampton Alliance for Monied Estates) has its head on its shoulders and knows that hedge fund and private equity managers aren’t just like you and I—they’re better, and should be compensated and taxed accordingly. Yesterday, SHAME, in association with Concerned Neighbors of Henry Kravis, took to the streets and demanded more tax breaks for private equity kings. Rallying around Kravis’s mansion, SHAME called on Congress to let the KKR boss and other buyout billionaires with homes in the Hamptons to keep the 15% tax they’ve long come to enjoy. SHAME sang slogans like “protect the emerging plutocracy.” SHAME told DealBook, “We’re out here to help save our local neighborhood billionaires.” SHAME passed around a petition and encouraged people to defend the rights of a contingent of people that so obviously cannot defend itself.
John Carney, discussing SHAME’s motivations on the eve of the rally [CNBC]
Union takes LBO protest to Hamptons [Reuters]
Buyout Tax Debate Hits the Hamptons [DealBook]
Cash of the titans: Criticism of pay for fund execs grows [USA Today]
*I will be here—KILLING—all day.
[The following is an imagined conversation based on a real event. After the Times ran its exposé on men in their 40s who don’t let their 20-something girlfriends come out to the Hamptons for the weekend, John Ivers, 42, got himself and the 19 people with whom he went in on a sweet 4-bedroom summer share in the Hamptons kicked out of their house*].
Ivers: Brosef, it’s Ivers.
Guy Ivers went to college with 85 years ago, ATO brother: Who is this?
Ivers: Ivers, man, Ivers! 2 minutes, 30 seconds ATO record setting keg stander-Ivers!
Ivers: John, brah, John!
Guy: Right. Hey man. Been a while. How are you?
Ivers: Not good, brah, not good at all.
Guy: What’s the trouble?
Ivers: The Times did a story on me being, more or less, AWESOME, you know, ‘cause I told that girl I’m dating she can’t come to the Hamptons because it cramps my style vis-à-vis nailing other chicks, etc, and Summer Share Ivers doesn’t do girlfriends, whatever, and the owners of the house I guess saw the article and were PO’d cause it’s not supposed to be a shared house and to make a long story short I have no place to stay for the rest of the summer and to, more importantly, hang my paddle…you know what I’m talking about.
Guy: Yeah, can you actually hang on a sec?
Guy: Sorry, kids.
Ivers: Kids? You gotta watch that shit, man, if they’re under 18 it gets risk-ay.
Guy: Actually I meant my children. I have 2 of them, 5 and 7.
Ivers: You dog!
Ivers: So brohamster, what I need is for your to tell me where you beach house is and when I can make a copy of the keys.
Guy: Yeah, actually I can’t do that, I just go there with my family, and my wife would probably have a problem.
Ivers: Brohamster, we’re bros! We’re brothers! This is not cool man, NOT COOL!
Guy: Yeah, I gotta go, but good luck with the house Jeff.
Ivers: You’ve changed, broheim.
Earlier: DealBreaker PSA: You Could Learn A Lot From This Guy
*Which we were told by quasi-reputable sources over the holiday. Any of the homeless 20 want to comment? John? You know where to find us.
Were you worried there wasn’t going to be an update to the pettiest story of all time? Worry no longer. Here’s a quick recap for those of you who haven’t been keeping score, which seems ridiculous to us since this story is about shrubs, but whatever, that’s your journey. Anyway, Goldman Sachs MD Marc Spilker wanted to widen his path to the beach at his house in the Hamptons. Unfortunately, his neighbor, Kynikos founder Jim Chanos had a problem with this, since his row of hedges would have to be taken out in order for Spilker’s family to be able to “maximize their beach enjoyment.” Spilker cited a deed that said he could have 15 feet, Chanos produced one that said otherwise. Then this week they went to court to negotiate; Spilker claimed to only want a few feet (i.e. 6-7), Chanos gave it to him and asked for it to be put in writing.
The (soon-to-be-promoted?) Goldman Sachs employee apparently then had a change of heart, re: abiding by the terms of the agreement, and yesterday afternoon decided he’d rip down the remaining hedges on Chanos’s property. Oh, and new neighbor Stevie Cohen, who shares the path to the beach, has thrown his support to Spilker.
Goldman Sachs’s co-head of asset management, Eric Schwartz, has announced that he will step down from his day job this summer, after 23 years with the bank. Under Schwartz’s tutelage, the asset-management unit grew to a record $758 billion, more than double the amount it handled when he became co-head (with Peter Kraus) in 2003. Rumored to be promoted to the soon-to-be vacant position? The man with no respect for the sanctity of another man’s hedge, Marc Spilker, who currently oversees Goldman’s alternative-investments unit.
In other news, James Metcalfe is leaving his post as head of power mergers and acquisitions at Lehman Brothers to become global head of power banking at UBS. Lehman posted an ad on Craigslist looking for someone with “a good head for numbers and lack of care for shrubbery” just this morning.
Goldman’s Schwartz, Co-Head of Fund Management, to Step Down [Bloomberg]
Boys—I would like to introduce you to a man you should be watching, studying, stalking and taking copious notes on, for he is your lord and savior. Emulate this man and you will go far in life. Don’t emulate this man and you will fail at everything you do.
Who is this beacon of light in a world cast in darkness? His name is John Ivers, he’s a 42 year-old self-employed stock trader (AKA the ghost of Tim Sykes’s future), and he just wants his summer share. Obviously, there are people who want to stand in the way of Ivers’s happiness, namely his 25 year-old investment banker girlfriend, but when you’re John Ivers, you don’t let 25 year-old girlfriends who want to get in on your 20-person summer house in Amagansett tell you what to do—you tell them (her) what you’re going to do.
You say, “Listen, Toots, I’ve been coming to the Hamptons as a single guy since before you grew breasts (John’s been in 14 houses). Now, I don’t have a problem continuing seeing your breasts, but in the city, k? When I come to the Hamptons I come alone. If I wake up one morning and want to sleep with one of my housemates, I do it. If I go out one night, and run into one of my ex-girlfriends, perhaps the one from three summers ago, who wears slender madras shorts and likes to watch me from a pebbled yard nearby, or the one from four years ago, who wears jeans and reminds me of what it was like to be 38, I do her. If I want to eat an $80 lobster roll by myself on the beach without anyone breathing down my neck and asking me ‘Where’s this going?’ I do it. So there’s not so much room for a girlfriend in that equation. Also, you know I’m in a band called Hot Lava, and rock stars don’t have girlfriends, they have groupies! You’ve seen the messages they leave me on Hot Lava’s Myspace page.”
When you’re John Ivers, 42, you wear flip-flops and Ray-Bans and a typical night would be something along the lines of:
A friend’s engagement party until around 10 p.m., a party at a house in Amagansett run by a “group of girls” until midnight, a gig by the band Booga Sugar at the nightclub Stephen Talkhouse until 3 a.m. or so, and then an after-party until near sunrise back at his place.
You’re not a pathetic aging frat boy who thinks nostalgically back to the nights of rohypnol cocktails and paddle slaps, ’cause you’re still living the dream. You can’t believe those guys you went to college with are already in their forties, having kids and letting their girlfriends come to their summer houses—losers!
One summer stay in the Rental o’ Rapture will set you back about $3,200. Some skeptismos in the group might say something about it being lame for a person that age not to have (or, at the very least, rent) his own place, or remark that perhaps your day trading isn’t going so well, but those people just don’t get it (and were probably in DTD).
When Boys of Summer Linger Till Autumn [New York Times]