See You At The Tracks

Author:: Bess Levin
Updated:: Jan 14, 2019
Original:: Apr 22, 2008

International Equine Acquisitions Holdings is turning itself into a hedge fund that will make money off of ponies!* IEAH, founded five years ago by Michael Iavarone and Richard Schiavo, already owns 80 horses in training, 15 broodmares and a handful of future stallions, including Big Brown, who’s favored to win this year’s Kentucky Derby. In its new iteration, Iavarone says the fund will offer “liquidity and options that people in the horse business have never had before.” The firm hopes to raise $100 million and possibly go public before the end of the year. With aspiring jockey Larry Robbins, and his hefty donation, on their side, they can’t lose.
Equine hedge fund tries to outpace the market [Reuters]
*(Don’t care for horses myself but I used the exclamation point because I get the sense I’m in the minority on this one. Show of hands, how many of you foam at the mouth over this stuff? Okay, now among those of you with your hands in the air, how many of you would say your predilection has to do with polo match connotations? And how many would say you’re more inclined to chalk it up to a deeply repressed desire to play with one of these? These are questions IEAH is going to ask you during the qualified investor screening process, better get used to answering them now.)

As some of you may recall, back in March, Highland Capital Management founder and CEO James Dondero testified that he is "insolvent under Texas family law, if not according to normal accounting rules," despite a 2010 tax return showing his adjusted gross income that year to be in excess of $36 million. The reason his finances were in question was because Dondero filed for divorce in September, and how much he owes his wife Becky is currently in dispute. Becky is "seeking enforcement of a prenuptial agreement guaranteeing her half of the couple’s community property, capped at $5 million," plus "spousal support and interim attorney fees." James, perhaps you can glean, is hoping it will be less than that and perhaps even nothing. One thing that really didn't help? Patrick Daugherty, a former senior portfolio manager at Highland who quit in October, testified that he met with James Dondero for drinks last month. “He told me his plan was to get his net worth down and pay her as little as possible,” said Daugherty, who was called to the stand by Becky Dondero. That testimony was given on March 28th. On April 11, this happened: Highland Capital Management, the $20 billion hedge fund and private equity firm based in Dallas, has launched a lawsuit that calls its former private equity investing chief a “megalomaniacal” manager who engaged in “abusive tirades” that “dehumanized employees.” Patrick Daugherty is the former head of stressed special situations and private equity at Highland Capital Management, where he was responsible for $8 billion of assets until he resigned in September 2011. Known as a blunt-speaking Texan, Daugherty has served on the board of Metro-Goldwyn-Mayer and as chairman of companies like Cornerstone Health Group. According to a 14-page complaint Highland filed in Texas state court in Dallas earlier in April, Daugherty has been paid in excess of $26 million while at the firm, but voluntarily resigned after “Highland refused to accede to his unacceptable ultimatums and megalomaniacal demands regarding compensation.” The lawsuit claims that Daugherty was “belligerent to peers” and that Highland employees complained and even quit after Daugherty publicly berated them as “‘f—ing idiots’” and disparaged them using other vulgarities. Highland, which has a reputation in the investment community for using hard-hitting tactics, pulls no punches in a lawsuit that at times can appear cruel. It claims that Daugherty’s tenure at Highland was characterized by extreme behavior and his performance diminished over the years as he “became increasingly unmanageable, erratic, and insubordinate.” It didn't have to be this way, Patrick! $20 Billion Highland Capital Calls Former Private Equity Chief "Megalomaniacal" [Forbes]

True investment icons know when to double down.

A few words on my last day at DB.