Sam Zell, billionaire investor and chairman and co-founder of Equity Group Investments, spoke with Bloomberg Television’s Betty Liu today about the real estate and financial markets as well as Microsoft Corporation (NASDAQ:MSFT)’s new CEO, Satya Nadella and Obama’s new policies.
When asked about Tom Perkins’s letter and comments, Zell said: “I guess my feeling is that he’s right. The 1 percent are being pummeled because it’s politically convenient to do so.”
*MARKETS WERE OVERPRICED GOING INTO 2014
*RESIDENTIAL REAL ESTATE OUTLOOK `BENIGN,’
*TOO MANY REITS IN THE U.S. MARKET
*EXPECTS REIT CONSOLIDATION OVER NEXT 20 YEARS
*TOM PERKINS RIGHT THAT TOP 1% UNFAIRLY TARGETED
*TOP 1% `PUMMELED’ BECAUSE IT’S POLITCALLY CONVENIENT
*ZELL LIKELY TO GIVE AWAY MORE THAN HALF OF NET WORTH
BETTY LIU: Joining us for the hour is none other than billionaire investor Sam Zell, whose holdings criss-cross the globe and many industries from real estate to energy to telecom. He’s also a substantial contributor to the worlds of education and politics. So much to talk about with Sam that we’re keeping him hostage for the rest of the hour. Sam, great to see you this morning.
SAM ZELL: Good morning, Betty.
LIU: You have been, as well as all of us, watching from the sidelines what’s been going on here with Microsoft Corporation (NASDAQ:MSFT). How do you think they’ve carried out this CEO search?
ZELL: I think that the challenge of trying to identify a CEO for a company as iconic as Microsoft is almost an impossible task.
ZELL: Well, you’re leaking they talked to this guy, they talked to that guy. It’s almost like a baseball player in free agency. And the answer is —
LIU: Well there’s no way to keep is secret. That’s for sure.
ZELL: And the real answer is how do you define and identify someone who’s capable of leading this company going forward?
LIU: What do you think of Microsoft Corporation (NASDAQ:MSFT) choosing – after – after all those names being bandied about finally choosing a relative unknown insider?
ZELL: I think it probably is a reflection of the risk appetite of the board. We’ve had a number of examples, whether it be Hewlett-Packard Company (NYSE:HPQ) or some of the others, where they brought in superstars to take over companies that really didn’t know the companies that well and made a lot of mistakes. I think this was a safe decision. I don’t know the gentleman, but somebody who’s been part of the culture – ultimately culture prevails. And I think it’s probably going to prove to be a good decision.
LIU: Well speaking about the culture, Sam, there’s a – there’s a culture – it didn’t play a role directly in this decision, but there’s a culture of the activist investor these days in corporate America. And while an activist investor did not push for – for change here at Microsoft, certainly there’s this aura, right, or atmosphere that if a board and a CEO doesn’t do this right, these people, whether it’s Bill Ackman or Carl Icahn, someone you’ve dealt very closely with, is going to be there at your doorstep, How does that change a CEO’s role, particularly someone like who’s running a public company? How does that change your role?
ZELL: First of all, I’m very benefited by the fact that I’m the chairman of everything and the CEO of nothing.
LIU: That’s true. That’s (inaudible).
ZELL: That’s really critical, okay?
LIU: Because you —
ZELL: Just because that means I can be a strategist. That means I can sit and think about what we’ve got to do tomorrow and I’m not confronted by an HR problem or a hacking problem or whatever somebody who’s running the company on an ongoing basis is (ph). I really think the activist thing could be summed up in the most simplistic fashion. The activist in effect raises money by saying, I’m going to create superior returns by addressing inefficiencies and opportunities for companies to do better. Those activists are under enormous pressure from their sources.
LIU: Right, from their own clients, yeah.
ZELL: And so to some extent they say why shouldn’t the CEO be under the same pressure? If I’m getting hit from behind, I’ve got to hit from behind and make him perform.
LIU: So you think it’s right?
ZELL: Well, the answer is I think activism is very right and very important in a capitalistic system.
LIU: Just quickly though, Sam, do we have that photo up of Carl Icahn – Carl Icahn on the cover of Time magazine? You and I talked about your relationship. You’ve dealt – you’ve been on opposite sides with Carl before. Master of the universe now. He’s made this comeback at this age, Sam. What do you think about this?
ZELL: Well I don’t think the word comeback is an accurate description. Carl is a force. Carl has been right. Carl has been right and committed to being right. If I had a hat, I would take it off to him. And I think America is dramatically better off for people like Carl.
LIU: All right. Sam, just stay with me because we’re going to talk with you about a lot more than activist investors. We’ll talk to Sam about the jobs market, Washington, Chris Christie and much more.
LIU: In Washington, the Congressional Budget Office released some startling new numbers about the president’s healthcare plan that’s sure to fuel more of this partisan wrangling in Washington, including this nugget, that in two years Obamacare is going to affect workers by prompting them to put in less hours in order to keep their federally subsidized healthcare benefits, costing an equivalent of about 2 million jobs according to the CBO.
Well Sam Zell stays with us throughout the hour, someone who is very involved in both local and national politics. And Sam, what do you make of this number, 2 million jobs?
ZELL: Well, I think the issue is not 2 million jobs. I think the issue is what is the contribution to the GDP of – or lack of contribution of 2 million people not working. We both know lots of people who have kept their jobs because they couldn’t afford to lose their healthcare. Now they can access healthcare from exchanges, and all of a sudden keeping a job isn’t as relevant as it was before.
LIU: But Sam, is that a small price to pay as a country for giving everybody healthcare?
ZELL: I think the best comment of all goes to Nancy Pelosi. We have to pass this bill to find out what’s in it. This is only the latest example of hundreds and hundreds of mistakes that were made in the preparation of this bill.
LIU: But do you think it should be repealed?
ZELL: I think that the current form of Obamacare I think is deleterious to our country and needs to be radically changed. The word repeal, I don’t know what that word means. I think healthcare is an important issue. I think the question is how do you go about it. We went about this half-assed.
LIU: But it – well, but however, the cat’s out of the bag and we have to figure out what to do now with the consequences. One of the things though that – that – that