Whitney Tilson’s email discussing his experience flying Spirit Airlines this week; Fannie and Freddie’s government rescue has come with claws – Tilson explains why is long and it has nothing to do with Bill Ackman….; pursuing gender equality as a competitive advantage; a woman at big law-no regrets; The Big Short.

Whitney Tilson’s experience flying Spirit Airlines

1) I published an article My Experience Flying Spirit Airlines This Week. Here’s the summary:

  • Having recently bought the stock, I wanted to experience Spirit for myself.
  • Though Spirit has a much higher complaint rate than other airlines, I had a great experience and didn’t observe any customer service problems on either flight.
  • The customers Spirit serves, how it’s handling areas of customer dissatisfaction and how it generates extra revenues and keeps costs low makes me more bullish on the future of the company.
  • The stock which, even though it’s up 20% since my first article three weeks ago, remains exceptionally cheap at ~10x earnings.

Whitney Tilson: Gretchen Morgenson’s article on Fannie Mae and Freddie Mac

2) A great article by Gretchen Morgenson in today’s NYT about the government’s secretive, outrageous and illegal decision to implement the profit sweep re. the GSEs, and the attempts to cover up what they did afterward. I think courts are very likely to reverse this, which is why I’m long Fannie:

The August 2012 profit sweep surprised investors, but documents show that it came long after Treasury officials had indicated privately that they wanted to ensure Fannie and Freddie shareholders would receive none of the companies’ future profits.

A December 2010 memo to Mr. Geithner from Jeffrey A. Goldstein, undersecretary for domestic finance, referred to “the administration’s commitment to ensure existing common equity holders will not have access to any positive earnings from the G.S.E.s in the future.”

It is impossible to predict how the judges overseeing the shareholder lawsuits against the government will rule on the Fannie and Freddie matters. But some investors are hopeful.

Joseph “Woody” Woodruff is a longtime Fannie Mae shareholder who was elected to the state circuit court in Tennessee last year after practicing law for decades.

“The federal government entered into a legal arrangement with the G.S.E.s that contained certain undertakings and fiduciary obligations,” Mr. Woodruff said, stressing that he was speaking as an investor, not as a judge.

“Then it unilaterally rewrote the terms of the relationship and began in a very lawless manner sweeping the profits and transferring them to the Treasury,” he added. “What’s up with that?”

Whitney Tilson: Pursuing gender equality as a competitive advantage

3) Good to see – too bad it’s so rare:

Hadley Mullin was already an anomaly as a female investor at TSG Consumer Partners, the private equity firm she joined in 2004. Six months later, she found out she was pregnant.

Balancing motherhood with the demands of private equity was not the usual track in an industry overwhelmingly dominated by men. But even after Ms. Mullin nervously told the TSG partners her news, they did something unexpected: They promoted her. And kept promoting her, three children later.

Now, Ms. Mullin, 41, is the No. 3 executive at TSG, as senior managing director. And she is no longer surrounded only by men. After a concerted effort, 50 percent of the firm’s employees are women.

That contrasts with the sluggish grind toward gender equality in all areas of finance, with perhaps none slower than private equity. Firms often blame a lack of female applicants, while women say the clubby nature of the industry has been a hurdle to their entry.

Hadley Mullin, senior managing director at the private equity firm TSG Consumer Partners.

This year, 13.7 percent of professionals at private equity firms in North America on average are women, which is a few percentage points higher than in 2014, according to data compiled by Preqin.

Whitney Tilson: A woman at big law-no regrets

4) Speaking of the lack of women at the top of certain industries, a friend recently wrote an anonymous article (posted here) about what it’s like to be one of the few women who make partner at a major law firm. It’s very provocative and insightful. Here’s an excerpt:

I don’t regret being memorable, even for the wrong reason. Yes, yes, the world will be a better place when we have 50 percent women everything. For now, I try to look on the bright side. I have been on calls with four Marks, three Jeffs, and three Michaels, and even using my best aural discipline, I have no idea who is talking. Does it really matter anyway? I can barely tell apart my hundreds of 5-foot-9 white male colleagues at bar functions. Yet, everyone somehow remembers me and my name on a call. Perhaps I am just that memorable, but I doubt it. It’s an interesting perk as a woman survivor—you are famous simply because you are still here.

…I regret that the word “balance” is used outside of yoga class. This is an article all by itself, but I’ll bottom-line it here. I regret the word “balance” because it implies that it’s weird to enjoy an intense job. I regret that “work/life” is punctuated as if these are antonyms. I regret that millions of women can’t afford to entertain this question. I regret that successful men are rarely asked about work/life balance, and I regret that, when I happily answer this question, I’m not sure people believe me (see Crouton-Spearing Associate, supra).

So if you are tempted to ask a woman with a long-term, high-powered job about “balance,” it’s fair to assume she probably likes it and she isn’t deluding herself. If you think someone’s life is out of balance, that reflects your own values, and we all get to choose those for ourselves.

I regret having few friends in my shoes. If you stay in Big Law long enough, at some point, the women are gone. One day, you walk into a conference room and it’s the first day of school and you can’t find the other band geeks to sit with. Meanwhile, you can’t use a spare Hostess Ding-Dong to make a new friend because the supply is cut off.

Most of the smartest, most bad-ass women I knew at school are now at home with their kids or have a lower-hours job. I truly believe they are happy, without assistance of wine or controlled substances. I also believe the kid wasn’t why they quit—it was always just one of several factors. Me? I’m very fortunate that I could quit, but of course I can’t. If I did, I’d feel pressure to give a first-chair performance at things I’m mediocre at—cooking, fitness, household tidiness. And pity my poor children, who would be promptly Tiger Mom’d into concert musicians who speak five languages.

I regret I don’t have even more women partners still in the game because, believe it or not, we are a pretty cool bunch. I look around the room and am proud to be in such esteemed company.

We are great lawyers and we haven’t suffered for our success. I doubt our kids will spend more on adult therapy than anyone else’s.

… In summation, younger members of the jury, Big Law hasn’t broken me, and it won’t break you either. If you think my job is worth having, you’re right. If you think you have the talent, thank God—and you’re probably right. Please make sure the top brass at your firm know it, and never presume that they already do or automatically will. If you think you can become a Big Law partner and do something else later, you’re right, and you have more imagination than I do. It’s like when my daughter beckons from the swimming pool, as I feign deep sleep in my deck chair:

“Please, please, come on in. The water’s not that bad.”

Whitney Tilson: The Big Short

5) I saw The Big Short on Thursday night (in a packed theater) and highly recommend it (as do critics, who give it an 81 on Metacritic and 86 on Rotten Tomatoes, and users who give it a 9.7). It was nominated for Best Comedy by the Golden Globes on Thursday, and the cast, topped by Brad Pitt, Steve Carrel, Christian Bale and Ryan Gosling, was nominated for best ensemble at the Screen Actors Guild Awards. Here’s an excerpt from the WSJ’s film critic’s review (below):

No nation has a corner on the cupidity, duplicity, stupidity and willful blindness that fueled the subprime mortgage bubble of the mid-2000s. Only in America, though, could filmmakers illuminate such a dire subject, and the financial debacle that ensued, with the sort of scathing wit, joyous irreverence and brilliant boisterousness that make “The Big Short” an improbable triumph.

The film was directed by Adam McKay, working from a script that he and Charles Randolph adapted—ever so freely—from the widely admired book by Michael Lewis. Where the book was calmly incisive and instructive, the screen version swings mainly between elation and mania. Yet that’s a reasonable representation of the national zeitgeist when the story’s protagonists, four eccentric clairvoyants from diverse backgrounds, make massive bets against the housing market and the banking system because they share the same vision of a shimmering bubble that’s bound to burst.

The Big Short” on screen even manages to be instructive, both whimsically— Margot Robbie sipping champagne in a bubble bath while she explains subprime mortgages—and philosophically. Its larger concern is human folly, a subject explored with resplendent zest by a cast that includes Christian Bale, Steve Carell, Ryan Gosling and Brad Pitt. All four stars are smart, fascinating and funny in their respective ways, so much so that their performances—and the script’s solid moral structure—sweep away any concerns about asking us to root for people who get unimaginably rich by betting against the health of the American economy.

I just wish the film has presented my friend Mike Burry as less on an oddball and more of a nice guy, which he is.

And I sure wish I hadn’t missed this trade – rightly called (in a good book of the same name), The Greatest Trade Ever. I knew Burry and so many other guys who were in on it and just sucked my thumb – for sure the biggest miss of my investing career.

Whitney Tilson Spirit Airlines