Whitney Tilson on JetBlue’s restructuring, Bill Ackman’s dinner, Bill Ackman’s new investment and Stephen Schwarzman’s sobering message for any junior financiers.
Whitney Tilson in his own words below.
1) Attached is an insightful, spot-on report on JetBlue (which I own in size) by my friend Kian Ghazi, who has started a special situations research service covering the fertile hunting ground of companies undergoing a CEO change. If you’re interested in learning more, contact Kian at [email protected]
Charlie Munger: Invert And Use “Disconfirming Evidence”
2) Also attached (editor’s note – we posted this last week) is the presentation Bill Ackman and his analysts made at the Pershing Sq. annual dinner last week. They had a year for the ages in 2014, up ~50% gross and ~40% net vs. 13.7% for the S&P 500. In it, they cover current holdings Pershing Square Holdings, Allergan, Herbalife, Air Products, Canadian Pacific, Burger King/Tim Hortons, Platform Specialty Products, Zoetis, Howard Hughes, Fannie/Freddie, as well as exited positions Beam and GGP.
Whitney Tilson: Ackman made his biggest investment in another hedge fund manager
3) Ackman also disclosed that he made his biggest investment even in another hedge fund manager, Phil Hilal (also a good friend of mine), who left Kingdon and is starting his own firm, Clearfield Capital Management. See this article: www.businessinsider.com/ackman-invests-in-hilals-clearfield-2015-1#ixzz3Qu0qMmOm
4) Phil is well positioned to launch his own firm, but many financial sector entrepreneurs aren’t, as Stephen Schwarzman correctly argues (I completely ignored this advice when I started my own fund 16+ years ago – but he’s still right):
Stephen A. Schwarzman, the billionaire co-founder of the Blackstone Group, has a sobering message for any junior financiers hoping to emulate his success: Think twice.
Mr. Schwarzman, 67, speaking here on Sunday before an audience of Harvard Business School students, said the temptation to start a new financial firm could disguise the considerable risk of failure and the damaging consequences failure brings. Calling finance an “apprentice business,” he said any would-be entrepreneurs need years of training, as well as the ability to bring something new to Wall Street.
“This is not Silicon Valley, where failure is an option,” Mr. Schwarzman said.
The warning carried special significance because Mr. Schwarzman is seen by many young Wall Streeters as the paragon of entrepreneurialism in finance, having become a billionaire several times over as he helped pioneer the business of private equity. Today, Blackstone is the largest firm that invests in alternative assets, with $290.4 billion under management.
But Mr. Schwarzman had a number of advantages when he started Blackstone in 1985 with Peter G. Peterson, who had been his boss at Lehman Brothers. At 37, he had years of experience in the world of mergers and acquisitions and even negotiated the sale of Lehman to American Express. Mr. Peterson, two decades his senior, had a Rolodex that was instrumental in getting Blackstone off the ground.
5) Roddy Boyd continues to do great investigative journalism:
It’s not the job of the business press to tell people how to allocate their capital but having worked through the Dot Com mania, the Credit Crisis and the China Boom, I think reporters have an obligation to speak up if they see something….unusual.
In this case, Win Neuger, the man behind the darkest hour of the credit crisis–AIG’s Security Lending debacle–is trying to raise a big chunk of cash for a new hedge fund.
Moreover, he’s doing it with a guy who ran a go-go tech fund from the Dot Com days.
The AIG Securities lending situation is beyond inexplicable–how it happened, and how it didn’t result in charges. Even as it collapsed Neuger was paid millions while thousands of AIG employees lost their jobs.
So I saw something and I said something. http://sirf-online.org/2015/01/22/the-past-imperfect-mr-neuger-and-mr-fitzmaurice-would-like-your-money-again/