Today, hedge fund bigwigs Bill Ackman and Carl Icahn delivered the most engaging TV smackdown in recent memory on CNBC.
Here's a story about two hedge funders who hate each other. It's also a story about whether or not a multi-billion-dollar nutrient company is actually a pyramid scheme.
Back in December, activist investor Bill Ackman gave the Powerpoint presentation to end all Powerpoint presentations -- it was 342 slides long -- about why he thought Herbalife, a company better known for weight-loss shakes and other assorted non-goodies, was doomed. The 1-slide version of his argument is that its web of distributors make more from recruiting new distributors than they do from actually selling products, making it less an Amway-style legal pyramid scheme, and more an illegal one. Ackman went short the stock -- in other words, he bet its price would go down by selling high and trying to buy low -- and very publicly said he expected it to go to zero.
Betting against a stock is a bit more involved than betting on it, because you can't exactly bet against something you own. Short-sellers have to first borrow the stock, then sell it, and hope to buy it back later at a lower price before returning it to the original owner. It's a risky game -- the stock can only go down so far, but it can go up an unlimited amount -- and Ackman seems to be playing a particularly risky version of it. He's short roughly 20 percent of the outstanding shares, which means he'll have a lot of stock to buy back that he might have trouble finding if, say, the price goes up and he tries to cut his losses.
That brings us to the billionaire battle. Activist investors aren't always the best of friends, and that's certainly the case when it comes to Carl Icahn and Bill Ackman. The two of them fought a seven-year legal battle over whether Icahn owed Ackman $4.5 million, a relative pittance in the rarefied air of Hedgistan, from the 2004 merger-sale of a real estate company -- a battle that Ackman ultimately won. That bad blood has carried over to Herbalife. Icahn thinks Ackman is just using his big media profile to make an easy buck manipulating the stock down, and that he's doing so in a way that could leave him very exposed. If other investors buy the stock for the express purpose of hurting his trade, Ackman might have to cover his large short position, which would send the stock racing up in a so-called "short-squeeze". Now, it's not clear Icahn is doing this ... but it certainly seems like a good bet.
Another good bet is that watching the two of them got at it on live television would be magical. It was. CNBC had the pair on, as you can see in the video below, and Icahn did not disappoint. This was tough, but here are his seven craziest quotes.
"I want to say what I want to say, and I'm not going to talk about my Herbalife position because you want to bully me ... So let's start with what I want to say. Ackman is a liar."
Discourse even more elevated.
"He wanted to have dinner once with me, and I had dinner with me. And I'll tell you, I laughed. I couldn't figure out if he was the sanctimonious guy I ever met in my life or the most arrogant."
Do these have to be mutually exclusive?
"I wouldn't have an investment with Ackman if you paid me to do it; if Ackman paid me to do it .... As far as I'm concerned, the guy is a major loser. You know, Disraeli once said, Disraeli once said about somebody that spoke in the Parliament, a young guy that spoke in the Parliament, 'Young man, I'd be happy if I could be as sure about one thing in my life as you are sure of everything.'"
"Ackman did it, look at the timing. Ackman did it with a week to go, or a month to go before he had to show his results. His results were bad for 2012, and this got his results up double, so he could get fees for himself. And then he talks about [giving these profits to] charity. That's complete bulls***."
Oops, live TV!
"I never said that I want to be friends with you Bill. I wouldn't be friends with you. And you said to me, you'd like to be friends so we could invest together .... I wouldn't invest with you if you were the last man on earth."
"I appreciate, Bill, that you called me a great investor. I thank you for that. Unfortunately, I can't say the same for you."
Give this man a mic to drop.
Okay, that was fun, but it's time for a serious point. Markets are mostly efficient, except when they're not. As Keynes, who knew a thing or two about picking stocks, pointed out, the market can be a bit like a newspaper beauty contest where you pick the six prettiest faces from a list of 100, and the winner is the one whose picks come closest to the most popular of the combined picks. But this means your optimal strategy is picking the faces you think other people think are the prettiest, not the ones you think are the prettiest. In other words, you're betting based on the crowd, and not the "fundamentals". It's the same with stocks, even before we consider hedge fund billionaires using a nutrient supplement company's stock to settle their grudge match.
Or, as Disraeli might have said, there are lies, damn lies, and efficient markets.
"[Ackman's] like the crybaby in the schoolyard. You know, I went to a tough school in Queens, and they used to beat up the little Jewish boys. And [Ackman] was like one of these little Jewish boys, crying that the world was taking advantage of him."
In the name of emotional well-being, college students are increasingly demanding protection from words and ideas they don’t like. Here’s why that’s disastrous for education—and mental health.
Something strange is happening at America’s colleges and universities. A movement is arising, undirected and driven largely by students, to scrub campuses clean of words, ideas, and subjects that might cause discomfort or give offense. Last December, Jeannie Suk wrote in an online article for The New Yorker about law students asking her fellow professors at Harvard not to teach rape law—or, in one case, even use the word violate (as in “that violates the law”) lest it cause students distress. In February, Laura Kipnis, a professor at Northwestern University, wrote an essay in The Chronicle of Higher Education describing a new campus politics of sexual paranoia—and was then subjected to a long investigation after students who were offended by the article and by a tweet she’d sent filed Title IX complaints against her. In June, a professor protecting himself with a pseudonym wrote an essay for Vox describing how gingerly he now has to teach. “I’m a Liberal Professor, and My Liberal Students Terrify Me,” the headline said. A number of popular comedians, including Chris Rock, have stopped performing on college campuses (see Caitlin Flanagan’s article in this month’s issue). Jerry Seinfeld and Bill Maher have publicly condemned the oversensitivity of college students, saying too many of them can’t take a joke.
Thicker ink, fewer smudges, and more strained hands: an Object Lesson
Recently, Bic launched acampaign to “save handwriting.” Named “Fight for Your Write,” it includes a pledge to “encourage the act of handwriting” in the pledge-taker’s home and community, and emphasizes putting more of the company’s ballpoints into classrooms.
As a teacher, I couldn’t help but wonder how anyone could think there’s a shortage. I find ballpoint pens all over the place: on classroom floors, behind desks. Dozens of castaways collect in cups on every teacher’s desk. They’re so ubiquitous that the word “ballpoint” is rarely used; they’re just “pens.” But despite its popularity, the ballpoint pen is relatively new in the history of handwriting, and its influence on popular handwriting is more complicated than the Bic campaign would imply.
The neurologist leaves behind a body of work that reveals a lifetime of asking difficult questions with empathy.
Oliver Sacks always seemed propelled by joyful curiosity. The neurologist’s writing is infused with this quality—equal parts buoyancy and diligence, the exuberant asking of difficult questions.
More specifically, Sacks had a fascination with ways of seeing and hearing and thinking. Which is another way of exploring experiences of living. He focused on modes of perception that are delightful not only because they are subjective, but precisely because they are very often faulty.
To say Sacks had a gift for this method of exploration is an understatement. He was a master at connecting curiosity to observation, and observation to emotion. Sacks died on Sunday after receiving a terminal cancer diagnosis earlier this year. He was 82.
This is a low-stress way to ease back into the ancient art of blogging. Our leaders, from J.J. Gould to Chris Bodenner, have explained the logic behind this new feature on The Atlantic’s site here. My colleagues, including Ta-Nehisi Coates and Jeffrey Goldberg, have gotten into the swing of things as you will read.
The new drama series, which follows the Colombian kingpin’s rise to power, feels more like a well-researched documentary than the gripping saga it wants to be.
Netflix’s new series Narcos is possibly arriving at the wrong time: The doldrums of summer aren’t really the ideal moment for a narratively dense, documentary-like look at the rise and fall of the Colombian drug kingpin Pablo Escobar. Narrated in voiceover by DEA Agent Steve Murphy (Boyd Holbrook), the early hours of Narcos feel like a history lesson, though an visually sumptuous one.
As Netflix continues to expand its streaming empire, it’s making a concerted effort to appeal to worldwide audiences, and Narcos fits neatly into that plan, alongside last year’s expensive critical flop Marco Polo. Narcos was shot on location in Colombia and stars the acclaimed Brazilian actor Wagner Moura as Escobar. It takes full advantage of its setting, loaded with sweeping helicopter shots of the Colombian jungle where Escobar founded his cocaine empire, filling a power vacuum left by various political upheavals in late-’70s South America.
What it's like to look for romance when "a big smile can be frightening"
The way to Paulette's heart is through her Outlook calendar. “Honestly, if you want to be romantic with me, send an email through Outlook and give me all the possible dates, locations, and times, so that I can prepare,” she said.
The former Miss America system contestant and University of Cincinnati College-Conservatory of Music-trained opera singer knew she had a different conception of romance than her previous boyfriends had and, for that matter, everyone else.
“People tend to think of romance as spur of the moment and exciting,” she told me. “I think of romance as things that make sense and are logical.” However, she didn't know why until this year when, at the age of 31, when she was diagnosed with autism.
A taxonomy of how we talk about class and wealth in the United States today
Last week, President Obama went on the road promoting an economic agenda for the middle class. As expected, John Boehner and other Republicans fired back by charging Obama with “squeezing the middle class.” It’s not even an election year, yet “middle class” is hotly contested linguistic real estate. But nobody seems to know what this term means.
“Middle class” remains our favored self-designation, although the percentage of Americans who select it fell from 53 percent in 2008 to 49 most recently, according to Pew Research. As a friend’s high-school teacher loved to say, “The great thing about America is that everyone can be middle class.” Good thing she wasn’t teaching math.
The Islamic State is no mere collection of psychopaths. It is a religious group with carefully considered beliefs, among them that it is a key agent of the coming apocalypse. Here’s what that means for its strategy—and for how to stop it.
What is the Islamic State?
Where did it come from, and what are its intentions? The simplicity of these questions can be deceiving, and few Western leaders seem to know the answers. In December, The New York Times published confidential comments by Major General Michael K. Nagata, the Special Operations commander for the United States in the Middle East, admitting that he had hardly begun figuring out the Islamic State’s appeal. “We have not defeated the idea,” he said. “We do not even understand the idea.” In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.
A new study pinpoints the Facebook status updates that irk us to the point of no return.
In the 1997 movie Romy and Michele’s High School Reunion, the two title characters, worried that they haven’t done anything noteworthy to share at said reunion, decide instead to lie and claim they invented Post-it notes.
Their story quickly unravels, of course, but had the movie been made a decade later, even the very concept of the ruse would have been impossible. Everyone would have known about Romy’s daily slog at the Jaguar dealership through Facebook.
Or would they?
The ebb and flow of Facebook friendships has become fruitful territory for social scientists in recent years. At least 63 percent of people report having unfriended someone on Facebook, but what prompts these digital rejections can tell us a lot about both the nature of real-life friendship and about how we manage our online personalities.
Residents of Newtok, Alaska voted to relocate as erosion destroyed their land. That was the easy part.
NEWTOK, Alaska—Two decades ago, the people of this tiny village came to terms with what had become increasingly obvious: They could no longer fight back the rising waters.
Their homes perched on a low-lying, treeless tuft of land between two rivers on Alaska’s west coast, residents saw the water creeping closer every year, gobbling up fields where they used to pick berries and hunt moose. Paul and Teresa Charles watched from their blue home on stilts on Newtok’s southern side as the Ninglick River inched closer and closer, bringing with it the salt waters of the Bering Sea.
“Sometimes, we lose 100 feet a year,” Paul Charles told me, over a bowl of moose soup.
Many communities across the world are trying to stay put as the climate changes, installing expensive levees and dikes and pumps, but not Newtok, a settlement of about 350 members of the Yupik people. In 1996, the village decided that fighting Mother Nature was fruitless, and they voted to move to a new piece of land nine miles away, elevated on bedrock.