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."
Most campaign ads, like most billboards or commercials, are unimaginative and formulaic. Our candidate is great! Their candidate is terrible! Choose us!
With the huge majority of political ads, you would look back on them long after the campaign only for time-warp curio purposes—Look at the clothes they wore in the 80s! Look how corny “I like Ike!” was as a slogan! Look how young [Mitch McConnell / Bill Clinton / Al Gore] once was!—or to find archeological samples of the political mood of a given era.
The few national-campaign ads that are remembered earn their place either because they were so effective in shifting the tone of the campaign, as with George H. W. Bush’s race-baiting “Willie Horton” ad against Michael Dukakis in 1988; or because they so clearly presented the candidate in the desired light, as with Ronald Reagan’s famous “Morning in America” ad in 1984. Perhaps the most effective campaign advertisement ever, especially considering that it was aired only one time, was Lyndon Johnson’s devastating “Daisy Girl” ad, from his campaign against Barry Goldwater in 1964. The power of the Daisy Girl ad was of course its dramatizing the warning that Goldwater might recklessly bring on a nuclear war.
The Texas senator’s about-face risks undermining his political brand and alienating the supporters who hailed his defiant stand in Cleveland.
Ted Cruz set aside his many differences with Donald Trump on Friday to endorse for president a man whom he once called a “serial philanderer,” a “pathological liar,” “utterly amoral,” and a “sniveling coward”; who insulted his wife’s looks; who insinuated Cruz’s father was involved in the assassination of John F. Kennedy; who said he wouldn’t even accept his endorsement; and who for months mocked him mercilessly with a schoolyard taunt, “Lyin’ Ted.”
The Texas senator announced his support for the Republican nominee late Friday afternoon in a Facebook post, writing that the possibility of a Hillary Clinton presidency was “wholly unacceptable” and that he was keeping his year-old commitment to back the party’s choice. Cruz listed six policy-focused reasons why he was backing Trump, beginning with the importance of appointing conservatives to the Supreme Court and citing Trump’s recently expanded list of potential nominees. Other reasons included Obamacare—which Trump has vowed to repeal—immigration, national security, and Trump’s newfound support for Cruz’s push against an Obama administration move to relinquish U.S. oversight of an internet master directory of web addresses.
How Washington men working in national security dress—for better or for worse
In 2017, shortly after the next president is inaugurated, thousands of newly appointed federal officials will struggle with the same existential question: What do I wear to my first day of work? I understand their anxiety, having languished over wardrobe during eight years of federal service and pondered the fashion choices of my male colleagues during the interminable meetings that are the hallmark of government work. It’s hard to point to a solid “real world” professional competency that I learned during those years of meetings and memo writing, but one skill I developed is an uncanny ability to tell you where any man in the national security community works based on his apparel. But first, to understand the fashion choices these professionals make, you must understand the culture—and keep in mind that not every employee falls into these stereotyped camps. (I’m also leaving a thorough assessment of female fashion to other writers more qualified.)
In Greenwich, Darien, and New Canaan, Connecticut, bankers are earning astonishing amounts. Does that have anything to do with the poverty in Bridgeport, just a few exits away?
BRIDGEPORT, Conn.—Few places in the country illustrate the divide between the haves and the have-nots more than the county of Fairfield, Connecticut. Drive around the city of Bridgeport and, amid the tracts of middle-class homes, you’ll see burned-out houses, empty factories, and abandoned buildings that line the main street. Nearby, in the wealthier part of the county, there are towns of mansions with leafy grounds, swimming pools, and big iron gates.
Bridgeport, an old manufacturing town all but abandoned by industry, and Greenwich, a headquarters to hedge funds and billionaires, may be in the same county, and a few exits apart from each other on I-95, but their residents live in different worlds. The average income of the top 1 percent of people in the Bridgeport-Stamford-Norwalk metropolitan area, which consists of all of Fairfield County plus a few towns in neighboring New Haven County, is $6 million dollars—73 times the average of the bottom 99 percent—according to a report released by the Economic Policy Institute (EPI) in June. This makes the area one of the most unequal in the country; nationally, the top 1 percent makes 25 times more than the average of the bottom 99 percent.
Police in Charlotte, North Carolina, released body-cam and dashboard footage of the 43-year-old black man’s final moments.
Keith Scott had his hands at his side when a Charlotte, North Carolina, police officer fatally shot him four times, according to footage from a police dashboard camera.
The Charlotte-Mecklenburg Police Department released Saturday clips of body-cam and dashboard footage taken during Scott’s shooting Tuesday after days of protests in downtown Charlotte over the killing.
The two clips offer an incomplete glimpse into the encounter. Footage from the body-cam of one of the officers runs a minute long. Scott himself is shown for only a fraction of a second in it. During the shooting itself, the lens is obscured by the officer’s neck. The audio is also missing from the first 25 seconds, including when the gunshots are fired.
Who will win the debates? Trump’s approach was an important part of his strength in the primaries. But will it work when he faces Clinton onstage?
The most famous story about modern presidential campaigning now has a quaint old-world tone. It’s about the showdown between Richard Nixon and John F. Kennedy in the first debate of their 1960 campaign, which was also the very first nationally televised general-election debate in the United States.
The story is that Kennedy looked great, which is true, and Nixon looked terrible, which is also true—and that this visual difference had an unexpected electoral effect. As Theodore H. White described it in his hugely influential book The Making of the President 1960, which has set the model for campaign coverage ever since, “sample surveys” after the debate found that people who had only heard Kennedy and Nixon talking, over the radio, thought that the debate had been a tie. But those who saw the two men on television were much more likely to think that Kennedy—handsome, tanned, non-sweaty, poised—had won.
Even in big cities like Tokyo, small children take the subway and run errands by themselves. The reason has a lot to do with group dynamics.
It’s a common sight on Japanese mass transit: Children troop through train cars, singly or in small groups, looking for seats.
They wear knee socks, polished patent-leather shoes, and plaid jumpers, with wide-brimmed hats fastened under the chin and train passes pinned to their backpacks. The kids are as young as 6 or 7, on their way to and from school, and there is nary a guardian in sight.
A popular television show called Hajimete no Otsukai, or My First Errand, features children as young as two or three being sent out to do a task for their family. As they tentatively make their way to the greengrocer or bakery, their progress is secretly filmed by a camera crew. The show has been running for more than 25 years.
The Republican candidate took his case to a shale-industry gathering, and found a welcoming crowd.
PITTSBURGH—“Running for president is a very important endeavor,” Donald Trump said. “What is more important, right?”
He leaned forward on his chair, separated by a heavy black curtain in a makeshift green room from the crowd waiting to hear him speak at the Shale Insight Conference.
“I am running because, number one, I think I will do a very good job. Number two, it’s really about making American great again.” He paused, as if realizing that repeating his campaign slogan might not seem genuine.
“I mean that; I really do want to make America great again,” he said. “That is what it is all about.”
The 70-year-old Republican nominee took his time walking from the green room toward the stage. He stopped to chat with the waiters, service workers, police officers, and other convention staffers facilitating the event. There were no selfies, no glad-handing for votes, no trailing television cameras. Out of view of the press, Trump warmly greets everyone he sees, asks how they are, and, when he can, asks for their names and what they do.
Campus life is too diverse at most schools for dorms to serve as a place of respite from uncomfortable ideas.
Last week, I got an email from Decker O’Donnell, an economics major at Lewis & Clark College in Portland, Oregon. He was troubled by my claim that dorm life at residential colleges cannot be like home. “We live there 30 weeks a year,” he wrote. “I know people with abusive or homophobic families who couch-surf in the summer.”
College, he observed, “is the only home they have.”
There is, of course, a subset of college students whose troubled home lives cause them to feel more comfortable on campus than in the households where they grew up, and the escape that higher education affords them is very much worth celebrating. But those cases are not the core of O’Donnell’s disagreement with me.
By way of background, I wrote about home during last year’s controversy at Yale, when students protested the faculty-in-residence at Silliman College after his wife sent an email that upset them. She argued that Yale undergrads, not administrators, should shape the norms around what Halloween costumes are appropriate. “As master,” a student retorted, “it is your job to create a place of comfort and home for the students who live in Silliman. You have not done that. By sending out that email, that goes against your position as master. Do you understand that?!”
In her new book, The Gardener and the Carpenter,Alison Gopnik offers up a more organic approach to raising children.
Could a 4-year-old possess better instincts for scientific discovery than a college student?
In one experiment, researchers showed preschoolers and undergraduates a variety of blocks, some of which made a machine light up and play music. The children turned out to be more open to the notion that unusual combinations of blocks could turn the machine on, whereas the college students got hung up on the most obvious solution—that the shape of individual blocks affected the machine—ignoring evidence that it was wrong. As surprising as the finding might seem to the layperson, it’s consistent with other research showing that children are better at exploring unlikely possibilities, while adults tend to build on our existing knowledge. In a sense, young children are superior innovators and scientists, open to novel hypotheses.