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."
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.
As the public’s fear and loathing surge, the frontrunner’s durable candidacy has taken a dark turn.
MYRTLE BEACH, South Carolina—All politicians, if they are any good at their craft, know the truth about human nature.
Donald Trump is very good, and he knows it better than most.
Trump stands alone on a long platform, surrounded by a rapturous throng. Below and behind him—sitting on bleachers and standing on the floor—they fill this city’s cavernous, yellow-beige convention center by the thousands. As Trump will shortly point out, there are a lot of other Republican presidential candidates, but none of them get crowds anything like this.
Trump raises an orange-pink hand like a waiter holding a tray. “They are not coming in from Syria,” he says. “We’re sending them back!” The crowd surges, whistles, cheers. “So many bad things are happening—they have sections of Paris where the police are afraid to go,” he continues. “Look at Belgium, the whole place is closed down! We can’t let it happen here, folks.”
Why the ingrained expectation that women should desire to become parents is unhealthy
In 2008, Nebraska decriminalized child abandonment. The move was part of a "safe haven" law designed to address increased rates of infanticide in the state. Like other safe-haven laws, parents in Nebraska who felt unprepared to care for their babies could drop them off in a designated location without fear of arrest and prosecution. But legislators made a major logistical error: They failed to implement an age limitation for dropped-off children.
Within just weeks of the law passing, parents started dropping off their kids. But here's the rub: None of them were infants. A couple of months in, 36 children had been left in state hospitals and police stations. Twenty-two of the children were over 13 years old. A 51-year-old grandmother dropped off a 12-year-old boy. One father dropped off his entire family -- nine children from ages one to 17. Others drove from neighboring states to drop off their children once they heard that they could abandon them without repercussion.
The Nebraska state government, realizing the tremendous mistake it had made, held a special session of the legislature to rewrite the law in order to add an age limitation. Governor Dave Heineman said the change would "put the focus back on the original intent of these laws, which is saving newborn babies and exempting a parent from prosecution for child abandonment. It should also prevent those outside the state from bringing their children to Nebraska in an attempt to secure services."
Can we predict romantic prospects just from looking at a face?
By the time you swear you're his, / Shivering and sighing. / And he vows his passion is/ Infinite, undying. / Lady, make a note of this — /One of you is lying. ― Dorothy Parker
Edward Royzman, a psychology professor at the University of Pennsylvania, asks me to list four qualities on a piece of paper: physical attractiveness, income, kindness, and fidelity. Then he gives me 200 virtual “date points” that I’m to distribute among the four traits. The more I allocate to each attribute, the more highly I supposedly value that quality in a mate.
This experiment, which Royzman sometimes runs with his college classes, is meant to inject scarcity into hypothetical dating decisions in order to force people to prioritize.
Students at Princeton University are protesting the ways it honors the former president, who once threw a civil-rights leader out of the White House.
The Black Justice League, in protests on Princeton University’s campus, has drawn wider attention to an inconvenient truth about the university’s ultimate star: Woodrow Wilson. The Virginia native was racist, a trait largely overshadowed by his works as Princeton’s president, as New Jersey’s governor, and, most notably, as the 28th president of the United States.
As president, Wilson oversaw unprecedented segregation in federal offices. It’s a shameful side to his legacy that came to a head one fall afternoon in 1914 when he threw the civil-rights leader William Monroe Trotter out of the Oval Office.
Trotter led a delegation of blacks to meet with the president on November 12, 1914 to discuss the surge of segregation in the country. Trotter, today largely forgotten, was a nationally prominent civil-rights leader and newspaper editor. In the early 1900s, he was often mentioned in the same breath as W.E.B. Du Bois and Booker T. Washington. But unlike Washington, Trotter, an 1895 graduate of Harvard, believed in direct protest actions. In fact, Trotter founded his Boston newspaper, The Guardian, as a vehicle to challenge Washington’s more conciliatory approach to civil rights.
The statesman understood something most diplomats don’t: history—and how to apply it.
In his new biography of Henry Kissinger, the historian Niall Ferguson recalls that halfway through what became an eight-year research project, he had an epiphany. Tracing the story of how a young man from Nazi Germany became America’s greatest living statesman, he discovered not only the essence of Kissinger’s statecraft, but the missing gene in modern American diplomacy: an understanding of history.
For Ferguson, it was a humbling revelation. As he confesses in the introduction to Kissinger: “In researching the life and times of Henry Kissinger, I have come to realize that my approach was unsubtle. In particular, I had missed the crucial importance in American foreign policy of the history deficit: The fact that key decision-makers know almost nothing not just of other countries’ pasts but also of their own. Worse, they often do not see what is wrong with their ignorance.”
What one woman learned from 10 years of teaching in a New York City public school
Laurel Sturt was a 46-year-old fashion designer in New York City whose career trajectory took an unlikely shift one day on the subway. A self-proclaimed social activist, Sturt noticed an ad for a Teaching Fellows program. Then and there, she decided to quit her job in fashion design and shift her focus to her real passion: helping others. She enrolled in the two-year program and was assigned to teach at an elementary school in a high-poverty neighborhood near the South Bronx.
Twenty-five years ago, the lip-syncing models were dethroned—and a class of more sophisticatedly manufactured stars took their place.
One of the stranger images in pop culture this year has been the one above, of Drake’s face pasted onto the body of a Milli Vanilli member. It came courtesy of Meek Mill, the rapper who picked a fight on Twitter over the summer by claiming that Drake doesn’t write his own songs. In one of the diss tracks to result, Mill (nickname: “Meek Milli!”) called Drake a “Milli Vanilli-ass n*****.” T-Pain, commenting on the controversy, boiled it down to being a “Milli Vanilli thing.”
Among the many importantimplications of this headline-making beef is the notion that, despite or perhaps because of the best efforts of some of pop culture’s watchdog forces, Milli Vanilli hasn’t been forgotten. November 27 marks a quarter century since the Grammys revoked the Best New Artist trophy from the act whose songs, it turned out, were sung not by the European models Fab Morvan and Rob Pilatus but by uncredited musicians working with the producer Frank Farian. It’s one of the most important scandals in pop history, especially when viewed in the context of today’s cultural wars over realness and fakeness.
Giving a gift is an act of competition as much as generosity.
Get $100 off the iPad Air 2 at Best Buy. Save $50 on the Xbox One Gears of War Bundle plus get a $60 Target Gift Card. At Walmart, one can buy a Samsung Smart HDTV for under $200. Under $200!
These are the marks of Black Friday, the annual bacchanal for consumer excess. And excess, it is normally thought, is a sign of vice. Profligacy. Christmas, the backlash insists, isn’t about possessing things, but about family and salvation, respect and contrition.
Except, in another sense, it isn’t. Whether one is a believer or not, Christmas is about a particularly excessive gift—an ultimate gift, the gift of God’s only son, whom the scriptures declare would sacrifice his life for all mankind. Excess is the origin story of Christmas, rendering Black Friday strangely compatible with the liturgy.
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.