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 class divide is already toxic, and is fast becoming unbridgeable. You’re probably part of the problem.
1. The Aristocracy Is Dead …
For about a week every year in my childhood, I was a member of one of America’s fading aristocracies. Sometimes around Christmas, more often on the Fourth of July, my family would take up residence at one of my grandparents’ country clubs in Chicago, Palm Beach, or Asheville, North Carolina. The breakfast buffets were magnificent, and Grandfather was a jovial host, always ready with a familiar story, rarely missing an opportunity for gentle instruction on proper club etiquette. At the age of 11 or 12, I gathered from him, between his puffs of cigar smoke, that we owed our weeks of plenty to Great-Grandfather, Colonel Robert W. Stewart, a Rough Rider with Teddy Roosevelt who made his fortune as the chairman of Standard Oil of Indiana in the 1920s. I was also given to understand that, for reasons traceable to some ancient and incomprehensible dispute, the Rockefellers were the mortal enemies of our clan.
Justin Trudeau’s government has started rejecting more refugee claims from migrants who cross the U.S.-Canada border on foot.
It may seem paradoxical. Last year, Canadian Prime Minister Justin Trudeau appeared to issue an open invitation to refugees with a tweet declaring, “to those fleeing persecution, terror & war ... #WelcomeToCanada.” This year, his government is working hard to deter thousands of people who are walking over the U.S. border to seek asylum in Canada.
Canada has begun granting refugee status to fewer irregular border crossers—that is, people who walk into the country without going through a designated port of entry. Since President Donald Trump was elected, over 27,000 people have crossed into Canada overland. (By comparison, only 2,000 people did this in 2016.) In 2017, the country granted refugee status to 53 percent of such border crossers, but that number was down to 40 percent in the first three months of this year, Reuters reported. Did Trudeau change his mind about Canada’s welcoming posture in general? Or is something else at work here?
It may not be as simple as calories in, calories out. New research reveals a far more complex equation for weight gain that places at least some of the blame on organic pollutants.
Conventional wisdom says that weight gain or loss is based on the energy balance model of "calories in, calories out," which is often reduced to the simple refrain, "eat less, and exercise more." But new research reveals a far more complex equation that appears to rest on several other important factors affecting weight gain. Researchers in a relatively new field are looking at the role of industrial chemicals and non-caloric aspects of foods -- called obesogens -- in weight gain. Scientists conducting this research believe that these substances that are now prevalent in our food supply may be altering the way our bodies store fat and regulate our metabolism. But not everyone agrees. Many scientists, nutritionists, and doctors are still firm believers in the energy balance model. A debate has ensued, leaving a rather unclear picture as to what's really at work behind our nation's spike in obesity.
If the president does not want to testify in Robert Mueller’s investigation, there simply is no realistic way for the courts to physically force him to do so.
As President Trump and Special Counsel Robert Mueller continue to dance around the possibility of an interview, it is, perhaps, useful to think about how a confrontation between the two might play out. Imagine that negotiations come to an unsuccessful conclusion and Mueller is motivated to issue a subpoena to Trump.
What happens then?
As far as the public record reflects, a president has only been subpoenaed once before, when Independent Counsel Kenneth Starr tried to compel former President Bill Clinton to appear in front of a grand jury during his sprawling inquiry into the Clintons in the 1990s, an investigation in which I served as a senior counsel. In the end, Clinton agreed to a voluntary interview and the subpoena was withdrawn, so the country never learned what could happen if a president were to fight a subpoena.
This month, many of the nation's best and brightest high school seniors will receive thick envelopes in the mail announcing their admission to the college of their dreams. According to a 2011 survey, about 60 percent of them will go to their first-choice schools. For many of them, going away to college will be like crossing the Rubicon. They will leave their families—their homes—and probably not return for many years, if at all.
That was journalist Rod Dreher's path. Dreher grew up in the small southern community of Starhill, Louisiana, 35 miles northwest of Baton Rouge. His family goes back five generations there. His father was a part-time farmer and sanitarian; his mother drove a school bus. His younger sister Ruthie loved hunting and fishing, even as a little girl.
“Bird hunting” has become a pastime and a side hustle for teens and young professionals, but for some it’s a cutthroat business.
Every afternoon around 4 p.m., when school lets out, Brandon, an 18-year-old high-school senior in Los Angeles who asked to be referred to only by his first name, goes “Bird hunting.” He heads for his minivan and, on the drive home, he’ll swing through convenient neighborhoods, picking up about 13 Bird electric scooters along the way, tossing them into the back of his car.
“I have a whole system,” he says. “I’ll go home, put the 13 I initially caught on the chargers. They’ll charge for about three hours until around 7 or 8 p.m.”—when Bird makes more scooters available for charger pickup. “Then I’ll go back out.”
Over the course of the next few hours, Brandon loops around his Santa Monica, California, neighborhood collecting as many scooters as possible. He brings back his bounty and, as his parents sleep, neatly sets them up to charge in batches overnight.
They’re linked to an increase in populist sentiments.
Discussion about the great American baby bust often seems meant to induce fear. The concern is that with fewer babies, economic growth will plummet, and too-few workers will have to shoulder the burden of an aging population. But if I’m being honest, the latest news about the drop in American births did not raise my blood pressure much.
Maybe it’s because I, myself, am kind of “eh” on kids in general. Maybe I’ve just been watching too many men beseech women to do their feminine duties on Handmaid’s Tale. So American women are opting out of parenting? Good for them! More time for Netflix, making money, reading my articles—to name just three very pleasurable activities that don’t cause stretch marks.
Philosophically, intellectually—in every way—human society is unprepared for the rise of artificial intelligence.
Three years ago, at a conference on transatlantic issues, the subject of artificial intelligence appeared on the agenda. I was on the verge of skipping that session—it lay outside my usual concerns—but the beginning of the presentation held me in my seat.
The speaker described the workings of a computer program that would soon challenge international champions in the game Go. I was amazed that a computer could master Go, which is more complex than chess. In it, each player deploys 180 or 181 pieces (depending on which color he or she chooses), placed alternately on an initially empty board; victory goes to the side that, by making better strategic decisions, immobilizes his or her opponent by more effectively controlling territory.
When so many students have outstanding grades and test scores, schools have to get creative about triaging applicants.
For generations, two numbers have signaled whether a student could hope to get into a top college: his or her standardized test score and his or her grade-point average.
In the past 15 years, though, these lodestars have come to mean less and less. The SAT has been redesigned twice in that time, making it difficult for admissions officers to assess, for instance, whether last year’s uptick in average scores was the result of better students or just a different test. What’s more, half of American teenagers now graduate high school with an A average, according to a recent study. With application numbers at record highs, highly selective colleges are forced to make impossible choices, assigning a fixed number of slots to a growing pool of students who, each year, are harder to differentiate using these two long-standing metrics.
Thirty-five years after implementing the country’s constitutional ban on abortion, an overwhelming majority of Irish people voted to repeal it.
Updated at 1:51 p.m. ET
DUBLIN—It was clear a big change was coming to Ireland even as the final votes were still being tallied: Exit polls Friday night showed an overwhelming majority of Irish citizens had voted “Yes” to overturn their country’s constitutional ban on abortion. And on Saturday, it was official.
It was supposed to be a much closer contest, and the overwhelming margin in the final tally conflicted with polls leading up to the vote, which seemed to show a public about evenly split on the issue. In the end, roughly 66 percent of Irish voters supported repealing the Irish constitution’s Eighth Amendment, which outlawed abortion by giving an unborn fetus equal right to life to that of a pregnant woman. Just about half that number—roughly 33percent—voted to maintain the abortion ban.