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Bubble Land
2008-05-14 04:11:00
The medium is the message.— Marshall McLuhanDear and Cultured Readers, I am thrilled to have this opportunity to share with you some happy news.I am pleased to announce that today is a red letter day for Umberto Eco, semioticians, and cultural anthropologists everywhere. I have no doubt that entire university departments around the globe will look back on this week as the seminal period in academic scholarship's institutional understanding and exploitation of the Great Private Equity Wave of the mid-2000s. Many scholars I have spoken with this evening have shared with me their gossamer hopes that today has been revealed the Rosetta Stone which will allow them once and for all to decipher and contextualize the overarching socioeconomic context of the Second Gilded Age we now find ourselves within.Of what ominous portent of Doom and Glory do I write, you timidly inquire? Why, of nothing less than the public release of The Blackstone Group's first annual report. * * *Now, I...
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Three Haiku
2008-04-28 03:30:00
I.Equity PrivateMakes fun of Michael Porter.Go ahead: read it.II.EP loves AppleComputer, a fact I findStrangely amusing.III.I love her writing,But it is too long to readOn an iPhone screen.© 2008 The Epicurean Dealmaker. All rights reserved.
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Not Safe for Work
2008-04-26 03:21:00
Stranger: "There's just one thing, Dude."Dude: "And what's that?"Stranger: "Do you have to use so many cuss words?"Dude: "What the fuck you talkin' about?"Stranger: "Okay, Dude. Have it your way."— The Big LebowskiIn between dusting off my snowglobe collection and watching my backlog of "Highly Probable" M&A deals drift into the "Maybe, But Don't Count on It" and the "Who the Fuck Do You Think You're Kidding?" columns of my revenue report, I have had plenty of time to contemplate the mysteries of modern life.Like: did Al Gore really invent the internet? Does the "Prince of Wall Street" still have a job offer in Financial Sponsors at a "bulge bracket" bank? And, is it true that Equity Private and Dan Loeb plan to use a mixture of shredded 10-Qs and portfolio company business plans as confetti at their upcoming wedding scheduled for a secret location off the Dalmatian Coast?We may never know the answers, Dear Readers, but certain questions are worth asking anyway, no?Al...
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The Scorpion and the Frog
2008-04-23 02:31:00
Once upon a time, there was a frog which lived happily on the bank of a broad river. It was a good riverbank, with plenty of flies to eat and lots of nice, cool water in which to swim and dive. Life was good for the frog.Then, one day, another frog which had heard of the nice river came and made his home just down the riverbank from the first frog. At first, the two frogs were cordial and polite. While they were not really friends, and they were natural competitors for the bugs and other food on the bank, there seemed to be plenty to go around, so they lived in peace with one another.After a while, though, the riverbank began to change. The river itself became wilder, colder, and more dangerous. At the same time, the flies, which had been so plentiful, began to disappear. Soon, the two frogs began to fight over the few bugs and pockets of calm water that remained on the riverbank, and they became implacable enemies. They would fight and squabble every day, until they were ga...
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Melancholia
2008-04-20 20:01:00
To pleasant songs my work was erstwhile given, and bright were all my labours then; but now in tears to sad refrains am I compelled to turn. Thus my maimed Muses guide my pen, and gloomy songs make no feigned tears bedew my face.— Boethius, The Consolation of PhilosophyThings are a mite quiet here at the Volcano Lair, Dear Readers.I assume the clever among you will have already inferred this fact from the relentless drumroll in the financial press about declining M&A volumes, struggling investment banks, and the like. Blah, blah, blah.Like all dutiful merger advisors, I continue to do my best to persuade my corporate clients that now is the time to strike, while Steve Schwarzman and Henry Kravis are busy renovating their secret Italian love nest away from the harsh glare of media scrutiny. But the intelligent and well-funded among these—a distressingly high proportion thereof, to my continual disappointment—just look at me skeptically and say, "Why bother?"1Inde...

Jack-Jack Attack
2008-04-18 00:37:00
To: jack@jack.comFrom: The Epicurean DealmakerSubject: Jeff ImmeltDear Jack —I saw that you apologized on CNBC today for the televised ass-whuppin' you gave Jeff Immelt yesterday after GE's earnings release. I'm sure Jeff appreciated the retraction, and I know for a fact that he hopes you don't "get out a gun and shoot" him if GE misses again. He asked me to tell you that he is working like gangbusters on the Gordian Knot puzzle you left him, but he still hasn't found the bottle of Jack's Secret Sauce you hid in the company boardroom. (Gosh, you guys are clever. I never knew the GE Way included scavenger hunts for the incoming chief executive.)Heaven knows, there seems to be a surfeit of underemployed, overexposed old farts running around right now burnishing their reputations at the expense of their successors, but I am glad you had the cojones to call "foul" on yourself for your little indiscretion. While there do seem to be a few skeptics out there, the bro...
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Born and Bred in a Briar Patch
2008-04-01 22:39:00
"Who asked you to come and strike up a conversation with this Tar-Baby? And who stuck you up the way you are? Nobody in the round world. You just jammed yourself into that Tar-Baby without waiting for an invitation," says Brer Fox, says he. "There you are and there you'll stay until I fix up a brushpile and fire it up, 'cause I'm going to barbecue you today, for sure," says Brer Fox, says he.— Brer Rabbit and the Tar Baby, retold by Catherine FarrellKaty bar the door!Having failed to unwind their ill-thought-out investments in Delta Air Lines and UAL and slink off quietly into a dark corner, as I recommended last November, Pardus Capital has suspended redemptions by its investors.Pardus Capital Management, the hedge fund manager that has pushed for the merger of United Airlines’ parent UAL and Delta Air Lines, has suspended investor redemptions because the $2 billion firm has been hit by market volatility this year.“The actions we have taken will allow us to protect th...
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Devil Take the Hindmost
2008-03-27 22:01:00
From Bloomberg News this afternoon:Bear Stearns Chairman Cayne Sells His Entire Stake in the Firm By Yalman OnaranMarch 27 (Bloomberg) -- Bear Stearns Cos. Chairman James "Jimmy" Cayne sold his shares in the firm prior to a shareholder vote on the company's pending takeover by JPMorgan Chase & Co.Cayne sold 5.6 million shares at $10.84 a piece on March 25 on the New York Stock Exchange, according to a regulatory filing today. Bear Stearns spokesman Russell Sherman had no comment on why or to whom Cayne sold his shares.Good for you, Jimmy. After all, if Lazard said $2.00 a share was fair, and $10.00 a share was fairer, then surely $10.84 is even more fairer-er.Send us a postcard from the Plaza, will ya?© 2008 The Epicurean Dealmaker. All rights reserved.
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Scatology
2008-03-26 20:45:00
Large man: "Who's that, then?"Cart driver: "I dunno, must be a King."Large man: "Why?"Cart driver: "He hasn't got shit all over him."— Monty Python and the Holy GrailI'm still here, Dear Readers. Truly.I have just been struggling a little with uncharacteristic tongue-tiedness in the face of the magnificently operatic Cluster Fuck of the Century we have all been witnessing for the last week or so; namely, the Bear Stearns Imbroglio.1I mean, what can one say? It is magnificent, it is operatic, and it makes Hiroshima look like a damp squib in a Folgers coffee can.2Depending on which source you listen to, JPMorgan's Jamie Dimon is either a reluctant pawn in Hank Paulson and Ben Bernanke's vengeful plot to ram a splintered stick up Jimmy Cayne's ass for DK-ing the Fed and Wall Street when Long-Term Capital blew up ten years ago, or he is a Machiavellian monster who is taking out his two-dollar broker's insecurities by buggering anyone in a three piece suit he can get ...

Character Study
2008-03-11 00:30:00
And as to you, Sir, treacherous in private friendship (for so you have been to me, and that in the day of danger) and a hypocrite in public life, the world will be puzzled to decide whether you are an apostate or an impostor; whether you have abandoned good principles, or whether you ever had any.— Thomas Paine, Letter to George Washington* * *And this is the type of individual that Martin Wolf and others would have regulate the pay and benefits of those on Wall Street. Admirable.© 2008 The Epicurean Dealmaker. All rights reserved.
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Remember the Alamo
2008-03-07 17:30:00
"Then I need say no more," said Celeborn. "But do not despise the lore that has come down from distant years; for oft it may chance that old wives keep in memory word of things that once were needful for the wise to know."— J.R.R. Tolkein, The Fellowship of the RingWell, it seems that the geniuses at The Carlyle Group have finally shit the bed. And in public, too. Oops.Another crop of yahoos, drunk on their own power, reputation, and greed steered themselves (and their trusting investors) into a ditch by ignoring the most basic rules of the road:Do not borrow short and lend longDo not overlever securities which might become illiquidDo not believe your own hypeDo stick to your knittingPrior to this, the Carlyle troika of Rubenstein, Conway, and Aniello were almost universally believed to be nearly as smart as Albert Einstein before he started smoking weed and hanging out with the fruitcakes at the Institute for Advanced Study. I guess they knew better.As Felix Salmon point...

Penny for the Guy
2008-02-27 01:45:00
Oh, no. Not again.I can only assume my secretary was late posting my subscription renewal to the Financial Times last month. How else can I explain the appearance of yet another Yahoo in Monday's FT opinion pages blathering on about the proper way to rein in investment banking compensation?Either that, or Paul Murphy and Helen Thomas over at FT Alphaville are encouraging their ink-stained colleagues to taunt Your Dedicated Correspondent with inflammatory commentary in hopes I will cause more catfights in the Alphaville comments section. If so, my friends, I can only warn you you are playing a very dangerous game.I thought my fellow-travelers and I had done a creditable job of beating back the self-righteous, ill-informed attacks launched from various quarters on the vexed subject of banker pay, but it appears there are a few more heads out there in dire need of lopping off.Sadly, Hercules I am not. I must admit that the apparent futility of this battle—and the hostility o...
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Survey Course
2008-02-24 01:50:00
Probability 105 – This introductory course uses readings, exercises, and perspectives from disparate fields such as film, literature, mathematics, and finance to place probability theory in a general intellectual context.Required for all undergraduates. No auditors. Pass/fail only.* * ** * *LiteratureOnce initiated in the mysteries of Baal, every free man automatically participated in the sacred drawings, which took place in the labyrinths of the god every sixty nights and which determined his destiny until the next drawing. The consequences were incalculable. A fortunate play could bring about his promotion to the council of wise men or the imprisonment of an enemy (public or private) or finding, in the peaceful darkness of his room, the woman who begins to excite him and whom he never expected to see again. A bad play: mutilation, different kinds of infamy, death.— Jorge Luis Borges, The Lottery in BabylonMathematicsAssume a coin toss game, using a fair coin, wh...
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The Fascination of What's Difficult
2008-02-20 01:20:00
"The truth is that a mastery of literary and philosophical texts and the acquisition of wisdom (in whatever form) are independent variables."— Stanley FishThe truth is that "independent variables" in the preceding sentence is content-free pseudo-mathematical hogwash.1 Nevertheless, hopefully you get the otherwise valid instructional point.1 A common intellectual failing and pretension in days such as ours, which are marked by the apotheosis of Science and Mathematics over common sense and—yes—wisdom; q.v. those current exemplars of human folly: hedge funds, quantitative, and economics, non-behavioral.© 2007 The Epicurean Dealmaker. All rights reserved.

Herding Cats
2008-02-15 05:30:00
John Kay produced an interesting commentary over at the Financial Times earlier this week, in which he tried to explain the current banking crisis by reference to identity politics and group think. His central argument is that bankers got caught up in counterproductive behaviors—like originating toxic CDOs and mortgage-backed securities and flogging them to befuddled widows and orphans—because they wanted and needed to go along with everyone else at their firms and in the industry who were doing the same thing.Yves Smith, of Naked Capitalism, doesn't quite agree:A lot of readers would probably differ; incentives like performance pressure and annual bonus schemes would seem sufficient to explain the short-sightedness of investment bankers. And recall when the firms were partnerships, the aggression in the lower ranks was checked by the owners whose capital was illiquid, which required them to take a longer-term, more deliberate stance. But it is true that the industry f...
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Does This Profile Make Me Look Fat?
2008-02-07 22:00:00
FBI Case File 0932074G – Exhibit 36:The following is an edited transcript of a telephone conversation recorded on Thursday, February 7, 2008 between one Stephen A. Schwarzman and an individual identifying himself as "The Epicurean Dealmaker." All dialogue transcribed verbatim.Hello?Hey, TED, it's Steve.Stevie! Howya doin' babe? Hey, you know, I asked you never to call me here.Sorry, I know, but I have to talk to you about something right away.Alright. Shoot.Thanks. Hey, listen, before I get started, I just want to thank you for not writing any more nasty articles about me in your blog. You were really getting under my skin for a while there, you know.I know. You're welcome. Thank you for sending Francesca over as a "peace offering."No problem. She's some firecracker, isn't she?Yeah. Now, what did you want to ask me?Oh, yeah. Did you see the profile on me in this week's New Yorker?Uh, yeah.Well? Whadja think?Not good, Steve, not good.Really? I kinda liked it....
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The Strait of Messina
2008-02-06 16:30:00
A thing I never know, when I'm starting out to tell a story about a chap I've told a story about before, is how much explanation to bung in at the outset. It's a problem you've got to look at from every angle. I mean to say, in the present case, if I take it for granted that my public knows all about Gussie Fink-Nottle and just breeze ahead, those publicans who weren't hanging on my lips the first time are apt to be fogged. Whereas, if before kicking off I give about eight volumes of the man's life and history, other bimbos, who were so hanging, will stifle yawns and murmur 'Old stuff. Get on with it.'I suppose the only thing to do is to put the salient facts as briefly as possible in the possession of the first gang, waving an apologetic hand at the second gang the while, to indicate that they had better let their attention wander for a minute or two and that I will be with them shortly.— P.G. Wodehouse, The Code of the WoostersOne of the existential pleasures of...
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Bad Hair Day?
2008-01-23 00:52:00
Stranger: "How you doing there, Dude?"Dude: "Not too good, man."Stranger: "One of those days, huh?"Dude: "Yeah."Stranger: "Well, a wiser fella than myself once said, 'Sometimes you eat the bar, and'—(Much obliged)—'sometimes the bar, well, he eats you.'"Dude: "Hmm. That some kinda Eastern thing?"Stranger: "Far from it."— The Big Lebowski© 2008 The Epicurean Dealmaker. All rights reserved.
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Just When I Thought I Was Out
2008-01-21 18:15:00
... they pull me back in."— The Godfather: Part IIIThe Financial Times continues to do an outstanding job of ruining my long holiday weekend here in the States by dragging me back into the vexed and contentious issue of banker pay. This morning, they have goaded me into a response by posting a comment left by former economist/Harvard poohbah and current hedge-fund-honcho/commentator-without-por tfolio Larry Summers on the FT Economist's Forum, wherein the Fine and Lofty have been debating Martin Wolf's recent provocation on the subject.While I truly begin to tire of this issue, I feel it would be irresponsible to my Faithful Audience not to share with you the comment I left on the Alphaville blogsite (and Mr. Wolf's subsequent "response"), just in case you wanted to see more of my flashing teeth on the subject. I fear these words will fall on deaf ears among the F&L, but perhaps some among you will be able to perceive the validity of my arguments amidst the vitriol of my ...
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Stump Speech
2008-01-20 15:36:00
WALL STREET, n. A symbol for sin for every devil to rebuke. That Wall Street is a den of thieves is a belief that serves every unsuccessful thief in place of a hope in Heaven.FINANCE, n. The art or science of managing revenues and resources for the best advantage of the manager. The pronunciation of this word with the i long and the accent on the first syllable is one of America's most precious discoveries and possessions.COMMERCE, n. A kind of transaction in which A plunders from B the goods of C, and for compensation B picks the pocket of D of money belonging to E.— Ambrose Bierce, The Devil's Dictionary* * *Recent readers of these pages will be aware that I have been engaged in an ongoing dialogue of sorts with several market commentators concerning the vexed and contentious issue of banker pay, especially as it relates to the ongoing crisis in financial markets. While tempers may have flared, I do hope that we can quickly move beyond casting aspersionsASPERSE, v.t. ...
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The Pressure Room
2008-01-17 16:17:00
"Mr. Bond, they have a saying in Chicago: 'Once is happenstance. Twice is coincidence. The third time it's enemy action.' Miami, Sandwich and now Geneva. I propose to wring the truth out of you."Goldfinger's eyes slid slowly past Bond's head. "Oddjob, The Pressure Room ."— Ian Fleming, Goldfinger[WARNING: This post has been rated VILE, for Very Interesting, Lengthy, and Educational. Read at your own risk.]Let's cut the shite, shall we?The time has come to face some simple truths.With the publication today on page one of The Wall Street Journal of an article entitled "Deal Fees Under Fire Amid Mortgage Crisis," I now count three major salvos in roughly the last week which have taken aim at pay practices in the financial sector, broadly defined. I have already responded to the first two, which appeared in the Financial Times, here, here, and here. I am a firm believer in the Chicago gangland maxim which Mr. Goldfinger cites, so I believe it is time to respond to the t...

Armageddon Outta Here
2008-01-16 19:33:00
Food fight!For those of you Dear Readers who nodded sagely at my most recent posts on the issue of banker pay, murmuring to yourself, "But of course. No-one could disagree with that clever chap TED, could they?," I have news for you.Apparently Martin Wolf of the FT took umbrage at my scurrilous attack on his opinion piece on the topic today, and our little disagreement has spilled over onto the pages of FT Alphaville's comment section. I am sure that left to his own devices, Mr. Wolf would never have even known about my little drive-by blogging, much less respond to it. Nevertheless, those clever geezers at Alphaville saw a chance to stir the pot and generate more page views, so they incited Mr. Wolf to comment by drawing attention to one of the least flattering things I had to say about him in my post. (Naughty naughty, Mr. Murphy.)Faithful Readers will already know that, because I cannot be bothered to defend my own irresponsible and intemperate jeremiads in these pages and b...
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Armageddon Rag
2008-01-16 00:28:00
Paranoia strikes deep in the heartlandBut I think it's all overdoneExaggerating this and exaggerating thatThey don't have no fun* * *Excuse me, did I miss something?I had just finished mopping the blood off the floor this afternoon from today's little exercise in market hysterics—NEWS FLASH!: Citigroup announces big writedown, reduction of dividend! Investors completely blindsided by totally unexpected news!SHOPPING SHOCKER!: Wracked by rising mortgage debt and declining real income, consumers have the temerity to reduce spending in December! Hank Paulson "extremely disappointed" by fellow citizens' "lack of gumption."—when I decided to surf to the Financial Times website for a little Old World perspective and reason. What to my wondering eyes did appear, however, but commentator Martin Wolf joining his voice to that of Raghuram Rajan in launching a second broadside against pay in investment banking.Mr. Wolf starts calmly enough:You really don’t like bankers, do...
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Canary Diamond in a Coal Mine
2008-01-11 15:57:00
'E's not pinin'! 'E's passed on! This parrot is no more! He has ceased to be! 'E's expired and gone to meet 'is maker! 'E's a stiff! Bereft of life, 'e rests in peace! If you hadn't nailed 'im to the perch 'e'd be pushing up the daisies! 'Is metabolic processes are now 'istory! 'E's off the twig! 'E's kicked the bucket, 'e's shuffled off 'is mortal coil, run down the curtain and joined the bleedin' choir invisibile!! THIS IS AN EX-PARROT!!— Monty Python's Flying Circus, "The Pet Shop."Oh boy.Fabled jeweler Tiffany & Co., also known as Wall Street's canary in a coal mine, just kicked the bucket this morning. It reported same store sales growth in the US of only 2%, versus analysts' expectations of 6%. This was in spite of a 10% gain in sales at its flagship New York store, where Ukranian oil field roughnecks, Polish construction workers, and Irish package tour operators used their surging euros to snap up $15,000 diamond rings like they w...
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Eat the Bankers
2008-01-10 03:30:00
You know, Dear Readers, having been an investment banker for lo these many moons, I long ago abandoned whatever starry-eyed dreams I might have entertained in my callow youth of obtaining a measure of social respectability for the stature and gravitas of my chosen profession (accompanied, of course, by a comfortable pile of shiny simoleons). Investment bankers, in modern capitalist society, seem to fall into that social class of people which everyone else despises vociferously as greedy, money-grubbing whores, unprincipled shills and hucksters who are only marginally less despicable than personal injury lawyers or Flavor Flav. Of course, this universally fashionable scorn is never in evidence when the citizen in question is desperately trying to get into Harvard Business School so he or she can become an investment banker, wheedling them to donate to his or her favorite charity, attempting to sell them an overpriced condominium in a brand new building stuffed to the gills with oth...

3 Pictures, 3,033 Words
2007-12-20 16:40:00
December 13, 2007: Lufthansa buys a 19% stake in JetBlue (JBLU) for $7.27 per share.JetBlue CEO Dave Barger said selling the stake to Lufthansa was a "short, quick decision." (Bloomberg)No shit, really?* * *November 14, 2007: Hedge fund Pardus Capital sends a letter to Delta Air Lines (DAL) urging an immediate merger with United Airlines.“We will do everything we can to kill this merger.” — Lee Moak, head of Delta's pilots' union (DealBook)So that's what $140 million sounds like when it's flushed down the toilet.* * *June 21, 2007: The Blackstone Group (BX) prices its initial public offering at $31.00 per share."I think the public markets are over rated." — Stephen Schwarzman (Reuters)Ya think?* * *For those of you who have nothing better to do but check my word count, the total excludes my editorial commentary and the mouseover nuggets hidden in the pictures. You better watch out, though, or you're going to end up like that poor slob at UBS in London wh...
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Hedenüppendieaßeiten1
2007-12-13 23:04:00
A target company stock price that is depressed.A weak US dollar.2Delusional foreign CEOs who never learn.3All for this one moment.1 Noun : (head'-en-up-pen-dee-ass-eye-ten) : The condition afflicting any CEO who makes a cross-border minority investment in a passenger airline.2 John Stewart: "John, in your expert opinion, what has caused this steep decline in the value of the dollar?"John Hodgman: "I would have to say God. I mean, it's right there on the dollar, 'In God We Trust.' We counted on Him, and we were fooled. I mean, what kind of Benevolent Deity would allow our money to be equal to that of Canada?" — The Daily Show3 US Airways/British Airways. Northwest/KLM. British Airways/Iberia. Need I go on?© 2007 The Epicurean Dealmaker. All rights reserved.

Frequent Flyer
2007-12-11 17:32:00
Truth.© 2007 The Epicurean Dealmaker. All rights reserved.
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Full Fifty Men
2007-12-10 13:44:00
"Follow. But! Follow only if ye be men of valor, for the entrance to this cave is guarded by a creature so foul, so cruel that no man yet has fought with it and lived! Bones of full fifty men lie strewn about its lair ... So, brave knights, if you do doubt your courage or your strength, come no further, for death awaits you all with nasty, big, pointy teeth."— Monty Python, The Holy GrailI guess the witch doctors at McKinsey ran out of chickens, so the executive bobsled team at UBS has decided to purify their sins in a bath of their shareholders' blood. So many shoes continue to drop in the global credit system that the financial sector is beginning to look like Imelda Marcos' closet in an earthquake.Because the announced $10 billion in writedowns at UBS seem to be connected to subprime mortgage exposure, it remains unclear whether McKinsey's advice to push decision making authority for leveraged loans down into the investment bank helped the bank make better lending d...
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Sleeping Dogs
2007-12-10 04:24:00
If you're gonna dance with the Devil, make sure to wear sturdy shoes.— AnonymousIn between reading every legal brief on Lexis/Nexis, parsing pending merger agreements into Esperanto and Swahili, and sleeping no more than two hours a day, hyper-prolific law professor and perennial Customer of the Month at the Wayne State University Starbucks Steven Davidoff has apparently found time to produce yet another comprehensive tome on merger practice.This time, he addresses what he calls the "Do's and Don'ts of Private Equity," from the perspective of corporate executives and Board members, M&A lawyers, and public shareholders. It is a pretty good list, in my view, and worth a gander if you have a fresh Venti Caramel Macchiato and twenty minutes or so to spare. If not, just e-mail the link to your favorite corporate lawyer requesting that he or she read all the merger agreements Davidoff appends for private equity deals which have closed since August. (After all, what fun is it ...
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