Recent reports from ESPN’s Met insider Adam Rubin give a very interesting picture of the deal the Wilpons and David Einhorn are apparently working on.
Rubin claims the source for this is the same one who correctly identified Einhorn as the new Met part owner before it became public information and who also clarified earlier rumors about the deal that were making news, so there is reason to believe that this information could be very close to the truth.
The way the deal appears, Einhorn will give the Mets $200 million for about 1/3 of the team. The deal supposedly stipulates that in three years he will have the option to force the Wilpons to sell him enough to make him the controlling majority owner. Should Fred decide against this, Einhorn will then receive his $200 million back, while still retaining 1/6 ownership, or half his original stake.
Should this occur, essentially the Wilpons would have received a $200 million loan for three years with the interest being 1/6 of the team.
In other words, Einhorn wins either way, but will probably win even more if the team continues to fail and the Wilpon financial situation becomes bleak enough that they must sell. Should this happen, then Einhorn will be able to buy controlling interest in what is clearly one of the most potentially valuable, cash-generating franchises in sports for what would undoubtedly be a below-market, insider price.
This is a clever man.
The connection both men have with Bud Selig does seem to indicate that this deal will be approved by MLB; indeed it surely is very welcome in the short term to help Wilpon keep control of the Mets. Unlike the Dodger situation, by most accounts Wilpon is well-liked in baseball circles, and the fans who want Selig to “take” the team from Fred are certainly dreaming.
The real question here is what does Einhorn indeed want, short- and long-term. Does he want the team to simply succeed, so he can make some money over time with the Mets, or does he want it to fail now so he can gobble up the rest at a preferred price and take further advantage of Wilpon distress? Based on this man’s career, it is very reasonable to expect the latter.
Einhorn made his fortune by “selling short.” What this essentially means is targeting a business that he thinks will fail in the near future, and taking an investment position which assures huge profits should that indeed happen. Sell high now, buy low later.
Einhorn was heavily involved with a major subprime lending company which failed. Businesses he has been involved with have been the target of various investigations and settlements of suits. He’s been called a destroyer of companies. While he is certainly charitable and a fun-loving poker player too, he is not a builder—he is a man who makes fortunes off of others’ risks and failures.
Why would Selig welcome such a Faustian bargain with a man like this? Clearly he wants the Mets to succeed and for Wilpon to be able to retain ownership. This is a risky move indeed. If Fred is somehow able to make a smaller than expected settlement with Picard, and should the team’s on-field fortunes dramatically improve in the next 12—24 months, the deal will ultimately wind up having given the team the influx of cash which they might not have been able to obtain elsewhere; MLB made it clear no more loans were forthcoming, and with the economy being what it is and with Fred advertising that the team is “bleeding cash” it is hard to see how else he could have gained $200 million.
But should Picard wind up winning a huge figure and/or tying the case up with uncertainty and the ongoing leaking of negative information, and should the Mets continue to lose in their very difficult division while attendance and revenue maintain their downward spiral, Einhorn will again be in a position to reap a huge windfall from the distress of a major business.
What does this mean for fans right now? Very, very hard to say. But Einhorn is a shrewd and well-connected man with fantastic timing. There’s zero chance he did this to save the Wilpons or because he loves baseball and the Mets. He did this because, to paraphrase Ace Rothstein’s line in the Scorsese movie Casino about blackjack cheats, he cruises the business world looking for vulnerable companies the way “lions look for weak antelope.”
The Mets are MLB’s weak antelope right now. Should Einhorn’s plan be to sit back and wait for things to really bottom out and then scoop up the team, this could in the long-term be great for fans. He might buy out the Wilpons and then sell out at a big profit to someone like Mark Cuban—an owner who is a sports lover and a builder who would clearly be in it to spend and to win. There’s nothing in Einhorn’s history that suggests he will become a Cuban or a Steinbrenner.
But even if this is how it all ultimately plays out, Met fans may be in for several more years of darkness before the dawn. Earlier in the year this comment board was filled with debate on what the year most analogous to 2011 was. 1984 where we just needed a few more pieces? 1982 where we had a nice young foundation that was a few years away? Or more like 1978, when we were largely devoid of prime talent, a strong minor league system, or ownership willing to spend, while being in a division with several clearly stronger teams? Or the Yankees in the mid-1960s, years away from the George era?
Alas, it seems as though the latter is what we are currently viewing. One can imagine what Sandy Alderson must be thinking right now, with public reports swirling regarding how low next year’s payroll will be, with the Phils on pace for 102 wins despite the problems with offense, age, and injuries, the Braves regenerating pitching dominance, the Marlins much better much faster than expected, and with this potential agreement with Einhorn and its possible ramifications.
The diehards are not going to stop watching or following the team, but we may indeed be in for several more very stormy and disappointing years before the orange and blue storm clouds clear up again once and for all.
49 comments
metsfan4decades
5/29/2011-12:32pm at 12:32 pm (UTC -4)
I’m not going to pretend I know anything about big business or these type of financial deals. It does seem like a win/win for Einhorn and just one big roll of the dice for the Wilpons.
What is evident to me though is the Sterling Mets are in worse financial shape than originally thought. I don’t think the Wilpons initially lied to the fans, I believe they thought they would be O.K. going forward. But in comes Irving Picard and that changed everything.
I wish I could say I thought 2011 was like 1984. However, I don’t think we’ve got a Doc Gooden and Strawberry like talents down there ready to come up. Too early to tell what we’ve got on the lower farms but unless something drastically changes, I’m not seeing the light at the end of the tunnel next year or probably even the year after that.
Count me as one of those diehards though who will continue to watch and follow my team.
Prismo
5/29/2011-12:50pm at 12:50 pm (UTC -4)
You certainly have a right to your opinion Kingman, but I will humbly disagree (however, admitting that neither of us truly knows why he bought part of the Mets).
I’ll start with: just because he shorted to make some money, doesn’t make him an evil genius. Shorting is a perfectly legal market strategy. Depending on the means of shorting, ethics can come into question, but certainly no one can say that Einhorn violated the law.
Just because he shorted to make money for his hedge business, doesn’t mean that’s his life goal: “short everything ever!”
The guy grew up a Mets fan, he lives in NY, has a family and young children. And honestly…the fact that he came in 18th in the WSOP means a LOT to me, as a poker player myself. That shows a LOT of wit. You can get lucky and advance in the WSOP fairly far, but it definitely takes a lot of skill to finish 18th. Not only that, but he donated all the winnings (600k +) to charity. Also, he’s donated $1MM out of his own pocket on another occasion to charity.
If you’re looking for something to scare you, sure, look at the way his hedge fund has made money…but if you look at any other part of Einhorn’s life, he’s an incredibly impressive figure.
I’m pretty certain that his goal is to eventually own the Mets and live the dream. What man wouldn’t want to own and operate a successful sports franchise? Specifically, the one you grew up idolizing?
kingman 26
5/29/2011-1:26pm at 1:26 pm (UTC -4)
Ever hear of New Century Financial? Look into it. A major failed subprime mortgage engine which he was a major part of. According to the LA Times, in addition to the huge settlements they paid out, their directors were barred from serving as directors of public companies for years for their actions.
And he has in fact been accused of and investigated for market manipulation. Accused of it a lot. Market manipulation is often how successful short-sellers operate.
If your dream is to own part or all of your boyhood favorite team, why in the world would he structure the deal like this, assuming it IS structured like this?
In his business life, how is he an incredibly impressive figure, other than amassing wealth for himself? I am a successful small business owner. I love capitalism and wealth creation. There are MANY people who have amassed massive wealth by inventing, building, creating, improving. How is Einhorn one of them?
Prismo
5/29/2011-4:03pm at 4:03 pm (UTC -4)
I’m confused! I think he structured it PERFECTLY to get the team!
In order for the Wilpons to block him, they have to basically GIVE him 1/6 of the team for nothing. Chances are, they won’t be in the financial situation to do that and he’ll get the team.
Prismo
5/29/2011-4:08pm at 4:08 pm (UTC -4)
Also, I apologize for taking so long to respond to your response!
Additionally, I know plenty about the subprime mortgage situation that occurred over the past decade or so. I’ve had numerous topics on it in business school and just read “The Big Short” by Moneyball’s very own Michael Lewis.
Having done that research, I can definitely understand your skepticism. But seeing as Einhorn’s done nothing to show that he’d be a bad owner yet, I think we should rally behind him.
kingman 26
5/29/2011-2:22pm at 2:22 pm (UTC -4)
I am just basically saying Prismo that he is not like Mark Cuban, Bill Gates, Jeff Bezos, Michael Dell, Steve Wynn, John Schnatter, Emeril Lagasse, Jay-Z, etc.
Not a person who has invented/built/created/etc.
Just a very smart guy who has created massive wealth by clever manipulation of the financial system’s flaws.
stickguy
5/29/2011-12:57pm at 12:57 pm (UTC -4)
Well, we won’t really know for sure until a couple of years down the road.
but, an MLB team is different than a “normal” business in many ways. not the least of which is it is not publicly traded, and you have to go through the league to be approved.
obviously I am forming unfounded positions based on what it reported though the internet, but this seems like a rich guy wanting to get into the club, and to me (based on his age, involving the young kids, etc.) my guess is that he plans to stay.
Not sure what if anything he can do to tank the team anyway, and if he wants to take control I am sure he would be happy to do it cheaper, but most likely he would also like the team to be doing well for him.
having the team completely destroyed, devoid of talent and fans, a few years from now just so he can buy it cheaper seems awfully short sighted, since it will take a long time from that to make it viable again.
metsfan4decades
5/29/2011-1:03pm at 1:03 pm (UTC -4)
The more I read the more I realize that owning a MLB team, even a piece, especially in NY is like being given the keys to the Company President’s washroom. Only an elite few are let in and it’s apparently a boyhood dream of many a grown man.
The fact that Joan Payson was a female who was passionate about bringing baseball back to the NL in NY, especially during that ERA is even more impressive. If she had a number, the Mets should have retired it. LOL.
stickguy
5/29/2011-1:07pm at 1:07 pm (UTC -4)
yup. at some point, you have to have enough money that just having more is almost irrelevant. Or at least, just being done as a hobby!
and what is the point of being super rich if you can’t do something fun with it?
I think he is in it to stay in it long term, not essentially to gut it for a quick process.
besides, if he does, it will be his last chance to be an owner, so unless he truly does not care, I don’t see it being a money grab.
kingman 26
5/29/2011-1:30pm at 1:30 pm (UTC -4)
“having the team completely destroyed, devoid of talent and fans, a few years from now just so he can buy it cheaper seems awfully short sighted, since it will take a long time from that to make it viable again.”
Yes, but he could also turn it around to Mark Cuban or someone who won’t do what Einhorn has but would love to own it all, and he could make a 9-figure profit doing this. Right now, the Wilpons clearly are not going to sell the entire team.
This could be viewed as Einhorn cleverly putting himself in position to either own the team outright should the Wilpon position eventually become untenable, or to take it over and sell it at a huge profit.
gategem
5/29/2011-7:33pm at 7:33 pm (UTC -4)
It’s also very possible that Einhorn is acutely aware that the Wilpon’s in all their years of owning and operating a sports entertainment franchise have not mastered the subject yet they will do anything short of selling their first born to retain control of the franchise. Thus he puts himself in a position to obtain controlling interest in a few short years.
One thing I’ve noticed over the years is that individuals that purchase a sports franchise have made their money in something other than the entertainment business and do not bring the same acumen they developed in their core business to the sports franchise. Most seem to be in it to become part of the elite group that owns a professional franchise. As an example the Dolan’s built a giant in the cable and network world but Dolan’s approach to running the Knicks has been lacking in intelligence.
metsfan4decades
5/29/2011-1:07pm at 1:07 pm (UTC -4)
Heyman:
SI_JonHeyman: I get that fred wilpons made mistakes but I’m not buying he’s giving einhorn 1/3rd the #mets for just a 3-yr $200M loan. #absurd
kingman 26
5/29/2011-1:38pm at 1:38 pm (UTC -4)
If it is the only way left for Fred to retain control, buy some time and have a fighting chance to turn things around and keep the team for Jeff and Jeff’s kids?
Definitely not absurd at all.
Guys like Fred have HUGE egos and always feel they will eventually come out ahead.
wannybackstra
5/29/2011-9:10pm at 9:10 pm (UTC -4)
If true, a brilliant no-lose deal for Einhorn.
hazmet
5/29/2011-10:06pm at 10:06 pm (UTC -4)
In reflecting on this deal I just keep thinking that old saying as a paraphrase “Fred’s brought a knife to a gun fight”. Essentially, as accomplished real estate moguls/businessmen that they are they are severely overmatched when dealing with Einhorn. Dealing with venture capitalists / hedge fund types is an entirely different level. I recall when a company I worked for was going private and periodically going into work and seeing a fleet of stretch limo’s with these late 20s – 30s Ivy League venture capitalists in for meetings, all of them significant wealth a few at the billion mark, and the reports I got from management coming out of the meetings was that these guys were just unreal. The way they work through information, strategize, and establish a plan is at a totally different level of business acumen. It’s a different shark tank when dealing with these types and the Wilpons are about to get eaten one bite at a time.
stickguy
5/30/2011-9:05am at 9:05 am (UTC -4)
Don’t make this seem like it is poor addled old Freddy sitting mano a mano with the big bad shark Einhorn.
this deal was full of lawyers and accountants. And I will bet that Fred’s are just as sharp as the other guys!
also, Knog mentioned flipping the team to Cuban. Won’t happen, as long as Selig and the boys don’t want him in the club.
hazmet
5/30/2011-10:04am at 10:04 am (UTC -4)
Well if I’m to believe poor old Freddy’s defense in the Picard suit I would have to believe that he’s just an unsophisticated investor with a low knowledge level of dealing in area’s of high finance when dabbling with these Wall Street types. Even Bernie said so
Granted this isn’t a stock, junk bond based type deal it’s more of a straight loan with some interesting terms & conditions. So it’s not really that complicated, but we’ve seen them screw things up to get themselves in this position so it’ll be interesting to see how this plays out.
I’m not buying Cuban either. For the reason’s you mention plus just because some fans may want it so based on how he spends and runs the Mavericks won’t make it a reality. Wishing’s nice but he’s not even in the discussion.
IB_Twaddle
5/31/2011-1:39pm at 1:39 pm (UTC -4)
Excellent piece Kong. Einhorn’s financial doings are extremely relevant and, if you ask me, 10 times more important than Wilpon’s foolish ravings. Get lynched for stupid remarks made in passing, applauded for selling the team to a man very much a part of the last 10 years of Wall St criminality (or extralegality, whatever you want to call it).
Yeah, this troubles me.
TRS86
5/31/2011-1:51pm at 1:51 pm (UTC -4)
Einhorn has been convicted of nothing. Wilpon has been convicted of stupidity. No defending Wilpon’s remarks as anything other than stupid. We can disagree on the severity of the words or their effect, we can even debate if they are true. However, 100% without a doubt they were remarks that an owner can’t make. Einhorn is being made out by some as if they know exactly what he is thinking and that just because he made a living short-selling he will come in and tank the Mets to have the opportunity to do so himself. We know nothing of him other than a few reports here and there. To me I am willing to wait to see what moves or impact he has. Otherwise, Wilpon is still the man in charge and still and idiot.
kingman 26
5/31/2011-2:06pm at 2:06 pm (UTC -4)
I know plenty about Einhorn, as does my retired VERY successful executive father who spent 40+ years at the highest levels of the economy in the NY area.
Einhorn is a market manipulator whose fortune has come from others’ failures and losses.
His involvement with subprime mortgages is revolting.
He has built nothing other than a huge fortune.
His behavior is a wonderful case study in what is wrong with much of what IS LEGAL on Wall Street.
TRS86
5/31/2011-2:15pm at 2:15 pm (UTC -4)
Regardless of how he made his money, it is his money and he did it legally. To suggest we even have a clue what he will now do with his purchased product to me is not giving the guy a fair chance at all. If you do not want to give the guy a chance, fine. However, I do not think it is fair to say we are sure what his motives are.
kingman 26
5/31/2011-2:14pm at 2:14 pm (UTC -4)
And actually, as I mentioned according to the LA Times, the subprime predator firm Einhorn was a director of paid almost $100 million in settlements for its revolting practices. And the directors (I believe including Einhorn) were barred for 5 years from serving on boards of public companies.
Find me a clearly ethical, productive way Einhorn has made part of his fortune.
I won’t hold my breath.
TRS86
5/31/2011-2:16pm at 2:16 pm (UTC -4)
What has he been convicted of? Regardless, how does this imply what he will do with the Mets? Why do I care if he is honest or crooked in his past?
stickguy
5/31/2011-2:28pm at 2:28 pm (UTC -4)
it does not appear that Einhorn can do anything to or for the team now anyway, since he does not have veto power or control over what the team does. Certianly just speculation to think his hope is for the team to compeltely crash and burn so he can buy out the wilpons on the cheap, and then sell the carcass for spare parts.
besides, he can’t get it for any low ball he feels like. If someone else offers more, he would have to pay more.
Prismo
5/31/2011-2:30pm at 2:30 pm (UTC -4)
Most of the subprime stuff wasn’t illegal. It was more…of finding loopholes in the system. Also, the government’s (Fannie Mae and Freddie Mac) negligence in checking on the ratings claimed by creditors.
It was shady for sure. Extremely shady. But almost ALL the big banks were in on it, and a ton of smaller vendors made a lot money off the situation as well.
There were easily 1000s of people who know what was going on, and to so easily label them all as villains I think is premature.
At the time, the extent of the repercussions were definitely unknown, and people saw a way to make a lot of money, legally. I don’t think they were all evil villains.
And being that none of us know Einhorn, I don’t think we have the right to judge him as a person.
stickguy
5/31/2011-2:39pm at 2:39 pm (UTC -4)
all fine points. the whole WS culture over the last decade was built around loopholes, and skirtling legality. Ethics and morals (doing the right thing even without fear of punishment) long since checked out.
and all of the big investment banks and hedge funds were mired in market manipulation of a sort, and insider trading for the most part.
but, the gov’t (the watchdogs, and the big players like Fannie) were hip deep in the muck with them.
as long as the money was flowing, most everyone looked the other way, and the few voices in the wilderness tended to be drowned out.
the average Joes on main street didn’t really care either, since they were getting mortgages at good rates, and their 401(k)s were going up. Until october 2008 of course, then suddenly everyone wanted to know why!
I am sure that if a real impartial investigator wanted to go after the bad boys, they could find enough to put most of them in the slammer, but the gov’t wanted nothing to do with turning over those rocks.
stickguy
5/31/2011-2:41pm at 2:41 pm (UTC -4)
anyway, none of us know the guy. And if he has not been charged or convicted of anything illegal, then he has the right to spend his money.
But, I still don’t see anything to indicate this is just some plan to rape and pillage a company in order to ick the bones clean for a quick profit.
kistics
5/31/2011-2:54pm at 2:54 pm (UTC -4)
I agree. And I really don’t understand how he would achieve to “rape and pillage a company” when not having any control over team’s operations.
If this was any other business and he was to purchase big chunk of stock of the company, I’m sure he’ll have a lot to say in how the company should be run. But in this case, Wilpons can override his opinion any time they want.
kingman 26
5/31/2011-3:02pm at 3:02 pm (UTC -4)
With all due respect to all of you, what was done on Wall Street and by the banks and mortgage companies destroyed a significant sector of the economy. Countless thousands lost their houses, jobs, pensions, standard of living, etc. It wasn’t a bunch of victimless paper crime.
Do you all know what the Glass Steagall Act is? A Depression-era law which stipulated that banks, investment banks, and insurance companies had to remain strictly separate. Precisely to prevent from recurring the greatest excesses of the 1920s which caused the Depression. This was overturned under Clinton/Rubin with bipartisan support and directly led to much of what later happened.
What was illegal for nearly 70 years was made legal again by politicians taking money from banks, investment banks, and insurance companies and changing this seminal law.
Ever hear of the Commodoties Futures Modernization Act? A law passed with bipartisan support to make trading risky, complex, unproven financial derivatives much easier and to have them be much less regulated.
The above laws which were repealed/passed made it possible for things which had been ILLEGAL to be openly and widely done.
The financial masters of the nation right now are often outright criminals who have paid lawmakers to make risky, irresponsible, dangerous, and formerly illegal practices legal.
stickguy
5/31/2011-3:14pm at 3:14 pm (UTC -4)
I don’t disagree that the system was corrupted and broken. And frankly, if you want to go after someone(s), it is the politicians that were charged with protecting the country but sold us out instead that should all be thrown in the slammer.
but the key is, activities were made legal. And smart guys that took advantage of the system as written to make money are not criminals. Slimeballs maybe, but not indictable.
the big investment banks were the real culprits though. The hedge fund guys seemed more like leeches sliming along the underbelly, but they never could have created the system on their own.
stickguy
5/31/2011-3:18pm at 3:18 pm (UTC -4)
anyway, I think the concept of sports team owners being some kind of squeaky clean, virginal, altruistic angels has not existed in a long time. Really rich people usually had to get a bit dirty to get that rich (unless they inherited the money, in which case an earlier generation did it!)
His history is public. If the government does not see fit to sharge him with anything, then he is a legal slimeball. And probably qualified as much as anyone to buy into team ownership.
hell, having an upstanding corporate made from scratch citizen owning the club has not worked out too well (assuming, of course, they Fred and Saul did not soil their hands too badly in NY real estate, not the cleanest thing I imagine!)
kingman 26
5/31/2011-3:24pm at 3:24 pm (UTC -4)
Stick, as I have said, the subprime company Einhorn was involved in had to pay almost $100 million in settlements and the directors were barred from being directors of public companies for five years. Einhorn has been investigated for market manipulation.
And of course you are right; many great fortunes started out dirty as hell.
My point is that not ALL of them did, and Einhorn’s entire fortune comes from creating absolutely nothing, inventing nothing, improving nothing. Simply from using shady practices to create wealth by pushing paper around and by manipulation.
Fred and Saul built things. Trump has built things. Mark Cuban built a company. Bill Gates and Paul Allen invented things and created countless jobs.
Many business titans build/create/invent/improve.
Einhorn is a creator of wealth for himself and nothing else.
Is this evil. Not necessarily. Is it something to be admired? Not to me.
stickguy
5/31/2011-3:39pm at 3:39 pm (UTC -4)
so don’t admire him, but it does not disqualify him from buying the team (and if it did, MLB should be making that decision!)
And trump is not such a good example. He is basically a thief too, borrowing money, lineing his pockets, then declaring BK and walking away.
anyway, the whole point of the financial system is that it DOES create something. Capital. Without the capital investment, Wilpon, Trump, etc. would never have been able to build anything. The system just happens to have gotten preverted.
kingman 26
5/31/2011-3:53pm at 3:53 pm (UTC -4)
I definitely never even suggested he should not be allowed to own a team. All I have done is suggest that his history might give fans something to think about.
And I totally agree about Trump–he’s a slimy weasel—but that is kind of part of my point in suggesting the unique nature of a guy like Einhorn who creates nothing.
Despite his dishonest dealings,Trump has built buildings which people live in, and many hotels which employ thousands of people.
Einhorn’s capital creation hasn’t really built or created anything other than wealth for himself as far as I know.
kistics
5/31/2011-4:04pm at 4:04 pm (UTC -4)
Agreed with you Stick. The man was smart enough to use the broken system to make money. There are hundreds of thousands of people that made lots of money by shorting stocks. What has Einhorn done wrong here?
And also, you don’t think the Wilpons took FULL advantage of the loophole in the system? Or that Donal Trump did not use all the leverage he can use to create his wealth? David Wright made millions of dollars by owning the Vitamin water stocks. And yet he didn’t really create anything. Is this a bad thing? Should we even invest our future in stock markets anymore?
kingman 26
5/31/2011-4:22pm at 4:22 pm (UTC -4)
LOL! CLASSIC argument.
He made money! Therefore he’s great!
For the umpteenth time, Einhorn was directly involved in the subprime mortgage market. The firm he was on the board of paid nearly 100 million in settlements for their practices. Do you understand what this means?
It is amazing the level of hero-worship our society engenders in people.
Vitamin water is a tangible product. People are employed making it, delivering it, and selling it.
The Wilpons BUILT things. Many people are employed at Citi Field. Many workers made a lot of money building it.
Donald Trump, for his flaws and ridiculous media persona, has BUILT things. Many thousands of people work in his casinos and hotels. Many people have earned loads of money building his buildings.
Einhorn has done NOTHING like this.
stickguy
5/31/2011-4:34pm at 4:34 pm (UTC -4)
you do realize that without investors risking their own money, citi field would not have been built? Nor any of trumps buildings.
Not sure what the whole situation with him being on a BOD of some kind is, but most of them have little to no control over anything the company is doing, especially if the people running it are hiding what they are doing. But of course that does not make him look good.
but lots of people add value without making something tangible. If you don’t have middle men, all the create ideas never get off the ground (venture capital, etc.). Facebook (now there is a big nothing!) never would have happened if a hedge fund had not seeded them with start up capital.
if you don’t consider investing in the market doing something, that is your right. But it does keep the country growing. As long as you play by the rules (assuming the right rules are in place).
Selling short is really no different than buying stock (long). in either case, you are giving someone money they need, you just happen to be betting on the stock going a different direction.
question: what do you think of warren buffett? Has he done anything worthwhile, or just more nothing?
kingman 26
5/31/2011-4:40pm at 4:40 pm (UTC -4)
OK, I give up, as no one really is interested in the issues I am proposing.
Yes Stick, I realize the purpose of investment capital, as I OWN A SMALL BUSINESS!
No matter how many bleat otherwise, what Einhorn does is far different from what Trump or the Wilpons or David Wright have done.
Einhorn’s not a venture capitalist. He does the direct opposite. He tears down and works to drive DOWN values. That’s how one makes money selling short. By seeing the value of a company GO DOWN.
kingman 26
5/31/2011-4:44pm at 4:44 pm (UTC -4)
And I have stocks. But I don’t like options, as I think they are nonsense.
I argue with my Mom about it all the time!
MGM Grand. Up 20% since I bought it. Nice.
stickguy
5/31/2011-4:48pm at 4:48 pm (UTC -4)
but he doesn’t tear anything down. You make it sound like he is a corporate raider (buying a company, gutting it, selling off parts for a profit then kicking the carcass to the trash).
Investing in the market is simply betting company will increase in value, so your shares go up, and you make money. or in his case, finding a company you think is overvalued, and betting it will go down.
I am not seeing where the tearing down idea is coming from (my only point here). he is not buying a company to the extent of taking control and making business decisions is he?
stickguy
5/31/2011-4:50pm at 4:50 pm (UTC -4)
glad MGM went up and you made money. wish more of my stocks did that!
but would it have been 1 iota different if after your research, you thought MGM was destined to fall, so you sold short instead?
kingman 26
5/31/2011-4:53pm at 4:53 pm (UTC -4)
“but would it have been 1 iota different if after your research, you thought MGM was destined to fall, so you sold short instead?”
Stick, I have to go, but yes, it would have been different if I bought hundreds of thousands of shares, was a well-known public figure, and constantly publicly trashed the company, using quasi-ethical means, in order to drive the stock price down.
That’s very, very different than buying a stock hoping it will go up.
kistics
5/31/2011-2:46pm at 2:46 pm (UTC -4)
I agree. Is he looking for the Mets/Wilpons to fail the next 3-5 years and buy the ownership for cheap? Maybe. But how exactly is he going to impact the Mets FO decision making while not having any operation control? Also, how is he going to control the team’s performances on the field and ultimately determine team’s attendance?
stickguy
5/31/2011-2:51pm at 2:51 pm (UTC -4)
from what we have read, he can’t do anything.
so, even assuming (a big if) that he has no real interest in owning a sports team (and this is all just about a rich guy making more money), then it really is just an investment (loan) in a way.
in a couple years, he either can buy more for a good price, and end up with something that should eventually be worth more, or he will get his money back with interest (the interest being the 1/6th of the team he keeps, but would most likely immediately sell).
if he really is as smart as people say, then it could also just be a way
kingman 26
5/31/2011-2:06pm at 2:06 pm (UTC -4)
Thanks for reading IB, and for “getting it.”
stickguy
5/31/2011-2:47pm at 2:47 pm (UTC -4)
One thing about the WS shadow guys is that they like to be there, in the shadows. Subterfuge, working behind the scenes, and getting out before getting caught. Kind of like a cat burgler.
owning a team like the mets is the antithisis of this. Anything he does is going to be under immense scrutiny. Already by getting involved this far he is 100x more well kown by non-financial junkies then he ever was before. Including his history and business practices.
so for someone in his position, with his bankroll, is the hope of gutting and flipping the Mets in a couple years for the profit you could hope for worth the time, investment and scrutiny? or couldn’t he have just invested the money in some “normal” company to make some quick (market maniuplated) profits?
Also, all the hedge funding was never actually buying a company, as opposed to investing in it. Quite a bit different becoming an owner, and having to deal with everything involved, than it is buying or chorting a bunch of stock, and better on it to go up/down.
metsfan4decades
5/31/2011-4:40pm at 4:40 pm (UTC -4)
Some very passionate views on Einhorn this afternoon.
Some of the very reasons some of you don’t like him and/or his practices are the same opinion I’ve got of Zuckerberg and Facebook. That’s one kid who will never make one red cent off me creating an account on that site.
Bottom line is Welcome to America. All streets are paved with gold. If it’s within the letter of the law (even if just barely), expect some out there to take advantage or even exploit it, all in the name of money.
wannybackstra
5/31/2011-5:42pm at 5:42 pm (UTC -4)
Mark Eichhorn was a relief pitcher, no?
kingman 26
5/31/2011-6:03pm at 6:03 pm (UTC -4)
Sure was, and had some pretty good years. He was, as I am sure you remember, banned from baseball for life in 1996 for shortselling Angels futures.
Made a bundle though.