When the government is all-powerful, this happens

The smug look of a man with politicians in his pocket

The smug look of a man with politicians in his pocket

Bill Ackman, his short-sale bet against Herbalife faltering, hires Democrat operatives to crush the company.

A hedge-fund investor bet a billion dollars that a health company would crash on Wall Street, and then hired a crew of Democratic lobbyists to kneecap the target company.

The lobbyists for the investor, William Ackman, successfully persuaded two Democratic legislators and numerous self-described Hispanic and African-American civil-rights groups to prod regulators into investigating Herbalife Ltd., according to a lengthy article published in the New York Times.

To defend itself, Herbalife hired its own gang of Democratic lobbyists to sway congressional staff and the media, and offered $30,000 to a Hispanic civil-rights group to quit Ackman’s crew.

Ackman’s team has included two Democratic legislators, California Rep. Linda Sanchez and Massachusetts Sen. Edward J. Markey. They helped Ackman after he hired two of their former staffers to lobby for his claim.

His other lobbyists included Toby Moffett, a former Democrat Representatives from Connecticut, Robert S. Walker, a former Republican Representative from Pennsylvania.

Ackman also added people who had worked in the White House for President Barack Obama or President Bill Clinton. They included Jim Papa, at the Global Strategy Group, and Minyon Moore, who worked for Obama.

He hired the Dewey Square Group in D.C., to create a fake grass-roots protest movement.

He also hired state lobbyists to create protests in Hispanic and African-American communities in Nevada and California.

Two things: (1) I share Ackman’s suspicions about Herbalife, so I initially cheered when he denounced the company as a fraud; and (2) there’s no doubt that, were Republicans in power, Ackmann would have found and hired Republicans as his flacks. As I see it, this isn’t about the merits of Herbalife or the respective virtues of the Republican and Democratic parties. It’s about what happens when the government grows powerful enough to destroy companies – those who control that power or can influence where it is focused, get rich.

UPDATE: The NYT article, linked to above, is very thorough and worth reading if you want to see how this process works. If only the Times’ editorial board would read what their business reporters write.


Filed under Uncategorized

34 responses to “When the government is all-powerful, this happens

  1. BigMike

    Herbalife will bury Ackman.

    On a lighter note, Malcom Pray was not messing around!!!

    6.6 million for one car
    A new record!

  2. Chief Scrotum

    Do hedgies/pe guys have any startling inventions or products they produce or make? All I’ve seen is them destroying companies, calling it “creative destruction” and acting like two year olds. It will be interesting to see how much they destroy before the world wakes up.

    • Anonymous

      “Do hedgies/pe guys have any startling inventions or products they produce or make? ”

      They provide an opportunity/service for others to make a return on an investment. Called capitalism, is legal and no one is forced to invest.

      • BigMike

        Do you really think “hedgies” give a flying F about anyone but themselves.
        The only reason they start or work for hedge funds is pure greed.
        The “two and twenty” sounds very appealing to only one side of the deal.
        If you think for one second that anyone grants “hedgies” as respectable people, you are seriously delusional, which leads me to believe…you are one.
        And most of them fail miserably btw.
        And the ones who get hurt, the investors, who never had any clue who was managing their pension.

        Two and twenty, go F ur self.

        • Anonymous

          You really are a moron. The investor who is willing to pay 2 and 20 is doing it for charitable reasons, not greed, right?! Freaking idiot!

        • “Greed” is also “profit motive”, or even “self-interest” – as Adam Smith pointed out back in 1776 or so, the baker does not provide us with bread out of charitable feelings but because of his self-interest. Nothing’s changed since then, nor should it. If you disagree, I’ll swing by your house with a very nice couple I know who want to live in Old Greenwich but can’t afford more than $750,000 – perhaps you’ll sell it to them.

        • Anonymous

          Please don’t cloud the issue, greed and self interest are not the same thing.

      • Hey Anonymous at 7:23am, make no mistake, HF’s provide a legalized form of fraud based investing. Other than that there is no reason for any of them to exist. They are a complete disaster to the free markets and true capitalism of this world. I personally shun anyone I come across who work at these firms, and there are plenty of them in Fairfield County. It is shameful that so many of these fraud based entities call Connecticut home.

      • Joey

        too bad they have no social skills or grace. That is probably why they can’t get anyone else to talk to them at the private schools or at their country clubs. Talk to one someday. They are empty pieces of shit.

    • housecat

      Perhaps you should stop confusing movies with reality.

  3. Flash

    Nothing puts the kaboosh on a crap table like a winning wrong-way-bet. Especially if the winner is a loudmouth know it all.

  4. Anonymous

    Private Equity firms provide a very valuable function in our economy. Hundreds of start- up companies rely on PE for funding. These start-ups grow up to provide thousands of jobs, pay millions in taxes, etc. do not lump PE in with Hedge funds.

    • Joey

      and PE firms, or at least their principals, pay only capital gains taxes on what should be considered income. Sound like leaches to me. Can you trust someone like that???

      • Anonymous

        And tons of people leach off the system in the form of social programs which my tax dollars fund. So grow up, grow some balls or do something.

        • Joey

          I do. I make money and I pay taxes. Now, if you are PE guy why don’t you try and pay some taxes for a change and take those Florida plates off your car.

      • housecat

        Those PE guys (how sexist of me) typically have to invest their own dough in their funds. So yes, part of their income is taxed at the lower cap gains rate – as is all other investment income. I disagree with the notion of taxing any and all income at earned income rates.

        • Joey

          That is partially true but obviously you don’t understand what is going on. Apart from their investment in the company They are “paid” (board memberships and advisory fees) through equity. Any logical person would consider this income. They never invested this money. Instead they were paid in shares. I have never met a PE gal yet but I am sure there is one or two out there. (And there are good reasons why women don’t do this kind of work: It is a very sexist work environment).

      • housecat

        Gee, Joey. Thanks so much for explaing everything to me. Of course, all firms are set up exacly the same way, and everyone gets paid in exactly the same fashion, and all firms are full of sexist pricks. Lucky for me that you are so capable of explaining something which I know Absolutely Nothing About Whatsoever. Thank you!
        Now, can you also explain why the sun rises in the east everyday? I’m just so confused.

        • Greenwich Gal

          Hey Joey –
          Mr GG is a PE guy and one of the top people in his firm is a WOMAN! And she rocks. No one is sexist when it comes to competence and success. She speaks quietly and walks with a big brain – topped with great blonde hair.

        • Joey

          I am glad that you can count to one. I have been “around” the business for a long time and know the industry well. It is very eighties in fashion and outlook toward life. I have never said that they are not smart.

        • Anonymous

          Housecat loves to paint with a broad brush, “Perhaps you should stop confusing movies with reality.” But hates it when someone else does or she thinks they do, “They are “paid” (board memberships and advisory fees) through equity.”
          Housecat has always been a generalizer and can’t handle any sort of truth when she’s off base. Research her responses for yourself. Joey, while I often don’t agree with you, I respect that your rebuttals are thoughtful. Can’t say the the same for housecat.

  5. towny

    Ackman is making a ton of money hauling oil out of Alberta on his Canadian Pacific rail line. Are you still convinced it’s the greenies who put the kibosh on Keystone?

    • And Buffet’s running Union Pacific. Lots of strange bedfellows here.

      • AndyD

        Buffett is running Burlington Northern, fyi, not Union Pacific. he was forced to sell his UNP stake to buy BNSF.

      • towny

        That is correct. 20% of Berkshire Hathaway profit comes just from the rail operation. Harold Ham CEO of Continental Resources, the biggest operator in Bakken, formed a huge lobbying group against Keystone. As I mentioned in another post, gas/oil pipelines 4 to 5 times the scope of Keystone, are being built all over America, yet not a peep from the greenie lobby and as mentioned in earlier post’ regarding misplaced political anger, things arent always as they seem.

  6. Hey Chris, can you please put up an article about Stevie’s rename of SAC to “Point 72 Asset Management” ? We apparently need a pure Hedge Fund context to continue our rant. The private equity guy seems to be offended that he’s getting lumped in with the HF gangsters. Thank you in advance 🙂

  7. Anonymous Citizenette

    I know a company that was similarly targeted by Ackman a while back. I feel it’s one thing to profit from the ups & downs of free market capitalism, it’s quite another to do what he does; to deviously and tirelessly do everything possible to bring about the demise of one specific company.

  8. Anonymous

    Ya gotta love capitalism…top of the food chain, baby!!

  9. Hu Nuh?

    This is not capitalism. At best it’s a mutant strain of commerce, spawned by corrupt hogs in our public and private sectors. Just like Obamacare.

  10. housecat

    AnonyTroll @ 2:08: I’m pretty sure even Joey has far better things to do than research my old responses. It is odd, though… I seem to recall complimenting Joey on his “thoughtful” responses as well awhile back, when two other commenters ripped him to shreds. What a strange coincidence…