Celebrating the vultures

No, I'm not celebrating the vultures like Eddie Lampert and Bill Ackman, vultures who swooped into Canada to destroy the lives and livelihoods of tens of thousands of working class Canadians. They've been amply celebrated in the pages of Canadian buisiness press already. The vultures I want to celebrate are the turkey vultures. I think we got a clan of them roosting in the barn. Like everything else at Falling Downs, the barn is falling down. It's an old-school homesteader era barn, and it's a shame to watch her go. At the same time, farming isn't done the way they used to do it when that barn was built. You had a large hay-mow up top, and usually a granary, and down below, you had space for cattle. Today the hay is stored in those massive plastic-wrapped sausages that festoon the countryside. Apparently it's way more nutritious if you wrap it in plastic than if you store it in a barn. The main reason for restoring an old barn today would be to use it as a wedding venue. I've thought of that. Rent out the barn for ten grand a night instead of fifteen hundred for the year. Alas, I'd have to sink in half a million I don't have in order to turn that falling down barn into a wedding venue. But I can enjoy the vultures without doing a damn thing! They are a beautiful bird to watch soaring. Where there's one there's usually an entire crew not far away. They float through the thermals and are one of the most graceful birds you'd ever want to see. They get a bad rap because they eat road-kill, but that's a great public service too. What a blessing it is to appreciate the beauty that surrounds me!

Save the Greedbags!

Here's a telling headline from the front page of today's Globe and Mail, "Wall Street hits back, limiting trades on stocks pushed skyward by amateur online investors."

The gist of the story is that within two weeks of an online mob of Reddit nerds inflicting a little pain on some hedge-fund greedbags, the "professional investors" have circled the wagons and are hoping to make sure this doesn't happen again.

Two weeks! 

Where was the outrage when hedge fund manager Bill Ackman destroyed 6,000 great jobs for regular folks at CP Rail?

Where was the outcry when hedge fund manager Eddie Lampert systematically looted Sears Canada, driving it into bankruptcy and destroying the pensions of 16,000 Canadian workers?

Needless to say, there's never howls of indignation in the business press when billionaire hedge fund managers are busy destroying lives and livelihoods. It's what they do, after all... it's their job!

Corporate rule

Here's a question; why has our government worked so hard to make a "deferred prosecution agreement" (DPA) available to SNC-Lavalin?

Here's another one; why has no mainstream media outlet ever investigated how hedge fund sharpie Gerald Schwartz was able to more than double the value of Husky Injection Molding in less than four years?

And another; why was Hunter Harrison universally lauded as a hero in our mainstream Canadian media for eliminating over 5,000 excellent working class jobs at CPR?

Here are some tentative answers.

The purpose of a DPA is to allow corporate entities that engage in bribery, bid-rigging, and other nefarious business practices to get off by paying a fine instead of being charged with a crime. Corporations love it! Paying the fine becomes just another cost of doing business, just like the original bribe. The Trudeau government's rationale for having slipped a DPA provision into law last year, in the back pages of an omnibus budget bill, is that Canada needs to have a level playing field vis-a-vis our competitors. Ergo, if the UK and US go easy on corporate crooks, we must too, or we won't be competitive.

Husky was the life's passion of Robert Schad, a German immigrant who started out with a little machine shop in the mid 50's. He famously made Husky one of the most desirable workplaces in Canada by providing not only good wages, but unprecedented employee perks, from free meals to free day-care to on site gyms. Getting on in years, he sold his baby to Gerald Schwartz's Onex in 2007 for just under a billion dollars.

Less than four years later, Schwartz sold Husky on to another hedge fund for two billion. How did Schwartz add a billion dollars in value to the company that Robert Schad had spent a lifetime building up? He ripped out all that feel-good stuff that detracts from the bottom line, that's how. That's what "building value" looks like in the world of hedge fund operators. 

That's appalling, disgusting, scandalous... but Gerald Schwartz is a Very Big Deal who just donated $100,000,000 to the University of Toronto. No newspaper publisher, let alone reporter, is going to touch that story with a fifty foot pole, because it would be their last story.

Canadian news media lapped up every drop of mendacious idiocy that dripped from Hunter Harrison's lips as Harrison and his hedge fund boss Bill Ackman destroyed more than 5,000 working class jobs at the iconic railroad. Harrison was "the new sheriff in town," don't you know. He was going to "change the culture" at CPR.

And he did. He replaced a culture of collegiality with a culture of fear, and he and Ackman walked away with a cool two billion for their troubles. For that, they are regarded as business geniuses by our business press.

That's what corporate rule looks like. There are innumerable case studies to choose from. Eddie Lampert looted Sears Canada to the tune of billions, leaving 16,000 pensioners in the lurch, but our media claim the company failed because of changing consumer tastes and inept management. The same corporate media still proclaim NAFTA a resounding success, even as all evidence shows it decimated Canada's manufacturing sector.

Which brings us to our current Prime Minister. He serves as an invaluable cover for the greedbags who call the shots behind the scenes. All the talk about feminism and diversity and human rights is designed to take our eye off the fact that he's 100% committed to corporate rule.

Here's a bold prediction. SNC-Lavalin will yet get their DPA. Our media, both corporate and the state broadcaster, will keep hammering away at the credibility of JWR and the (completely bogus) claim that 9,000 jobs are at risk.


Corporate rule will prevail.

Shame

There was a time when we could feel shame.

Those days are long gone.

Take a gander at this excerpt from a time before we were shameless. George Romney, Papa to Mittens, DECLINED a hundred thousand dollar bonus in 1960 because he already made more than enough money...

WTF???

Shame?

George was in thrall to an outdated concept called the "social contract." At some level, the social contract assumed we were all in this thing called the "economy" together.

Fast forward 65 years or so, and you've got pharma-bro. Martin Shkreli had a simple strategy for success. Buy up companies that market life-saving medicines and jack up the prices!

Brilliant!

Shame doesn't even come into the discussion. He's just a brilliant entrepreneur...

It's the same kind of brilliance that allows greed-bags like Bill Ackman and his henchman Harrison "Hitman" Hunter to "save" railways by making the trains longer and running them faster, all the while pocketing hundreds of millions of dollars for their noble efforts.

Shame? No way!

Ackman and Hunter have oodles of laudatory press clippings documenting their genius.

According to the Globe and Mail and the rest of the business press, you're a genius if you can kill 6,000 great working class jobs in Canada as long as you enrich yourself and your investors.

There is no shame in making 6,000 good jobs go away.

Instead, there are accolades.

How did we get from a place where A-list capitalists would refuse a bonus, to a place where destroying working class jobs and working class communities and screwing the sick and infirm is considered legitimate business activity?


I don't have the answer yet, but I'm working on it...

Ackman resignation from CP board ends four year reign of terror that cost Canada 5,000+ jobs and made Ackman 2.6 billions

Canada's newspaper of record today bids a fond and fawning farewell to hedgie Bill Ackman, who is walking away from an immiserated Canadian Pacific after stuffing his pockets with 2.6 billion dollars. Here's the intro paragraph to writer Svea Herbst-Bayliss' story;

Activist investor William Ackman left the board of Canadian Pacific on Tuesday, marking the end of a four-year tenure that helped overhaul the ailing railroad company and earn his hedge fund roughly $2.6-billion.

I suppose 2,600 millions is a reasonable sum to pay an "activist investor" for overhauling an "ailing" company that had net income of $650,000,000 the year before Ackman began accumulating shares. After all, the writers and editors of Canada's number one business newspaper seem to think so.

I'm a little perturbed that Ackman's overhaul cost the Canadian economy somewhere north of 5,000 excellent jobs. The think tank here at Falling Downs was always a little iffy about why major Canadian media keep telling us that it's a good thing that American investors would or could be given carte blanche to loot an iconic Canadian company.

But they were, they did, and it's all over but the gloating by our media and the crying among those 5,000+ Canadian families who saw their bread-winners shunted out of well-paying jobs to set the table for Bill Ackman's heroic rescue of Canadian Pacific.

Announcing the million dollar Falling Downs Hedgie of the Year Award

That's right folks, the think tank here at Falling Downs will hand out a ONE MILLION DOLLAR PRIZE to the hedge fund manager who you believe has contributed the most to civil society in the past year!

Who will be the hedgie of the year?

Vote early and vote often for your fave hedge fund manager!

Will it be Bill Ackman? The guy who looted the CPR?

Paul Singer? The guy who looted Argentina?

The erstwhile Canadian, the guy who looted Robert Schad's company, but who's name escapes me due to my early onset Alzheimers?

Vote early and vote often! This is an unprecedented prize in the anus of business awards! Never before has a million dollar prize been bestowed on the billionaires who have been destroying the economy!

Just send your nomination, along with the entry fee of one million dollars (US dollars, if you don't mind) c/o this blog.

We promise to send everyone who supplies a nomination a free Falling Downs coffee mug!

Hunter Harrison makes good on promise to change CP Rail culture

Check out this story about Transport Canada's "unprecedented" order against CP Rail to change their scheduling practices because they are an "immediate threat" to rail safety.

Reading the story, it's obvious that "Hitman" Harrison has succeeded in creating a culture of fear at the venerated CP Rail.

Now back up a few years, when Harrison was the widely lauded "new Sheriff" in town. Yup, he'd just trousered his fifty million dollar signing bonus from hedgie Bill Ackman, and he was gonna shake up that "spoiled, horrible, permissive" work culture at CP Rail.

Sounds like he's succeeded!

Those lucky folks still on the payroll now have a culture of fear instead of the awful spoiled, horrible, and permissive culture that prevailed in the Fred Green era!

But it's not all coming up posies at CP Rail...

Take a gander at the CPR share price history over the past five years. Ackman was loading up on shares back in 2011 when they were in the fifty dollar range. Peaked at well over two hundred in late 2014. By then Ackman had announced an ambitious share buy-back plan designed to drive the share price even higher.

Hasn't quite worked out that way. As of today, CP Rail shares have lost over half their value from that peak.

The think tank here at Falling Downs would like to think that our January 2014 research report had some small role to play in helping the markets get over their Ackman-Harrison euphoria.

It's high time I renamed this blog the "Bolshevik Bruce Research Report" or some such nonsense and fobbed it off as an "investment strategy advisory"...

...or some such nonsense. And of course charged big dollars for an annual subscription!

Maybe if I could get Todd Hirsch to do a guest spot once in awhile...

Ackman trousers $2.3 billions for "losing" battle for Botox

Pity Bill Ackman and his Pershing Square hedge fund.

He's been after Botox maker Allergan for months now. Sadly, he was outspent by Actavis, an American generics giant headquartered in Ireland to avoid US corporate taxes.

But don't feel too sad for Bill. Reuters has the hedgie pocketing a cool $2,300,000,000.00 for his six months effort to coral the Botox manufacturer.

Nice work if you can get it.

Bill Ackman shows why hedge fund slime tactics need to be regulated

The NYT has an expose of the lengths to which Pershing Square Capital boss Bill Ackman will go to lobby regulators and elected officials to aid him in his campaign against Herbalife.

I've never bought a Herbalife product and generally can't get too enthused about any direct-marketing scheme, be it Amway or Mary Kay or whatever, but like them or not they've been a part of the business scene for generations. Whatever flim-flam and unrealistic expectations they're peddling pales in comparison to what Ackman is doing.

Among other things, he's giving hedgies a bad name. This isn't "capitalism", it's rank cynical opportunism. It's a bully trying to destroy the value of another company with tactics made possible by his deep pockets and political connections.

What would stop this foolishness? A 100% tax on non-productive economic activity. Take the incentive away completely. Let Mr. Ackman and those like him use their talents and their money to make constructive contributions to the society they're a part of.

Many, many entrepreneurs have proven that can be profitable too.

Daewoo sitting duck for hedgies

While it's true enough that I often make stuff up, I will occasionally resort to research in a desperate attempt to enhance the credibility of this blog. Thus it was that I found myself reading up on the Daewoo Shipyard.

I was utterly shocked to learn that the Daewoo shipbuilding facility employs 300 gardeners!

Gardeners?  At a shipyard? Who can even imagine such a thing? Ya, I get that they keep the trees trimmed and the flower-gardens tidy, but gardeners in a shipyard?...

I couldn't make that up.

Does Bill Ackman know about this?

How Bill Ackman and Hunter Harrison are destroying CP Rail

Financial media in Canada and beyond are singing the praises of CP Rail CEO Hunter "Hitman" Harrison after the stellar Q4 results posted yesterday.

And while the results may be stellar, the overall tone of unbridled adulation is unwarranted. Spend five minutes with a pencil and a scratch-pad and you'll see there are essentially two factors that account for Harrison's stellar results.

One is that Harrison is running the railroad with roughly 4,500 fewer employees. That's an annual payroll saving of somewhere north of $300m/year.

Harrison isn't the first business leader to come up with the idea of making fewer people do more work. What was quintessentially Canadian about previous CEO Fred Green was that he could have done the same thing but chose not to. I don't want to over-generalize and make this a contrast between US and Canadian management philosophies; there are certainly American entrepreneurs who have stopped short of squeezing the very last nickel out of every employee, just as there are Canadians who do, but on the whole, the slash and burn mentality is more American than it is Canadian.

The other factor is the exponential rise in crude-by-rail. Crude traffic has absolutely exploded for CP Rail, pun intended. That scratch pad should tell you that at 700 barrels of crude in a tank wagon at ten bucks a barrel for the average trip times the increase in crude traffic is good for another half billion or so per year.

You just solved the Ackman-Harrison miracle.

So Canada has 4,500 fewer well-paying jobs and CP Rail has a record cash hoard on hand of about $500 millions. Judging by the stories out there, the Ackman-Harrison management team intends to solve that problem with either a share buy-back or a special dividend. Either way, it's a gift the shareholders are giving themselves, and the biggest shareholder is Ackman's Pershing Square hedge fund.

While they're looting the cash reserves, Canada's rail infrastructure needs tens of billions of dollars in upgrades. A responsible corporate citizen would be investing the surplus in upgrading the infrastructure, not lining its own pockets.

Instead, Harrison, the guy who got a $50 million signing bonus for agreeing to do Ackman's dirty work, and Ackman, who was permitted by the government to rape this iconic Canadian company with a mere 14% shareholding, are roundly applauded by the sycophantic business media.

It'll be a great success story till one of those exploding crude trains takes out the downtown of a major city.

Dump your CP RAIL stock now; Ackman is toxic!

It was only a matter of time before the backsplash from the Lac Megantic disaster was going to splatter on folks beyond MMA boss Fast Eddie Burkhardt.

This story tells you that the throngs of litigation attorneys hovering over the carcass of Fast Eddie have Big Bill Ackman in their sites.

This will go on forever on the basis of the "deep pockets" syndrome. That's where the litigation hounds take off after the prey that has potentially the most wherewithal in terms of providing the juiciest pay-out.

Now that the media have drawn the connections between Big Bill and Fast Eddie, everything even remotely connected to Ackman and Pershing has a big fat target on its back.

Road kill on the hedge fund highway

You owe it to yourself to read this.

A couple of weeks ago when I wrote about dueling douchebags I had Dan Loeb in mind. Looks like Icahn has elbowed him aside.

It's always good fun to see a couple of billionaire twats calling each other names. The reality of America today requires people to see beyond the cheap laughs. These are guys who have made billions of dollars, and hope to make billions more, destroying the American economy.

They're on TV but Bradley Manning is in jail.

I think it should be the other way around.

Battle of the market manipulators

It must be a sweet place to be when the very fact that news of your stake in a publicly listed company can, absent of any other news, drive up that company's share price.

Success becomes inevitable.

A few weeks ago hedge fund bully Bill Ackerman announced he had taken a major short position in Herbalife and intended to drive the share price to zero.

That announcement alone was enough to take him about a quarter of the way to his goal.

Today another hedge fund bully announced that he has amassed a big position in Herbalife and intended to stay in the stock for the long run.

That announcement alone was enough to bump the share price almost eight percent on the day.

Dueling douche-bags!

This should be good!

Bill Ackman dons mantle of righteousness

Taking a break from his screw-over of Canadian Pacific Railway, "activist investor" Bill Ackman is making headlines with his pledge to drive the value of Herbalife shares to zero.

And even though Ackman claims his Pershing Square hedge fund has accumulated an enormous short position in Herbalife, Bill says he's not doing this for the money. In fact, he says that in the event he makes any, he will donate the gains to charity.

Bill is doing this for "poor people" says Bill. Poor schmucks in Africa who have been beguiled into believing that they too can get rich as a Herbalife distributor.

Hell, I figure anybody that stunned is just a patsy waiting to be fleeced anyway. But it sure is nice that Bill cares.

Frankly, anyone seriously interested in getting rich would be well advised to copy Bill's MO. That "activist investor" shtick has worked wonders for him. All he has to do is take a minority position in a company, and then manipulate the media to publicize the pending shake-down... sorry, I meant to say shake-up of management.

Viola! The publicity itself will produce astonishing results in Ackman's portfolio.

So if you're a young keener with a hunger for riches, forget that Herbalife nonsense.

Gather up a few friends, pool your resources, and become an activist investor like Bill Ackman.  

The rape of CP Rail

CPR stock swooned to new highs today after it was announced that up to a quarter of the work-force will be dismissed over the next coupe of years.

Hedge fund visionary Bill Ackman and his management team have figured out that if you just make the trains longer you can get by with fewer crew.

Guess that's why he's a billionaire and I'm not.

Bill is no ordinary hedge-fund shit-bag. He is an "activist investor," as the papers never tire of telling us. That means he takes a minority stake in a venerable company and uses that to bully the existing management out of the way and install his hand-picked rapists.

Rapist-in-chief at the new CPR is Hunter Harrison, the man who successfully did away with the eight hour day at rival railroad CNR a decade ago.

That's the least of what you can expect at the "new" CPR.

Hedge fund hijinx

Bill Ackman isn't what you'd call a patient investor. None of that Warren Buffet-style hold-it-forever nonsense for him. Ackman is a man in a hurry.

Bill's hedge fund Pershing Square Capital has only been a minority shareholder in the Canadian Pacific Railway for a few months and already he's whining to the Wall Street Journal about how his investment is underperforming.

As a minority shareholder of a few months standing he demands changes, big changes, starting at the very top. He wants to see a new CEO at the helm.

That's the first step in "effectuating a cultural transformation", which is hedge fund jargon for kicking the shit out of the workers. CPR's workforce is heavily unionized and enjoys ridiculous benefits like paid overtime and a dental plan. By bringing the company into the 21st century Ackman should be able to cut hundreds of millions in operating costs. That'll bring up the share price enough that Pershing can dump it's shares, walk away with a few hundred million in profits, and carry on with effectuating a cultural transformation on the next victim.

Along the way Bill Ackman builds nothing, invents nothing, discovers nothing, and produces nothing of any value. In return, society rewards him by making him a billionaire.

That's the beauty of capitalism!