Interesting Article:
Hedge Fund Manager Dan Loeb: "The Whole System Is Rigged"
Provided by the Business Insider, August 31, 2010:
Apparently everyone's forwarding around the powerful message in hedge fund manager Dan Loeb's most recent letter to investors.
The message, from the number of chunks of quotes Dealbook pulls out of Loeb's letter is: I don't trust the government to do what's best for the economy, so I'm pulling out of companies that could be impacted by public policy.
Third Point's most recent investment strategy reflects Loeb's belief that banks, healthcare, and for-profit education companies are "overly exposed to unpredictable government regulation."
In the startling conclusion, Loeb says:
“It is easy to see why so many people have concluded that the entire system is rigged.”
Here are the quote chunks we pulled from Dealbook's analysis of the letter. Key points are bolded:
“As every student of American history knows, this country’s core founding principles included nonpunitive taxation, constitutionally guaranteed protections against persecution of the minority and an inexorable right of self-determination."
“Washington has taken actions over the past months, like the Goldman suit that seem designed to fracture the populace by pulling capital and power from the hands of some and putting it in the hands of others.”
“We have given a great deal of thought about the impact that public policy has on individual companies, industries and the economy generally.”
Loeb's firm Third Point has sold its investments in big banks as a result of “regulatory headwinds”; got rid of its stake in Wellpoint, which we think is “a statistically cheap stock owned by several hedge funds, but which we saw as being overly exposed to unpredictable government regulation”; and taken a short position against for-profit education companies as a result of “the government’s increased willingness to use its regulatory muscle.”
“Perhaps our leaders will awaken to the fact that free market capitalism is the best system to allocate resources and create innovation, growth and jobs."
“Perhaps too, a cloven-hoofed, bristly haired mammal will become airborne and the rosette-like marking of a certain breed of ferocious feline will become altered. In other words, we are not holding our breath.”
“Many people see the collapse of the subprime markets, along with the failure and subsequent rescue of many banks, as failures of capitalism rather than a result of a vile stew of inept management, unaccountable boards of directors and overmatched regulators not just asleep, but comatose, at the proverbial switch."
“It is easy to see why so many people have concluded that the entire system is rigged.” |
