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WORK TITLE: When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle
WORK NOTES:
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RESEARCHER NOTES:
PERSONAL
Male.
EDUCATION:University of South Florida, B.A.
ADDRESS
CAREER
Reporter and author. Associated Press Television News, New York, NY, reporter; KDFW-TV, Dallas, TX, Business Reporter; Fast Money: Halftime Report, host. Reporter for documentaries, including One Nation, Overweight, Ultimate Fighting: From Blood Sport to Big Time, and Hotel: Behind Closed Doors at Marriott.
AVOCATIONS:Cooking.
AWARDS:Sigma Delta Chi Award, Society of Professional Journalists, for One Nation, Overweight; Award, Society of American Business Editors and Writers.
WRITINGS
SIDELIGHTS
Scott Wapner works predominantly within the world of television. He has participated in the production of numerous documentaries as a reporter; his work in this particular genre includes appearances on “One Nation, Overweight” and “Hotel: Behind Closed Doors at Marriott,” among several others. The former documentary earned considerable attention, a Sigma Delta Chi Award, and a Society of American Business Editors and Writers Award. He has worked with Associated Press Television News and KDFW-TV and, most recently, acted as a host for the television show, Fast Money Halftime Report.
When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle is Wapner’s debut book. It focuses on Carl Icahn and Bill Ackman, two vastly wealthy men who both have built their livelihoods within the shares industry. Wapner details how the two men came to compete with one another over time, culminating in a final battle where both men attempted to take each other down. Wapner starts off Icahn and Ackman’s story from the very beginning. The two originally planned to work together in an attempt to accrue more wealth; however, relations between the two soured when one of their agreements fell through and Ackman lost a considerable amount of money. He blamed Icahn for the deficit. From there, the men’s relationship continued to decline. By the year 2012, the men’s arguing escalated into Ackman saying Icahn monded his company, Herbalife, into a pyramid scheme meant to profit disingenuously off of a naive customer base. This accusation clashed with Icahn’s reputation as a more humanitarian-focused investor. Furthermore, Ackman reduced the amount of money he planned to invest into Herbalife. Icahn was left with no choice but to double down on his decision to stick with the company, expressing his sentiments directly and pouring even more money into Herbalife to back up his support. Wapner details the final outcome of this war and which of the men managed to become the winner of it all. One Publishers Weekly contributor called When the Wolves Bite “a trenchant business drama that brings life to its characters and will mostly appeal to business buffs.” On the Value Walk website, Brenda Jubin remarked: “If you want an engaging, fast read, When the Wolves Bite may be just the ticket.” A writer on the value and opportunity website concluded: “Overall, the book is very well written and big fun to read for anyone interested how this ‘Big guys’ play.” Crossing Wall Street reviewer Eddy Elfenbein felt that “Wapner is a skilled storyteller.”
BIOCRIT
PERIODICALS
Publishers Weekly, February 12, 2018, review of When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle, p. 72.
ONLINE
Adweek, https://www.adweek.com/ (October 22, 2016), A.J. Katz, “5 Questions With… Scott Wapner,” author interview.
CNBC, https://www.cnbc.com/ (July 31, 2018), author profile.
CNBCfix, http://www.cnbcfix.com/ (May 11, 2018), review of When the Wolves Bite.
Crossing Wall Street, http://www.crossingwallstreet.com/ (May 10, 2018), Eddy Elfenbein, review of When the Wolves Bite.
PR Newswire, https://www.prnewswire.com/ (May 17, 2018), “Author and CNBC Anchor Scott Wapner Joins Jeffrey Sherman on The Sherman Show™.”
value and opportunity, https://valueandopportunity.com/ (May 28, 2018), review of When the Wolves Bite.
Value Walk, https://www.valuewalk.com/ (April 22, 2018), Brenda Jubin, review of When the Wolves Bite.
Scott Wapner is the host of Fast Money: Halftime Report, which airs every weekday on CNBC. Wapner has also reported several documentaries for the network, including Ultimate Fighting: From Blood Sport to Big Time, which earned him an Emmy nomination, and One Nation, Overweight, for which he received an award from the Society of American Business Editors and Writers as well as a Sigma Delta Chi Award from the Society of Professional Journalists. Known industry-wide as an expert in the area of activism and markets, Wapner has reported live from the floor of the New York Stock Exchange and is in regular contact with all the personalities in this book. He lives in New Jersey.
Author and CNBC Anchor Scott Wapner Joins Jeffrey Sherman on The Sherman Show™
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May 17, 2018, 09:45 ET
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LOS ANGELES, May 17, 2018 /PRNewswire/ -- DoubleLine Deputy Chief Investment Officer Jeffrey Sherman and Asset Allocation Analyst Sam Lau interview CNBC anchor Scott Wapner about his career in financial journalism and his new book, When the Wolves Bite, on The Sherman Show™ podcast.
Mr. Wapner, who originally aspired to become a sportscaster, describes how a lucky break led to his career covering the markets, including walking the tight-rope of sometimes hardball interviews with some of the titans of Wall Street. One episode which became famous on the Street was Mr. Wapner's presiding over "a 30-minute slugfest" in 2013 between Bill Ackman and Carl Icahn in their clash over Herbalife.
Earlier this month, Hachette Book Group published Mr. Wapner's best-selling exposé of the Ackman-Icahn showdown, titled When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle.
To access the episode, please click here
For the earlier episodes of The Sherman Show, click here
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DoubleLine Capital LP, an investment adviser registered with the SEC under the Investment Advisers Act of 1940, managed $119 billion in closed- and open-ended 1940 Act funds, exchange-traded funds, separate accounts, hedge funds, variable annuities, UCITS and other vehicles as of the March 31 end of the first quarter of 2018. DoubleLine's Los Angeles offices can be reached by telephone at (213) 633-8200 or by e-mail at info@doubleline.com. Media can reach DoubleLine by e-mail at media@doubleline.com. DoubleLine® is a registered trademark of DoubleLine Capital LP.
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Scott Wapner
Host, "Fast Money Halftime Report"
Scott Wapner is host of the "Fast Money Halftime Report," which airs weekdays from 12PM to 1PM ET.
He has reported live from the floor of the New York Stock Exchange and the Nasdaq MarketSite, covering the real-time action of the global financial markets. Wapner was reporting live from the New York Stock Exchange during the May 2010 "flash crash."
Wapner has also reported several documentaries for the network, including "Hotel: Behind Closed Doors at Marriott," "Ultimate Fighting: From Blood Sport to Big Time," which earned him an Emmy nomination, and "One Nation, Overweight," which documents the impact of the nation's obesity epidemic. In 2011, Wapner received an award from the Society of American Business Editors and Writers as well as a Sigma Delta Chi Award from the Society of Professional Journalists for "One Nation, Overweight."
Before joining CNBC, Wapner served as the franchise Business Reporter for KDFW-TV in Dallas and was a reporter for Associated Press Television News, based in New York City.
Wapner earned a bachelor's degree in history from the University of South Florida.
Follow Scott Wapner on Twitter @ScottWapnercnbc.
5 Questions With… Scott Wapner
By A.J. Katz on Oct. 22, 2016 - 8:42 AMComment
CNBC’s Scott Wapner is celebrating five years as host of the network’s 12 p.m. program Fast Money Halftime Report. Last week he packed his show with guests ranging from billionaire investor Carl Icahn, to billionaire New England Patriots owner Bob Kraft. We caught up with Wapner about the last 5 years, and what’s next.
TVNewser: Five years as host of Halftime Report. Congratulations! Talk about the evolution of the program over time.
Wapner: From the very start we tried to have a show that gave viewers actionable investment ideas in a fun and entertaining way, and I think we’ve succeeded in doing that. We hold people accountable too which I truly believe is a critical component to this show’s staying power and credibility. I’m also a big proponent of teachable moments when it comes to investing and trading, and I know we’ve made an effort to enhance what we do by helping people understand why certain decisions are made by the group of experts we bring on.
TVNewser: What is one episode of Halftime Report that really stands out to you?
Wapner: Well certainly the day in 2013 when Carl Icahn and Bill Ackman brawled live on the show will always be a standout. Beyond the spectacle of it, that moment helped define what we wanted to be – THE place for “real money, real debate” where the biggest and most trusted investors could routinely appear to discuss the markets. Since then, most of the debates on the Halftime Report have been more civil of course, but the spirit of that event lives on in what we try to accomplish every day, albeit not always as heated.
TVNewser: What is Wall Street saying about this uncertain election, and any thoughts on how the outcome might impact the market, both long-term and short-term?
Wapner: There’s an unmistakable level of caution among Wall Street’s biggest investors and many have expressed that view on our show as recently as this week. Many hedge fund managers are taking a wait and see approach. There’s certainly the idea that gridlock in DC will be good for stocks, but also a sense that some real initiatives could be enacted no matter who wins, such as tax reform and infrastructure spending, just to name a couple of things.
TVNewser: You’re a Redskins and Capitals fan. The past few weeks have been good for Kirk Cousins and Co., and the Caps have high expectations this season, per usual. What are your thoughts and expectations?
Wapner: Like every sports fan, my expectations are always high, as my family and trader pals will attest. But this year truly feels like we’re on to something special with both teams. One is trying to meet the lofty expectations that have become an annual exercise – the other trying to build on its recent success to become a more consistent winner. I’m confident that both teams will accomplish those goals.
TVNewser: I hear you’re an aspiring chef. What are your go-to dishes right now, and what dishes do you want to learn how to make?
Wapner: I’m always partial to Italian and especially pasta, but I’d like to really expand my exploits into other cuisines. Making those luscious and velvety French sauces is really complex so that’s definitely one area I’d like to keep pushing towards.
When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle
Publishers Weekly. 265.7 (Feb. 12, 2018): p72.
Copyright: COPYRIGHT 2018 PWxyz, LLC
http://www.publishersweekly.com/
Full Text:
When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle
Scott Wapner. PublicAffairs, $27 (256p)
ISBN 978-1-61039-827-5
Two masters of the universe butt heads in this gripping, if narrowly focused, real-life business thriller from Wapner, the host of CNBC's Fast Money. He shares the story of how two famous activist shareholders, hedge fund manager Bill Ackman and activist investor Carl Icahn, clashed over the beleaguered Herbalife, a "multilevel marketing" company that recruits devotees to sell its teas and shakes. After describing how Ackman and Icahn rose to become two of Wall Street's biggest power players, Wapner follows their years-long showdown. In 2012, Ackman accused Herbalife of being a pyramid scheme and shorted its stock, and Icahn countered with a large stake and public declaration of confidence in the company, beginning a feud that captivated the business world. Weathering distrust from Wall Street, lawsuits and FTC investigations, and falling shares, Herbalife survived--but the outcome of Ackman and Icahn's war remains less clear. Although Icahn beat Ackman in the end, Wapner finds it uncertain whether either came out the better. Told in a breathless, urgent style, this is a trenchant business drama that brings life to its characters and will mostly appeal to business buffs. (Apr.)
Source Citation (MLA 8th Edition)
"When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle." Publishers Weekly, 12 Feb. 2018, p. 72. General OneFile, http://link.galegroup.com/apps/doc/A528615541/ITOF?u=schlager&sid=ITOF&xid=ed06cddf. Accessed 29 June 2018.
Gale Document Number: GALE|A528615541
Scott Wapner’s When the Wolves Bite – REVIEW
April 22, 2018 5:59 pm by Brenda Jubin
The title of Scott Wapner’s book, When the Wolves Bite: Two Billionaires, One Company, and Wall Street’s Most Epic Battle (Public Affairs/Hachette Book Group, 2018), comes from an article in the Yale Law Journal: “Who Bleeds When the Wolves Bite? A Flesh-and-Blood Perspective on Hedge Fund Activism and Our Strange Corporate Governance System.” That’s as academic as the book gets, which is fine, because, even if you know most of the story, it’s still a page-turning account of what became a vituperative personal battle over Herbalife. Is Herbalife in effect a Ponzi scheme that the government should shut down (Bill Ackman’s position) or is it a legitimate company on which investors can make money, especially in the event of a short squeeze (Carl Icahn’s view)?
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Scott Wapner was the obvious person to write this book since he hosted “the brawl” between Ackman and Icahn on CNBC’s Halftime Report (January 25, 2013) in which Icahn, despite his Princeton philosophy degree, sounded eerily like his friend Donald Trump, with claims such as “as far as I’m concerned the guy [Ackman] is a major loser.” Unfortunately for Ackman, Icahn would be right in one sense—Ackman would take a major loss on his short Herbalife position and Icahn would profit handsomely from his investment in the company.
Herbalife is a multilevel marketing (MLM) company in which distributors are compensated for what they sell as well as for how many new recruits they bring in. In its swashbuckling early days it often seemed to cross the line of legality, and, even as the shorts and longs battled it out, the FTC fined Herbalife $200 million and put in place regulations to ensure that it had real customers and didn’t misrepresent how much money its distributors could make.
Wapner delves into the early research that eventually prompted Ackman to short the company’s stock and explores the role of activist investors. But at its heart When the Wolves Bite is a tale of outsize egos going to battle using the money of investors in their funds. Ackman came out bloodied, his reputation tarnished (not only by his Herbalife position but also by his forays into Valeant and ADP), and his assets under management now half their 2015 peak. Carl Icahn, in the meantime, stepped down as President Trump’s special adviser on deregulation amid controversy and is smarting from three straight years of either outright losses or massive underperformance in his investment fund.
Is there a moral to the story? I could suggest several, but I’m sure my readers could think of even more. So I’ll leave it to your imagination. In the meantime, if you want an engaging, fast read, When the Wolves Bite may be just the ticket.
Book review: Scott Wapner – When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle
Posted on 28. May 2018 by memyselfandi007 2 comments
“When the wolves bite” is the story about Herbalife and the fight between Bill Ackman, the Activist Hedge Fund manager who publicly shorted the company and Acitivist legend Carl Icahn who became a large shareholder mainly in order to annoy Bill Ackman.
The book is written by the CNBC journalist and TV host Scott Wapner who, among other things, hosted the live call on Television when Carl Icahn and Bill Ackman accused each other to be idiots live on TV for more than 20 minutes. I had written about this “slugfest” more than 5 years ago and to be honest, my conclusion was very wrong back then:
Personally, I think that Loeb and Icahn are only in for the quick rebound and long-term Ackman will most likely come out with a nice profit, but I wouldn’t really bet on this, as you might be killed (or squeezed) in the meantime.
In the book, the background for both main actors is well documented. Bill Ackman’s meteoric rise to become one of the top activist Hedge Fund managers and Carl Icahn with his decade long history of doing shrewd deals.
Ackman and Icahn had a first conflict about a single digit million amount of USD when Ackman had to wind down his first fund Gotham Partners and sold a stock to Icahn and agreed with Icahn on a contract they called “Schmuck Insurance” which contained the clause that Ackman could participate in the upside if Icahn would sell within short time.
Icahn then did exactly this but not in an outright sale, which he thought gave him the right not to pay Ackman. Ackman however sued and won. This seemed to have been the start of the grudge between the two and laid the foundation for this epic battle later on.
The book also shows in detail some other blunders Ackman had during this time, most notably his misplaced bet in Valeant. There is also a lot of information on Herbalife and other players that were involved such as Dan Loeb, David Einhorn and even John Hempton from Bronte.
Overall, the book is very well written and big fun to read for anyone interested how this “Big guys” play. “Hedge fund porn” at its best…….
My major learning:
It clearly shows that the capital market is not always a rational market and that in such situations, egos play a big role. My advice back then that normal investors should stay out of this is still valid, unless one enjoys poker games without being actually at the table.
Some quibbles:
Although I don’t like Ackman myself (too much ego), I think the author portrays him maybe a little bit too negative especially compared to Carl Icahn. For instance the author details how Ackman had to wind down his first fund in 2003 without mentioning the overall situation in the stock markets back then.
Icahn in contrast in portrayed mostly as the brilliant investor, although investors who bought into Icahn Holdings in 2006/2007 are still down 50% and how Icahn for instance treated his son by closing out his son’s Netflix position against his will.
What’s not in the book:
Ackman actually did exit the Herbalife investment in February this year with a big loss. And just 2 days ago Carl Icahn announced that he sold 25% of his stake in Herbalife at a profit. The final verdict is still out as Icahn still owns a huge stake in Herbalife but so far it looks like a big victory for Icahn.
CNBCfix review: When the Wolves Bite
Scott Wapner’s incidental tale on recruiting the government could use a protein shake
Posted: Friday, May 11, 2018
It's a story without an angle — or even an ending.
Scott Wapner's When the Wolves Bite, while hardy and earnest, unfortunately peaks in Chapter 3, bottoms in Chapter 7, and lumbers toward a finish line that doesn't exist.
Bite is a chronicle of a Wall Street showdown. Wapner is indeed the right person to pursue this, having succeeded in bringing the opposing parties on air multiple times and earning a level of trust. But the showdown is not particularly sexy because 1) nobody was made or broken by it and 2) the parties declared a truce fairly early in the battle and 3) that battle nevertheless dragged on for a frustratingly long time for all involved. As Wapner began the project, it would've been a fair and serious question to ask aloud, Is there really a book here?
There is, deeply embedded in some of Wapner's pages.
Wapner, accidentally it seems, at times draws a beautiful contrast of America's wealth hierarchy. Notice that Bill Ackman and Carl Icahn, their associates and contemporaries, are Ivy Leaguers who make their money on Wall Street, while dropout/community college types might make their fortune in places such as Herbalife. Academic elites would seem to have the upper hand in society's race to the top until emotion is factored in: All the Ivy Leaguers promise is more money, while the Herbalife people promise a beautiful life. All of the parties are smart, savvy people who have — at least in certain instances — made a lot of wealth through controversial means. There's a quiet message here and not really from Wapner: Anybody can get rich, but you quite possibly, sometimes, will have to be an s.o.b.
Bite has to make one wonder if Harvard and Princeton produced any value added to the talents of Bill Ackman and Carl Icahn given how well the HLF CEOs have done financially without such mind-shaping.
Most Wall Street books, including the biographies, purport on some level to make the reader a better investor. Here's how Warren Buffett does it, etc. Finance tends to be a boring subject; why read about it unless such knowledge can boost your bottom line. Does Bite teach you anything about investing? Maybe that most stock traders are knuckleheads. Every time there's a headline on HLF, there's a massive move in the stock, duly noted by Wapner. Since Ackman's short at the end of 2012, HLF has had one bad year, 2014; the rest all pretty good, and at the time of the book's release, the stock was at an all-time high. Anyone ignoring the news reports and patiently adding shares during this time has made serious money; those playing headline wack-a-mole probably haven't.
Also, maybe there's a message that the best investments are under the radar. While the retail-investing public loads up (with good reason) on the hottest Silicon Valley stocks of the week/month/year, Bite indicates that people such as Ackman and Icahn tend to make money on fairly obscure companies. The deal that caused their feud involved Hallwood Realty, which virtually no one has heard of, actually a highly successful enterprise for both parties.
But that's below the surface. Unwilling to opine, Wapner fails to find a voice, clumsily gets bogged down in halfhearted formalities and shuns what could've been a valiant effort to turn the Herbalife war into another Barbarians at the Gate, one of the best business books. He stumbles through storylines people don't care about and ignores things that they should. Wapner is a TV host. Writing is not his meal ticket. Unlike the Barbarians authors (Bryan Burrough and John Helyar), Wapner hopes to continue receiving semi-regular television appearances from his subjects. At times, his prose is effective. He refreshingly calls himself an "unproven author." But his passages attract clutter. Too often, they feel like spare parts. Instead of telling a good story, Wapner leans toward research-like material, tacking on 16 pages of citations at the end. Wapner flirts far too closely with the weakest type of book, a timeline. Numbers (particularly the percentage rise or fall of Herbalife on any of a dozen or so different days) and press releases are scraped up whenever the narrative runs dry. Eventually, readers are wondering what in the world HLF has to do with VRX or Dan Loeb, let alone Jerry Yang or MBIA or JCPenney.
Whether hosting TV shows or writing a book, Wapner, like most people, is at his most likable when focused, head down, churning through the material. It's when he pauses and thinks "I could be cool here" that the production stalls with eye-rolling references. Rather than give the writing a chance to bring whatever narrative exists here to life, Wapner sprinkles the text awkwardly with profanity steroids, including his phrasing in Chapter 6 ("Johnson had f----- up, and he knew it ...") and Chapter 7 ("sticking it up Ackman's ass") and Chapter 8 ("Bill Ackman, it seemed, had f----- him."). Wapner used the actual letters rather than hyphens after the "f." This from a guy who refers to Eliot Spitzer as "Mr."
Wapner stumbles out of the gate. Let's start with the cover. What exactly does this title, When the Wolves Bite, mean? Wapner indicates that it's part of the title of a 133-page (Zzzzzzzz) paper written by Delaware Supreme Court Chief Justice Leo E. Strine on activist hedge funds in the Yale Law Journal. That paper criticized activist investors for typically seeking short-lived stock pops for the benefit of shareholders rather than longer-term change for the good of the companies as a whole. What does any of that have to do with shorting Herbalife?
Turning to Page 1, Wapner stalls immediately with uninteresting definitions and descriptions of today's activist investment community. Wapner includes Icahn and Ackman in this category, but their presence exceeds such terminology; it's like saying Magic Johnson is one of the best point guards in the league. This Introduction chapter is titled "Masters of the Universe," a now-stale term coined or popularized by Tom Wolfe 3 decades before Wapner's book.
Chapter 1, called "The Profile," would be entertaining and great satire ... except Wapner actually takes the profile seriously. We learn Herbalife had $100,000 available to pay someone who "never met Ackman before" to "scour the Internet" and put together a profile, of dozens of pages, that gets "deep into Ackman's psyche," a document according to Wapner "so sensitive" that its existence was "a secret until this writing." This document, according to Wapner's book, refers to "Warren Buffet" (spelled with one "t"), an indication you don't always get what you pay for. (If the spelling was actually correct in the report and botched by Wapner — there is no "sic" or indication that this is a misspelling — then that's another problem of a different kind.) This supposedly legitimate report, taken seriously enough by Wapner to dominate his first chapter, suggested Ackman could be appeased or bought off by arranging a photo-op with Jerry Bruckheimer.
By the end of the book, such startling buffoonery is believable because, despite leading a somewhat controversial company, Herbalife CEO Michael Johnson hadn't even considered what would seem like the most basic doomsday plan — a relationship with "whale" investors who could be counted on to defend the stock if someone challenged it. That occurred on its own. Better lucky than good.
(For what it's worth, Wapner also misses a golden opportunity for a teachable moment with the first word in Chapter 1. It is "Herbalife," but he doesn't offer a pronunciation. If you think the pronunciation is obvious, please note that Wapner's CNBC guests will alternate between hard "H" and silent "H" after years of televised reports on this company. At one point in the book, Wapner puts an "an," rather than "a," before "Herbalife.")
The book begins to right itself when readers learn something very interesting about Wall Street — that even supposedly brilliant investors are getting their ideas from salesmen. Here again, Wapner should be lambasting this process, not marveling at it. The notion of shorting HLF stems not from a "eureka" moment for Bill Ackman ... but a run-of-the-mill pitch from a third party called the Indago Group that offered the supposed tip not just to Pershing Square but to "other big name hedge funders on the payroll (sic, it's Indago that's on the payrolls, not the other way around), hoping at least one would bite," which doesn't exactly sound like the strongest bear case. And isn't it curious that the only one who ultimately bites (at least in a big way) is the one who was the subject of a fawning book by the same Indago researcher who wrote that she is "grateful" to Ackman for his "openness and optimism"? (That's called journalistically developing a marketplace.)
In Chapter 3, Wapner hits a stride, detailing how Bill Ackman reached the point where anyone would care whether he was shorting Herbalife. With a little more background oomph, Bite could work as an Ackman biography. But there's not nearly enough research into his coming of age, and Ackman already has a healthy footprint in financial media that some readers may be well aware of. One of the curiosities of this book is that the author seems clearly impressed by Ackman, pointing out how Ackman, "At 6'3", with piercing blue eyes, a barrel chest," was a "straight-A student" who "still seems pissed" about scoring only 750 on the SAT's math portion (one of the numbers that obviously came from Bill himself), but the various Ackman initiatives listed by Wapner feel like, in total, a below-par record as the bungles include not only Herbalife but Target, JCPenney and, worst of all, Valeant. (Ackman, according to the text, had "never heard the name" of Philidor until at least 7 months after he made a $3.3 billion investment in Valeant.) The fact that Ackman is regarded as a famous investor, perhaps even Wall Street titan, despite these flops is reminiscent of a John Cassavetes interview on Dick Cavett's show in which Cassavetes explained that while the actors went without a salary for a long time, if the film "Husbands" lost money, it would be "Columbia's money then."
Ackman's greatest skill would seem to be his ability to attract a large amount of financing at a young age. He likes the comparisons of himself to Warren Buffett, but more relevant might be Donald Trump (not politically), a person of privilege determined to expand the brand by publicizing himself in a field where very, very few want publicity.
It can be inferred from the book that once investors reach the status of Ackman and Icahn, missteps don't really matter; there's forever enough money sloshing around to remain relevant. The truth is that while a hedge fund manager definitely wants to avoid a debacle, the gut feeling, from the book and coverage of this battle in the news media, is that there is no reputational risk to Ackman from the HLF trade. The targeted company had long been viewed with skepticism. He took a shot at it with serious diligence, which some people, but not nearly enough, appreciated. A lot of Ackman's investors can live with that. They might even secretly like the attention Ackman got from this trade. What looks a lot worse is his bizarre, onetime bullishness in VRX.
There's a saying in Hollywood that, if your project makes money, nobody really cares about anything else, and Wolves Bite suggests a similar mentality on Wall Street. After Icahn basically settled his score with Ackman by going long Herbalife, the two purported to reconcile on air, though the mood was something short of real friendship. We learn on Page 208 that if you clash with Bill, you can still end up watching the U.S. Open with him in great seats.
Ackman's initial "skeptical" response to an HLF short in Chapter 2 is the most accurate analysis in the book and about all you need to know about the merits of the idea. He started to warm to the possibility only after 1) a Belgian court ruling and 2) David Einhorn's conference call question (translation: Ackman's team found nothing on its own that justified this trade), in the process devoting time and resources to this possible investment, which only make it more likely that more reasons will be unearthed to make this particular investment. As the saga continues, Ackman's massive presentations and arguments begin to seem much like that nitwit on the recent cable TV special who claimed he had 93 pieces of evidence implicating some California joker as D.B. Cooper.
One of the many red flags about this trade is hinted on Page 81. "Ackman pledged to give all personal profits he made to charity," Wapner writes. If this is such a great investment and totally in the country's best interests, why is Ackman concerned about "blood money" and forgoing the gain from helping out the American people so much? And who exactly would be auditing the trades to ensure "all" of his "personal profits" would go to charity?
More red flags: Upon news of Ackman's HLF position, other investors' knee-jerk reaction was that HLF is more likely a long than short. Robert Chapman, who did not like Ackman and thus like Icahn had a potentially risky motivation, nevertheless correctly "figured the government, which had given Herbalife the once-over before, had 'been there, done that' and had already moved on," Wapner writes. Dan Loeb actually had the savvy to meet the Herbalife CEO before making an investment and hired former FTC lawyers to opine on the likelihood of regulatory action, something that apparently didn't occur to Ackman, who — according to this text — seemed most fascinated by the little shacks that Herbalife distributors apparently operated out of and presumably still do.
Something readers will never know from this book but might notice on CNBC is that, despite his ego and win-at-all-costs approach, Bill Ackman is ... funny. Wapner only states that Ackman has a "quick, unsparing wit." It's more than that. You have to listen to him talk. It's a polite defensiveness. Whether he could do standup is doubtful (he takes himself fairly seriously), but when on CNBC, Ackman entertains. It is a very subtle type of humor, incidental really, the way many people are funny. Sure, most people have no idea what he's talking about. To anyone who has evidence of a brain (not all of us do), Ackman is an interesting, entertaining guy. Probably, if Ackman ever decided that laughs were more valuable than dollars (as if), he could give Jimmy Fallon a run for ratings. No joke.
Carl Icahn is not particularly funny, but in his advancing age, he's no longer the bad guy, the "raider," but something of a likable-uncle persona. He was at his funniest on CNBC referring to Ackman as "Ackman" and insisting (as did Ackman) that he wouldn't let his rival be friends with him or invest with him again. That was rare air. Most of the time, Icahn spends his television soundbites grumbling about corporate governance and over-regulation. What gets him jazzed up every day? Who knows, maybe just righting all the wrongs of improperly run companies.
Though a savvy TV pro, Wapner essentially admits he never thought of trying to put Icahn on air at the same time as Ackman. "Unbeknownst to me," Wapner writes, CNBC producer Maxwell Meyers had independently tipped off Icahn's camp to Ackman's pending on-air call, which apparently was handled by producer John Melloy. Here we have a brief insight into the tenacious profession of television booking in which the competition perhaps is fiercest not among rival channels but among people in the same office. Ackman alone was such a good get, Wapner presumably had no inclination to attempt anything bigger that might derail it. Yet after the famous Icahn-Ackman showdown, Icahn became a semi-regular guest on Wapner's program, to the loss of other CNBC programs.
Wapner in the book never mentions that during the on-air showdown, Icahn was more irritated with Wapner than he was with Ackman and told the CNBC host, after several questions about a then-undisclosed HLF stake, this would be their last interview together (that quickly proved not to be the case). Icahn told Wapner, "I didn't get on to be bullied by you ... I don't give a damn what you want to know ... you can say what the hell you want ... I'll talk about Herbalife when I goddamn want to and not when you ask me. I'm never goin' on a show with you again, that's for damn sure, OK." He also told Wapner: "I don't think you've been handling this fairly. I think you're trying to attack me and, and bully me into admitting something. ... You seem like a nice enough guy ... You're giving me all this bullsh--; and Max Meyers said I could say what I wanted on the show so I'm saying it."
The strength of Wapner's book is the biographical material on Ackman. On Icahn, he has little. On Michael Johnson, he's somewhere in between. It feels like everything Wapner got from Johnson was run by Johnson through HLF lawyers or PR teams first. In compiling bios, Wapner is oblivious to significant others. Surely individuals such as Ackman, Icahn and Johnson go home at night and ask a spouse/significant other, "What do you think? Am I going to lose a lot of money here?"
When in doubt, Wapner accepts Ackman's stated thoughts, including on Page 201: "As for Ackman, he remained convinced the new restrictions would ultimately cause the company to crumble, even feeling vindicated by how tough the FTC's language was." Seriously? Wapner believes that Ackman was really "convinced" of this? It's hard to believe Wapner doesn't find Ackman's last-ditch letters to the FTC pathetic. How about when Ackman claims well into his HLF debacle that in his career, he has not seen a "less attractive risk-reward ratio than a long investment in Herbalife."
Hilariously, despite the fact MBIA is regarded as Ackman's signature success, Wapner in Chapter 2 writes of "the toll that the whole affair had taken on him personally" ... what sort of toll is making a lot of money and acquiring a reputation that, from subsequent endeavors, seems overrated?
Wapner's text is peppered with overwriting. For example, "... who made an appointment to visit him face-to-face the next time she was in the city" (would she visit him in any manner besides face-to-face?). On Page 82, see how easy it is to scratch a few words, "With his company's stock in free fall, Johnson, who'd never before been through such an exercise in his professional career, picked up the phone and called his mentor, Jerry Perenchio …"
Or here: "Now — finally — for the very first time, Johnson and Herbalife's other executives felt they could begin to understand why the war had happened in the first place."
Wapner also belabors facts as though readers had already forgotten the previous chapters. On Page 59, he writes that "Herb Greenberg, who covered Herbalife as a reporter for CNBC and hosted a network documentary about the company ..." Then on Page 81, Wapner reaffirms for those who might've forgotten, "Herb Greenberg, who'd also done work on Herbalife for a documentary project produced by the network …" (He doesn't mention though if Herb was named after Herbalife.) (That was a joke.)
Twice we're told Hoffman is "the PR man."
On Page 95, this sentence somehow made it through: "On July 17, 2012, Yahoo named Google star, thirty-seven-year old Marissa Mayer, CEO."
On Page 173, we have, "according to experts who opined on the topic" (obviously they are opining on the topic or their information wouldn't be in the book), and on Page 188, "By December, Apple had spent the most of any company in the S&P 500 on the move, according to FactSet, which tracks such data." (If they didn't track such data, he probably wouldn't be citing it.)
On Page 149, we learn Ackman attended the Robin Hood Investment Conference, and that "Ackman branded Herbalife 'Robin Hood in Reverse' in a play off the title of the well-attended charity event." (It's not hard to tell that it's a play on the conference name.)
In a fairly short book, there are grammar glitches. On Page 112, there is "poured through Herbalife's financial statements," and on Page 140, "Herbalife shares, which Ackman had blasted into the $20s toward the end of 2012, was now up more than 80 percent for the year," and on Page 212, "has millions of loyalists around the global."
Fairly regularly, Wapner notes the price of Herbalife shares while certain events are happening. Up, down, sideways, inside out, this is a mess. Inexplicably, the one time numbers are really needed — the price of Herbalife shares on Dec. 19, 2012, the day before Ackman's big Sohn presentation — Wapner doesn't bother; on Page 81, all he says is that the shares fell 12% and then 10% the day of presentation.
Even though the whole book is about a famous short, it's not until Chapter 6 that Wapner defines the goal of short selling: "If the shares lose value, you can them buy them back." In Chapter 2, he notes that a short is a bet that "shares would plummet."
Chapter 7, in which Wapner decides to recount Dan Loeb's battles with Yahoo, is downright terrible, the worst of the book.
Mainstream-media reviews of When the Wolves Bite are virtually nonexistent. The book got off to a healthy start on Amazon presumably because of Wapner's relentless on-air promotions on CNBC that began a couple months before the book was even available.
As the HLF war dragged in recent years, presumably, Wapner sought to get a book out before the episode faded from public consciousness. Somehow, it concludes with the battle still in progress, even though Ackman acknowledged (February 2018) that he was out of his HLF short. Wapner writes in closing, "How many pitch drafts did we go through?" One wonders if any included the term "plutocracy." The book is 100% clear on one thing: How far the government will go for the highest bidder. The astonishment of Bite is not Ackman's silly trade but how far he got with it. Four years after Wall Street needed tens of billions in taxpayer bailouts to stay afloat, a rich guy was basically commanding the government to go to work for him, and it did.
When the Wolves Bite — Two Billionaires, One Company, and an Epic Wall Street Battle" (2018)
Book Review: When the Wolves Bite
“I wouldn’t do business with you if you were the last man on Earth.” So said billionaire Carl Icahn on live television to fellow billionaire Bill Ackman.
On January 25, 2013, for 27 riveting minutes of uninterrupted television, world financial markets came to a halt as two of the wealthiest men on the planet tore into each other. It was great TV.
The brawl was vicious, personal and highly entertaining. The supposed subject of their discussion was an unlikely one: Herbalife, a nutritional-supplements company. On its prospects, they viscerally disagreed; Icahn was long and Ackman was short.
Typically, portfolio managers speak in measured tones. Not this time. These two men loathed each other, and they weren’t shy about expressing it. Naturally, Wall Street loved it. During the segment, trading volume dropped 20%.
Coolly presiding over the mayhem was CNBC anchor Scott Wapner, who details the full story in his fun and engaging new book, “When the Wolves Bite: Two Billionaires, One Company and an Epic Wall Street Battle.”
Here’s the TV segment. If anything, Wapner downplays the zaniness. As the insults started to fly, you can hear traders hooting in the background. At one point, Wapner has to remind Icahn, a billionaire 20 times over, that “bullshit” is inappropriate for cable TV.
Wapner explains how the Ackman/Icahn kerfuffle long predated their on-air brawl. Years earlier, Ackman felt Icahn had screwed him out of millions in a stock deal, and the courts agreed. Icahn, the cantor’s son from Queens, didn’t take the loss well. “I couldn’t figure out if he was the most sanctimonious guy I ever met in my life or the most arrogant.”
Despite their feud, or perhaps driving it, the two men aren’t terribly dissimilar. They’re both rich, very smart and incredibly driven. Both are also “activist investors,” which is the new, more respectable name for “corporate raiders.”
Ackman made his name by shorting MBIA, the mortgage insurer. He chose right and made a fortune. Icahn, whose voice still carries the pugnacity of his native Queens, is a legendary investor. Five years ago, the cover of Time magazine labeled Icahn the “Master of the Universe.”
The story picks up speed in 2012, when Ackman and his Pershing Square hedge fund decide to take a $1 billion short position in Herbalife, the multilevel marketing company. Under the leadership of their ebullient CEO Michael O. Johnson, Herbalife sold diet shakes and teas, mostly to Hispanic customers. Like many MLM firms, the strategy was to get to new people to sign on as distributors who then had to buy more products. The new distributors were then encouraged to sign on still more distributors.
This left the question, “Were Herbalife’s sales real, or were they just selling to their own distributers?” In May 2012, before Ackman initiated his short, the stock got pummeled after David Einhorn queried management on precisely this topic. They fumbled their answer, and Wall Street’s judgment was brutal. The next day, shares of Herbalife plunged 40%.
On balance, history suggests that Herbalife is indeed a legitimate enterprise, if perhaps an unseemly one. But Ackman’s thesis was that the whole thing was a sham and a Ponzi Scheme. He used the media and an investor conference to relentlessly criticize Herbalife. That’s what irritated Icahn. He objected to Ackman’s bear-raid tactic of taking an outsized short position and then scaring the bejesus out of everyone. In response, Ackman accused Icahn of using the same tactics.
Wapner is a skilled storyteller, and the book has its tragicomic moments. By 2014, the battle started to turn against Ackman. At one investor conference, Ackman slammed Harbalife for more than two hours, and the shares soared 25% that day. Herbalife was so creeped out by Ackman’s obsession that they commissioned a psychological evaluation of him, looking at his desires and motivations, the same way the FBI profiles serial murderers.
“This guy Ackman,” to quote Icahn, seemed possessed. The more he lost, the more defiant he became. He even compared Herbalife’s evasions to the Nazis’ “big lie.” As Herbalife rallied, Icahn increased his already massive fortune, but causing Ackman pain seemed the greater reward.
One of the more disquieting details in the book is the way big investors manipulate the media. In fact, Ackman was able to marshal much of the political system against Herbalife. Apparently, if you have enough cash to spend, it doesn’t seem terribly difficult to weaponize social justice in the cause of your portfolio. I have to wonder where else this dynamic exists.
The judgment of Wall Street is clear: shares of Herbalife are up more than 64% so far this year. As entertaining as the Herbalife story is, it’s also just baffling. What drove these men? Why was Ackman so darn relentless? Why did he short Herbalife after Einhorn gave it such a haircut? It’s odd that a battle over a nutritional-supplements company is tinged with Greek drama. When egos are in play, all the money in the world isn’t enough.
Posted by Eddy Elfenbein on May 10th, 2018 at 10:31 am