Oh Maria - How was your flight?

Todd Thomson clearly lacked good (or any) judgement. Good riddance!


ONE $WEET RIDE
BARTIROMO'S FLIGHT WITH THOMSON COST CITI $50K
By RODDY BOYD

PLANE FAIR? The costly one-way trip between Beijing and New York for CNBC's Maria Bartiromo and Todd Thomson (above) of Citigroup cost the financial giant $50,000.




January 24, 2007 -- The controversial trans-Pacific corporate jet jaunt that ousted Citigroup exec Todd Thomson took with glamorous CNBC anchor Maria Bartiromo set the New York banking giant back almost $50,000.
Based on prevailing operating rates for a swanky Gulfstream executive class jet, Citi largely underwrote the ritzy flight of the high-profile "Money Honey" to the tune of between $2,300 and $4,000 per hour.
Assuming a $3,000 per hour average cost for the 16-hour flight to New York, Citi shelled out $48,000, not including the commercial airfare for the three execs Thomson bumped in order to fly alone with Bartiromo.
A CNBC spokesman said that Bartiromo only paid "prevailing commercial rates" for her seat, approximately $3,000 to $4,000.
A Citi spokesman did not return a call.
The late-autumn flight, for which Citi's former wealth-management boss Thomson bumped key lieutenants of CEO Chuck Prince, was "just about the last straw" for frustrated Citi execs, Citi sources told The Post.
A CNBC spokesman said Bartiromo sought and received approval in advance before hopping the pricey flight on one of Citi's jets, which gave her an opportunity for "source development."
"We review all of these travel requests on a case-by-case basis, and this was no exception," said the CNBC spokesman.
Thomson's rearrangement of the Beijing flight list irked some very senior Citi execs, especially Executive Board Chairman Robert Rubin, who is said to have directly chastised Thomson about the importance of appropriate corporate appearances.
Thomson did not return a message left at his residence.
Even before the controversial flight, Bartiromo and Thomson often appeared together on panels at financial conferences and have been quoted in articles about each other several times.
In a recent Success magazine cover profile, Thomson gushed that Bartiromo - who sits on a council with him at the University of Pennsylvania's Wharton School - "truly understands business and brings clarity and authenticity to the table."
For her part, the Brooklyn born Bartiromo, who writes a finance column for Reader's Digest, quoted Citi's Thomson - who managed private bankers and retail brokers - as an authority in global business competitiveness for an August 2005 story.
Long respected for her trademark live reports from the floor of the NYSE, Bartiromo once raised eyebrows by disclosing on air that she personally owned Citi stock.
More recently, she has won plaudits for breaking the news that Chairman and CEO Sandy Weill was leaving the firm.
roddy.boyd@nypost.com

Hedge Fund Assholes

After dozens of interviews and conversations over the years with people involved with money management, I am struck by the arrogance of those in the business. Give most anyone a "significant" amount of money to manage and once they have a few or even one good year(s) watch that person develop a king size ego. People on the "buy-side" are by and large the most obnoxious group of people I know of. It's a sort of misguided god complex only they are not saving lives. Somehow sitting in front of a monitor, pressing a few buy and sell buttons and generating a return for your investors gives many a feeling of supreme superiority. At our firm we are constantly mindful of how silly most of our peers are. Just listen to them with their big words and convoluted reasons for why things happen as the "i'll play dumb" business reporter laps it up. So cute!!!

Hedge Fund Strategy

Fresh slate, new year! What to do? We're doing nothing and loving it. We will not be making any big sector calls, rotating in and out of hot industry or companies and most importantly we will not be changing our strategy one iota. 2006 was not a great year for us but that does not mean we need to change our strategy. Many managers who lagged in 06 are rejiggering the portfolio - selling losers and probably adding to winners. Fine for traders - dumb for investors. A strategy not followed is worse than no strategy at all. After years of observing "smart money" I realize two things: there isn't much of it and what exists of it is not widely publicized. The people that are truly the "smart money" do not appear on CNBC, rarely speak at conferences, usually don't write books and generally are not widely known. They aren't "consummate marketers".

Real investment professionals treat their vocation as a profession instead of as a business.

Happy New Year Mr. Nardelli

Very interesting to hear rumblings that the board of The Home Depot, upon seeing the runup in the stock due to rumors of an LBO, were more inclined to fire Bob Nardelli. The market sent a clear signal to the board that the company was worth more without Nardelli than with him. Good for them for reading the signal. While Nardelli certainly lacked charm he was a good operator. Don't dismiss him as a chump just because the stock was down and don't blame him for making a ton of cash. Who are the directors that approved it? It's easy to find and you can then blame them.

Murder Inc. and the Invisible Hand of Capitalism

Earlier today the owner of Murder Inc., a Manhattan based bookseller, announced that after 35 years in operation the store would be closing its doors at the end of the year. The owner, Jay Pearsall, when asked about his store's closure by an anchor on CNBC refused to blame anyone for his demise. Yes, he admitted that Amazon cut into his mail order business and yes, the Barnes & Noble that at one point opened in his neighborhood cut into his core store business. He was not bitter, though. While I'm sure he was not thrilled to be closing shop he did not get on the populist bandwagon and declare that small business was dead, corporate america is evil, and that the U.S. is destined to become a second class power. You could tell that the anchor was hoping for this type of answer. He refused. Pearsall's final words on the closing were, "if the market says it's time to go, then it's time to go." The invisible hand of capitalism can sometimes be cruel but ultimately it rules the day. Pearsall understands this and instead of bitching and moaning I trust he will use his abundant intelligence to do something else that he finds fulfilling.

Now if he understands so elegantly how capitalism works, why can't politicians and regulators?

They're Jacking up the Market

If there is another half decent day like today, so close to the finish of the year, then brace yourself for the idiots who love to say that the hedge funds are pushing the market higher. What they won't remind you about is that the last week of the year in 2005 was nothing like this. While hedge funds might be able to prop up a stock or two (usually of the microcap variety), they cannot prop up the S&P 500 and if they could then why don't they do it every year, every day or every week. The conspiracy theory holds very little water.

Sage Words from Herbert Stein

The following quote from Herbert Stein of the American Enterprise Institute is well worth reading. Though dense and wordy, it rings so true.

"Some people say that employers have a social responsibility to commit themselves to providing more assured employment. But would this social responsibility extend to paying workers as much as they would get without that commitment? And, if it did, would investors have a social responsibility to provide as much capital and on the same terms as they would without the employment commitment? And would consumers have a social responsibility to buy as much product if the commitment entailed higher prices? And who would have a social responsibility to the people who did not get employed in the first place because it would have entailed too large a commitment?"

The next time Mr./Mrs./Dr. "insert liberal politician here" talks about "economic policy" ask them this question. On second thought, don't, they just won't understand.

Australia "Gets It" - Buyer Beware

Australian hedge funds
Big hittersDec 13th 2006 SYDNEY From The Economist print edition
What happens when small investors play in the big leagues
AS A nation, Australians tend to get more excited at the prospect of slugging a ball around a cricket pitch than playing in the big leagues of international finance. But that does not mean they don't like to bat aggressively as investors, too. Unlike America and Europe, where regulators have shielded small investors from exotic investments, such as hedge funds, Australia allows its citizens to hold them as freely as it does mutual funds. So far this freedom has helped the local hedge-fund industry, without hurting the punters.According to the Reserve Bank of Australia (RBA), the central bank, one of the most powerful forces behind the growth of hedge funds is their popularity among individuals, including ordinary folk with as little as A$1,000 ($785) to invest. In much of the rest of the world, access to hedge funds is usually restricted to the rich and to institutional investors.But in Australia individual investors account for two-thirds of the A$60 billion invested in hedge funds, compared with just 44% globally. “In part, this high share reflects the regulatory regime, which does not limit retail access to hedge funds,” the RBA writes. Around 77 of the 200 hedge funds sold in Australia offer their products to the general public, sometimes over the internet, without officials batting an eyelid. “We sell loads of them,” says Ron Hodge, of InvestSMART, an online business that offers investments.Australian hedge funds are no different from those elsewhere; they can involve borrowing, short-selling, and illiquid securities. Generally, they claim to safeguard investments even if markets fall, and the most popular strategy is one that bets on falling as well as rising share prices, or so-called long/short funds. Mutual funds, by comparison, simply buy assets in the expectation that prices will rise. Registration is mandatory, but there is no difference between the processes for hedge funds and mutual funds. The legal principle is that disclosure of important information, such as risks and fees, in sales documents, is enough to protect the public.Financial advisers are often pushy in promoting hedge funds, which adds to the already high fees charged by the managers themselves. Typically, a financial adviser can collect up to an extra 1% of a client's assets each year. Yet more fees are paid to funds of hedge funds, which invest in a range of single-manager hedge funds rather than in the underlying securities.

In spite of the odd international blow-up, investment in Australian hedge funds has soared in recent years (see chart), and according to the RBA has even eclipsed the pace of growth in the global hedge-fund industry, where assets have reached around $1.5 trillion. Institutions are also stepping up their allocations to hedge funds; in 2005 almost one-third invested in hedge funds compared with less than 20% in 2003.But recent returns, in the aggregate, are barely more impressive in Australia than anywhere else—especially after deducting fees. The RBA said hedge funds returned the same as local shares over the past five years, or 12% a year after fees, albeit with lower volatility. At present there is little pressure to tighten up the industry. It is “fine as long as people go in with their eyes open,” says Frank Ashe, an associate professor of applied finance at Macquarie University. That attitude might change if something were to go horribly wrong with hedge funds. But Australia, unlike much of the rest of the world, is hoping for the best.

Hank McKinnell - Executive Compensation

As I write this the media and other market observers are obsessing over Hank McKinnell's severance package from Pfizer. Yes, it's a large amount but does anyone really think he's going to say no to it. To villify Mckinnell, Dick Grasso and others for collecting or trying to collect large payouts from firms is insanity. If it was in their contracts then so be it - good for them for getting or trying to get what's theirs.

What CNBC and others should do is publish the names of and try to interview the people on the boards of these companies and point blank ask them what they were thinking. These people are responsible for the "excess". Don't blame someone for trying to get a large comp package. At the end of the day the board is responsible. No one really talks about this. It's easier to demonize the highly visible CEO. Leave the bastards alone!

Clinton Administration Hall of Fame Member - Sandy Berger

http://www.cnn.com/2006/US/12/21/berger.documents.ap/index.html?eref=rss_topstories

This article on Sandy Berger hiding classified documents under a trailer is a classic. A must read for those who wish to gain insight into what the Clinton administration was like. Enjoy!