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Information on Sam Zell


Morgan
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I've been looking over the years for information on Sam Zell and haven't been particularly successful on how he got his start in real estate and what happened for the next 5-10-20 years after that. Does anyone have a summary of what he has done and why he has been so successful?

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My understanding is he was introduced to RE in college managing and owning student housing.  After college he spent something like a week in law and quit to start investing in RE full time.  He then made a ton of money in the 70s and early 80s taking title to under-performing commercial RE, renting them up, and selling them to institutional buyers (pensions/insurance/etc).  He was able to buy the RE with almost no equity because the banks knew that if he could work them out they wouldn't  have to write down the loans. 

 

If you're looking for more information, he wrote some great articles talking about his experiences that are well worth a read.  The two that come to mind are the grave dancer articles he wrote for, I believe, a real estate trade journal.  You can probably find the articles with some googling.  If not PM me and I can email them to you.  Someone also mentioned to me that he's currently writing a autobiography/memoir but I don't know if this is correct or not.

 

 

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There are a bunch of Sam Zell videos on YouTube.  The above is a talk he gave at the University of Chicago a few years back. 

 

Around the 29 minute mark he discusses his investment in the Chicago Tribune newspaper.  Interestingly, even though it was a terrible investment, he says that he would do the investment again because the risk-reward ratio was apparently so much in his favor. (Maybe this explains why FFH and Chou made the investment in Torstar).

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It's been many years, but from what I remember the book isn't very well written but does have lots of good info on his early years + methods. A bunch of now (mostly) useless stuff about the Tribune saga, but you can always just read the good chapters :)

 

Did you read it? If so, how was it? On amazon it has quite a few bad reviews. I ordered, but would like to know what you think of it.

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These are the articles I mentioned above.  They're accounts of how he made his first fortune.  Well worth a read.

 

The Grave Dancer -  http://www.valuewalk.com/2014/07/the-grave-dancer-sam-zell/

 

Return of the Grave Dancer  -  http://www.cre.org/memberdata/pdfs/Zell_Grave_Dancer.pdf

 

 

Thanks Poor Charlie. I also came across this one, "From Cassandra with Love..." by Sam Zell:

http://www.cre.org/memberdata/pdfs/zell_cassandra.pdf

 

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  • 2 weeks later...

It's been many years, but from what I remember the book isn't very well written but does have lots of good info on his early years + methods. A bunch of now (mostly) useless stuff about the Tribune saga, but you can always just read the good chapters :)

 

Did you read it? If so, how was it? On amazon it has quite a few bad reviews. I ordered, but would like to know what you think of it.

 

Thanks maxprogram. I read it over the weekend on a camping trip. It did have some good info and was fun, but it was written poorly. Regardless, I'm glad to have read it and learned something.

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  • 3 years later...

New interview:

 

Nothing too surprising but it was good to hear his thoughts on RE. Like Buffett, he’s not really buying now.

 

Thanks for sharing! I’ll give it a listen tomorrow.

 

Cheers!

 

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Good talk, and right on the money with the lack of price discovery, a large part due to anchoring bias.

 

So Sam Zell, Buffett, and Icahn are cautious on the sidelines and on the other side you have folks like Bill Ackman. Take your pick...

 

Interesting observing the age differences there. The young feel invincible, the old not so much?

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Good talk, and right on the money with the lack of price discovery, a large part due to anchoring bias.

 

So Sam Zell, Buffett, and Icahn are cautious on the sidelines and on the other side you have folks like Bill Ackman. Take your pick...

 

Interesting observing the age differences there. The young feel invincible, the old not so much?

 

I think the virus strikes a greater fear on older folks (rightfully so) and it's being reflected on their investment decisions...

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^It's well known that older people tend to be more risk-averse. Many reasons for that.

Some work has shown that experience may very well be associated with (more capacity for?) risk-taking, which seems to go against the age factor but greed and fear are not processed in the same areas of the brain.

Mr. Zell has given thought (and money) to the subject of risk.

https://www.businessinsider.com/billionaire-sam-zell-business-advice-risk-2017-6

https://www.kellogg.northwestern.edu/news_articles/2007/zell-leadership-award-coverage.aspx

He's known to have said that, to be successful, one has to be right about 70% of the times so betting against him is reasonable but he doesn't come across as somebody who would be fearful, only because of age. And he's certainly not senescent.

 

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I don't know enough about Icahn to take a view, but if you ask whether I'd side with old Buffett & Zell on one hand, or Ackman on the other, I'd be Team Oldie every time.

 

I do take the point that old age can alter risk-taking, and I know Ackman has done some great stuff, but I think the oldies have a better hit rate.

 

My best guess is that they see a wide range of outcomes, and don't feel comfortable i.e. no 1 foot hurdles at the moment.  Those who do well from Corona may be lucky rather than skilful.

 

I found the Zell book lightweight and overly self-congratulatory unfortunately - but a lot of good writers aren't great investors either...

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There a certain age bias in this current situation , both on terms of health as well as financial risk. Zell has a lot more to lose than to win at this Point than let’s say a 30 year old private equity guy.

 

First, he has a much higher chance to get killed by this disease, second with this being an unprecedented situation l he really doesn’t know how this plays out economically. So he won’t play until he sees it, plain and simple.

 

Compare this to a 30 year old private equity guy who probably is willing to roll the dice with other people’s money and if it doesn’t work out, he is just going to try again a couple of years later with a different shop.

 

The different starting situation and incentives lead to different decision making bias.

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There a certain age bias in this current situation , both on terms of health as well as financial risk. Zell has a lot more to lose than to win at this Point than let’s say a 30 year old private equity guy.

 

First, he has a much higher chance to get killed by this disarrayed, second with this being an unprecedented situation l he really doesn’t know how this plays out economically. So he won’t play until he sees it, plain and simple.

 

Compare this to a 30 year old private equity guy who probably is willing to roll the dice with other people’s money and if it doesn’t work out, he is just going to try again a couple of years later with a different shop.

 

The different starting situation and incentives lead to different decision making bias.

 

Does the 30 year old not have significant career risk in doing that? I think Buffett and Zell have been relatively straight shooters (particularly Zell) about the opportunities they see at any point in time. I don't think they would have any reason to waver now unless they truly saw a wide range of outcomes. Also, Buffett was about 78 when he went through the Great Recession, so taking his comments and assigning some risk-averse age argument doesn't hold water to me.

 

It's kind of interesting Buffett's comments about $137 billion not being that much in the context of worst-case outcomes. That is a way different tone than his "we only need $20 billion to survive even the worst catastrophe" , and suggests to me he thinks coronavirus will be a huge issue for insurers, not dissimilar to what Dupperrault and others have said.

 

Maybe these guys are simply operating in areas (insurance and real estate) where there is close to maximum uncertainty right now about how things play out. During 2008 perhaps Buffett could pick up bargains because he knew his insurance subs were not as exposed to 2008 risks as the current insurance business is to the fallout from the pandemic?

 

 

 

 

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