Everybody wins!

[Cigarbutt]

It's an old book (1997) and it is a balanced auto-biography by Gordon Cain. Got the idea indirectly from this Board.

I enjoyed it and thought it was still relevant.

 

The financial highlight of his life was the successful accomplishments of several leveraged buyouts using junk bonds in the 1980's.

Much has been said about the junk bond era and reading Barbarians at the Gate certainly offered another perspective.

 

I understand that Gordon Cain was able to buy chemical plants at the bottom of the cycles, restructure them and create a tremendous amount of value.

Unlike many other participants who may act as greedy vultures in these circumstances, it seems that he was able to integrate honesty and fairness into the process.

 

The book is well written and includes perhaps too much information about his life before his main accomplishments.

 

His vocation as a deal maker occurred relatively late in his life. He was clearly a contrarian who could detect and uncover value. He was patient and expectant when necessary but could focus and inject a "clarity of purpose" when needed. Value investors may appreciate.

 

He offers his own pearls of wisdom.

 

What comes across is that he was an apostle of free markets and wished less encumbrance by the government. However, he seemed humble and open to different and opposing views. He attributes at least some of his financial successes to these qualities.

 

He was a pragmatic man who was "not interested in social theory" but always tried to optimize factors under his control. He was critical about many regulations and various government agencies. However, he also underlined positive aspects of unions and various government interventions. He wished that the government could go through a restructuring just like he did with the acquired firms. Mr. Cain was results oriented and understood incentives. He liked and applied the works of Deming concerning efficiency and productivity. He was not entangled in a dogmatic conceptual framework. He felt that there was a major problem with "the inertia and bureaucracy of large institutions".

 

The book contains chapters dedicated to certain transactions which could be treated as case studies.

 

A major aspect of his "deals" was that, in addition to himself, managers and workers benefitted as well in a fair way. He encouraged share ownership and put in place profit sharing programs.

 

So, interesting for value investors, people involved in restructurings and/or corporate financing and just for those who believe that individuals can make a (positive) difference.

 

Everybody wins!