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List of Sh*t Actors In the Public Markets


BG2008
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A couple years ago, many members of CoB were screwed over by Brookfield in the Teekay take private.  During that period, I mentioned that I wanted to curate a list of bad actors in the public market.  I really want to make this topic something that we can all use as reference in the future.  Now that there is an active dialogue on DTLA preferred which once again involves Brookfield, it is time to bring up the topic. 

 

1) Brookfield - If you want to own Brookfield, just own BAM. You can be a fanboy. I don't give 2 rat's ass.  But this is fair warning to people that if you are find one of Brookfield's entities (non-Bam) trading at a cheap price, please understand that there is a good reason.  The public market does not trust these guys.  This is the financial #Me_TOO moment.  TOO was the ticker for Teekay Offshore.  The #Me_TOO is to remember that Brookfield screwed the Teekay Offshore shareholders.  They took advantage of the fact that it is a limited partnership and that people did not have any appraisal rights.  The take private was offered at a discount to the then publicly traded price.  Here are the timelines

 

https://bbu.brookfield.com/press-releases/2017/07-27-2017-035001869  Brookfield initially bought 60% of Teekay at $2.50 per unit plus warrants then

https://privatecapitaljournal.com/brookfield-to-take-teekay-offshore-partners-private-in-us-430m-deal/  Brookfield offered to buy rest of Teekay for $1.05 per unit

https://www.globenewswire.com/news-release/2020/01/23/1974173/0/en/Teekay-Offshore-Partners-Announces-Completion-of-Its-Acquisition-by-Brookfield-Changes-to-Board-of-Directors-and-Plan-to-Rebrand-as-Altera-Infrastructure.html  After a really good fight from JDP Capital, Brookfield finally upped their offer at $1.55 per unit

 

Yes, Brookfield is acting in best interest of BAM.  I agree with that.  But Brookfield mistreated the TOO shareholders.  So this thread is to remind people that if you don't own BAM, EXPECT TO GET SCREWED. 

 

For more info, you can reference the Teekay Offshore Thread here at CoB

 

2) DTLA Preferred - Brookfield refuses to pay the preferred of a DTLA office acquisition that they did in the early 2010s.  There is a thread on this.  Again, Brookfield is doing what is right for BAM.  But, this is warning to all that if you own anything that is Brookfield related that is not BAM, EXPECT to get screwed.  This is a warning.  I hope that #ME_TOO starts trending on twitter. 

 

3) Bridgemarq Real Estate Services used to be called Brookfield Real Estate Services - They changed the terms of the agreement a couple years ago.  I need to dig out the details.  But BAM basically gets more fixed rate fees.  Bridgemarq basically exist for BAM to extract fees.  There is a reason why it trades at a high single digit low teens payout yield despite being a very good royalty business for Canada's real estate brokers.  These things should trade for 4-5% yield.  But people understand that it exists to create wealth for BAM and hence it trades at such a high yield because you never know when BAM will screw you. 

 

I request that people don't clog this thread by defend BAM and Brookfield for doing what's right for BAM.  I agree with that.  Yes, they are maximizing value for BAM.  But there is a side that got screwed and that is the side that I am highlighting.  You may say BG2008, you were too obtuse and you should have known that Brookfield is a bad player and it is your fault that you got screwed by Brookfield.  Again, don't clog this thread with this.  My goal is to source all of our knowledges and create a robust list of bad actors. 

 

4) JW Mays - The CEO doesn't want to do jack.  The real estate is worth a lot but he won't pay a dividend, won't put any debt on the company, and don't give a rat's ass about minority shareholders. 

 

I hope others can fill in this list and we can all search this database. There is a glimmer of hope that this list becomes well known. 

 

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Good idea for a thread:

 

Biglari

 

KCLI is largely run largely for the benefit of the controlling family

 

Portnoy family has a horrible reputation

 

Many nano cap family-controlled companies. Due to very small size, controlling families maximize their take by maximizing their salaries, and have no intention on ever paying dividends, buying back stock, or selling the company....basically they don't want to do any of the things outside shareholders would want them to do.

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2. Icahn

 

3. Richard Baker - Hudson’s Bay

 

4. Eddie Lampert - Sears (although beginning I think he tried).

 

Could you list the examples of Icahn?  Thanks.  Having some details would be very helpful. 

 

One good thing that came out of Richard Baker is that he sponsored a SPAC which decided not to liquidate during 2008/2009.  That is ROIC run by Stuart Tanz today.  ROIC is a west coast grocery anchored shopping center that has done quite well for shareholders. 

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Good idea for a thread:

 

Biglari

 

KCLI is largely run largely for the benefit of the controlling family

 

Portnoy family has a horrible reputation

 

Many nano cap family-controlled companies. Due to very small size, controlling families maximize their take by maximizing their salaries, and have no intention on ever paying dividends, buying back stock, or selling the company....basically they don't want to do any of the things outside shareholders would want them to do.

 

Yeah, the Portnoys have terrible reputation.  I don't invest in anything that they do. 

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On the Banking Side

 

Citigroup - Chuck Prince who famously said "if the music is on, you must dance" and then Citi went from $50 to $1

 

Lehman Brothers - Dick Fuld, he YOLOed his way into bk

 

Wachovia - Forgot who the CEO was

 

Countrywide - Angelo Mozilo

 

 

 

 

 

 

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Um, I agree with almost everything about this, but I do think your hashtag suggestion is at best gauche, and at worst offensive.

 

Getting back to the point, I do think it's a shame, as Flatt is obviously a highly talented operator in so many respects, and it's a shame that his view of acceptable behaviour to minority shareholders is like this.

 

On the nano-cap Family-controlled companies, there seem to be in particular a lot of these in Hong Kong.  It seems that David Webb sometimes tries to take 5-10% stakes in certain of these in the hope of getting them to reform and catalyse significant value.

 

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Um, I agree with almost everything about this, but I do think your hashtag suggestion is at best gauche, and at worst offensive.

 

 

I don't want this to devolve into a fierce and meaningless political back and forth.  Here is my come back.

 

 

Let's just call it that we have some disagreement and move on and curate a good list.  Quite a few people have mentioned that they find this list useful even if they haven't submitted anything yet.   

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“Because Americans are the dumbest investors around, and there's lots of liquidity in this market.”

 

George Economou, CEO of Dryships

 

Oh man, how can I forget about Dryships?  What a sh*t show that was.  I have been to a shipping companies' office and I would say that the offices are wayyyy toooo nice for how much money they lose for their shareholders. 

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Um, I agree with almost everything about this, but I do think your hashtag suggestion is at best gauche, and at worst offensive.

 

Getting back to the point, I do think it's a shame, as Flatt is obviously a highly talented operator in so many respects, and it's a shame that his view of acceptable behaviour to minority shareholders is like this.

 

On the nano-cap Family-controlled companies, there seem to be in particular a lot of these in Hong Kong.  It seems that David Webb sometimes tries to take 5-10% stakes in certain of these in the hope of getting them to reform and catalyse significant value.

 

Yes, there are many family-controlled companies in Hong Kong. Sure Webb, he is an activist investor, but he seeks out companies that are basically "well governed" -- not the kind of names that belong in this thread.

 

https://www.bloomberg.com/news/articles/2019-01-02/the-20-a-year-stock-picker-who-wishes-his-edge-would-disappear

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I am genuinely trying to compile a list of bad actors that I can steer clear of when I invest.  I have found that I don't really want to be invested in a company if I have a chance of getting screwed even if it is at a very deep discount to intrinsic value. 

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Personally, I think it's a great topic. Name & shame, baby!

 

My contribution:

 

William Erbey of Ocwen et. al. fame. - I wouldn't invest in his crap with my worst enemy's money!

 

And should we add Mickey Pearson of Valeant/Philidor to the list? I think so, I won't invest alongside him either.

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I am genuinely trying to compile a list of bad actors that I can steer clear of when I invest.  I have found that I don't really want to be invested in a company if I have a chance of getting screwed even if it is at a very deep discount to intrinsic value.

 

BG2008,

 

Thank you, the list is actually appreciated for my personal part to consider, but how do you consider your "on the banking side" post relevant today from an investment perspective? [To me, it has no actual relevance at all].

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I am genuinely trying to compile a list of bad actors that I can steer clear of when I invest.  I have found that I don't really want to be invested in a company if I have a chance of getting screwed even if it is at a very deep discount to intrinsic value.

 

BG2008,

 

Thank you, the list is actually appreciated for my personal part to consider, but how do you consider your "on the banking side" post relevant today from an investment perspective? [To me, it has no actual relevance at all].

 

John,

 

I am not perfect...just naming the ones that I can remember

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Former management team of Forestar

 

This was a real estate company in Texas that had a land lot business, water rights, etc.  I think ThePupil was very involved with.  They somehow got into the O&G business and their performance metrics was trying to double or triple their EBITDA.  Sure EBITDA from O&G production and EBITDA from RE are comparable.  Activists eventually got involved and one of the big home builders bought them

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Alliance Healthcare/Oaktree

 

Oaktree sold 51% of the shares (control) to a Chinese buyers and left minority shareholder out to dry.  Oaktree sold at $18 I believe.  The Chinese buyer eventually forced everyone out at $13.  Oaktree did not bother to get a price for the minority.  I have noticed that distressed investors in equity investments means that they will likely screw minority equity.  In hindsight, it is fitting that Brookfield bought Oaktree.

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Former management team of Forestar

 

This was a real estate company in Texas that had a land lot business, water rights, etc.  I think ThePupil was very involved with.  They somehow got into the O&G business and their performance metrics was trying to double or triple their EBITDA.  Sure EBITDA from O&G production and EBITDA from RE are comparable.  Activists eventually got involved and one of the big home builders bought them

 

Got involved in low mid teens, very involved in high single digits company was bid@ $14/5, sold most around there, eventually went for $17 and change to DR Horton but not for all of the company. Stock got as high as $20’s and is now $16 again (ticker FOR) as a land company for DR Horton

 

Forestar had incompetent management and activist got them out / to change / sell company. I wouldn’t call them bad actors. There’s a long thread on it. It’s pure 100% pure pupil (hodge lodge real estate, starter position “hey there could be some value here, 30-50% drawdown, “well that escalated quickly”, but I think there’s still value here, and value was realized at slight premium to initial entry but high premium to average cost)...I think I should just short my starter positions, then go long.

 

Bad management, not bad actors in the criminal or extremely parasitic sense though and they eventually got what small crap value activist target managements get: paid off and laid off.

 

 

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