June 24, 2007
I´m back fresh from a restful break. In this vein, I thought I would recommend some good summer reading for deal junkies and the like. This is the light reading; I´ll recommend some brainier stuff on Friday.
Hedgehogging by Barton Briggs. Briggs was global strategist at Morgan Stanley, but left the position to start the global macro strategy hedge fund Traxis Partners. In Hedgehogging, Briggs spins on the day-to-day life of running a hedge fund by (anonymously) profiling many of the top managers. Hint: get ready to pity these poor managers as they experience unbearable pressure to raise money, earn that twenty part of the two and twenty, and afford their lifestyle. In between, Briggs writes about various hedge fund strategies and trading triumphs. Think Accidental Investment Banker, but for hedge fund types. The book is a good, light vacation read for those who want a taste of what the hedge fund life is like and what hedge fund managers actually do on a day-to-day basis.
Liar´s Poker: Rising Through the Wreckage on Wall Street by Michael Lewis. In this time of a possible private equity/hedge fund/credit/liquidity bubble, its time to revisit a classic from another heated time. In Liar´s Poker, Lewis engagingly describes his four years with the Wall Street firm Salomon Brothers during the 1980s; a time when Salomon´s mortgage trading group ruled Wall Street. The book is filled with trading stories and personalities and describes vividly such Wall Street legends as John Meriwether and Lew Renieri. Sure, Lewis was only there as a junior sales banker for four years, but he ably captures Salomon´s frenzied trading culture and describes the mortgage trading business in a very accessible way. The culture Lewis details would ultimately lead to Salomon´s demise when Paul Mozer, one of its traders, engaged in a rigged bidding scheme for treasury bonds. The gambit would be discovered and would bring down the entire bank in scandal setting off a series of events which ended Salomon´s independence.
Stealing Time: Steve Case, Jerry Levin, and the Collapse of AOL Time Warner by Alec Klein.The story of the America Online and Time Warner merger. At the time announced, this was the largest merger in U.S. history; this deal is also ranked among the most spectacular M&A failures in history. It is therefore a must read for any M&A attorney. And Klein tells the story in news reporter fashion, showing the strategies and personalities which created the deal and led in part to its failure. By the way, not everyone lost on the deal including, most importantly, the lawyers. Cravath represented Time in the transaction and received the astronomical flat fee of $35 million (though still not as sweet as Wachtell´s $20 million flat fee for two weeks work defending Kraft in 1988 against Philip Morris´s unsolicited bid).
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