SAC Capital, Completely Comfortably Wrong

In an obvious but entirely appropriate piece in the N.Y.Times on Tuesday, we are warned not to take advice from hedge funds, they being like strangers with hard bad candy, and we being like kids (gullible).

It seems all is not pure gold up there in the comfy comfy of Connecticut, where one hugely successful Steven runs SAC Capital in complete secretude. In the recent past, the desire for profits overwhelmed the desire for genteel invisibility, causing SAC to dance with Jana Partners in an attempt to encourage TD Ameritrade to explore financially fornicatory mergings with Etrade. Such drama, and the leprechauns in the woods raise their eyebrows.

Says the Times:

In their letters, they harshly criticized certain members of TD Ameritrade’s board as “self-serving” and having “glaring and untenable conflicts of interest.” And they suggested that E*Trade would be a relatively safe merger partner, in part because it “assumes only modest credit risk.”

In reading this, one wonders what a true credit risk might be, and whether SAC was really concerned about long term risk at all. Probably not.

Of course the accuracy of SAC's shortcut methods to wealth enhancement is not of real importance. They will probably earn their take, making up for this, with that. It is also easy for us to recognize self dealing and bad advice in hindsight. We all have our smarty pants on. NOW.

However, we can take discomfort in the notion that certain entities and special interests can apply inappropriate influence in order to obtain undeserved profit; a profit that can come at the expense of the companies in question and their shareholders.

If I am invested in a theoretical company, the last thing I want is some nun who owns one share appearing at the shareholders meeting telling the CEO how tofu makes for a better beef burger. Nor do I want any other special (and soon passing) interest to try to compel the company to do long term damage for short term gain.

That some Icon or Icahn of business can waltz in, throw down, collect, and then waltz out the back door is a trend that should not be allowed to continue no matter how much said parties pretend to be helping the company.

We, the leprechauns of the world, should take note and pay close attention. Who is saying what, and how do they stand to gain? Are they patient, or are they watching the clock, and stepping atop your head on their way to catch the money train back to the Comfy.