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A good example is our trade in Fiat in 2003. We made 20 percent in a month on that single transaction. At the time, the broad market was rallying sharply in a rebound from the preceding bear market. Fiat had a big rights issue.5 At the same time, Deutsche Bank had announced that they would be disposing of their industrial holdings, and Fiat was one of their positions. Rather than exercise their rights, which would increase their position, Deutsche Bank decided to sell their rights. You had a situation where the market was going up, and while Fiat should have been going the same way, it was actually going down because of a big seller. And that seller was not driven by fundamentals, but rather by a desire to rebalance their portfolio to reduce industrial holdings. The rights were especially cheap because of the Deutsche Bank selling. We bought the rights, which effectively gave us a cheap call. Buying the Fiat rights was a trade where everything lined up. First, the market was very strong. Second, the stock was substantially underperforming the market and its sector for two technical reasons—there was a rights issue and a large seller for technical reasons that had nothing to do with the fundamentals. Third, the rights provided you with a way to put on a large position for a small capital outlay. Fourth, because Deutsche Bank was a large seller of rights and the stock was difficult to borrow, the rights were trading below their intrinsic value.
Hedge Fund Market Wizards
Jack D. Schwager
After I built the first trailer in 1963, I was constantly looking for new ideas, new ways to get the customers excited about Portillo’s. My mind never slept. Every time I created something different, something different that I knew the customers liked, I saw the smile on their faces. And when I saw that my ideas were working, as crazy as they were, thinking out-of-the-box, I gained more confidence in myself, and it gave me more passion. My passion and confidence grew.
Out of the Dog House
Dick Portillo, Don Yaeger
In these discussions Harder learns that Gawker has long used unpaid internships as a part of its business model, and this might be an opportunity for a third front. “I was talking to some former employees of Gawker and one of them mentioned that Gawker had hundreds of interns and none of them were paid,” Harder says. “Gawker was basically getting free labor. And I had talked to an employment lawyer about this in New York and they said it’s one hundred percent against the law.”
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