Wednesday, October 01, 2008

Sam Zell is a God ! (well, almost...)

I do not know Sam Zell. And I cannot tell you whether or not he is a nice man, charitable or selfish. He looks warm, fuzzy, and indeed almost grandfatherly in many of his photographic depictions (see left). What I can tell you is that his decision to sell his real estate behemoth, Equity Office Properties (Fmr Ticker: EOP) in November 2006 (closing in Feb 2007) was the epitome of counter-trend prescience, bucking the prevailing crowd by unloading at supremely elevated valuations on the offer-side of the market to buyers who were apparently more flush with cash and agency zeal than foresight. BANG! went the gavel! YOURS!!! (for $34 billion $102 million 305 thousand dollars thankyouverymuch).

By comparison, the chart below shows the fate of Manhattan Class-1 Office REIT SL Green & Co (Ticker SLG) and it isn't a pretty site. Not that SLG's earnings estimates have deviated much from what they were. Oh no. This is about ratings compression, and the (probable and correct) wisdom of the market (and thus price) running roughshod over the innovation of sparse earning information.

Most portfolio managers, investors, traders and fence-swinging hedgies aspire to "tagging it" just so, wearing it as a badge of honor for the rest of one's life, like Nils Taube in 1987. Even those of us who are more comfortable and adept at playing percentages, cannot help but admire such exemplary market-timing perfection, the flip-side of the horror we (or at least yours truly) would view the late-cycle OTT dismemberment of ABN.

So today, Sam Zell, when the best in the business (ahem, except for John Paulson) are recipients of the ego-cleansing of-a-lifetime, and all market participants are in need of something to smile about, in honor of your not-be-underestimated feat, it matters not whether you are a nice guy, or a prick, I tip my hat you...



(erratum: the inset photograph, despite the likeness to Sam Zell, is of course, NOT Sam Zell, but Burl Ives. However, his attire was more appropriate for this post than anything Sam Zell would be caught dead wearing, so I've left it, as much for its aptness as for the fact that Burl Ives was the first vinyl record I would play on my parents phonograph when old enough to figure out how to work it)

11 comments:

RJH Adams said...

Maybe the last time someone buys what he's selling (outside of sports teams).

Nice little youtube of him in action earlier this year with Tribune staff.

http://uk.youtube.com/watch?v=jpkBeijRICI

Anonymous said...

the cost of a sports team is but a rounding error to Mr Zell. And in any event, even multi-billionaires have egos to assuage that seemingly on a prof sports franchise can satisfy. I call it the "Emperor At The Coliseum" syndrome. Ahhhh the rapture of the crowds...

-C-

PeeDee said...

Truly outstanding. In the same way, I still revere Steve Case for the way he rang the bell on the dot-com boom, from the driver's seat.

Awesome.

Anonymous said...

A picture of Harland Sanders woulda worked nice, too.

Charles Butler said...

Almost identical timing to Manuel Jove's sale of Fadesa to Martinsa - the resulting combined firm now in administration. As to whether Jove was prescient or not, he sunk the 4.4 bn€ into BBVA stock in July 2007... I guess he didn't get the connection.

Travel is good. It broadens the mind. Personal affairs aren't too bad either.

jmf said...

Moin from Germany,

here is another story related to Zell...

July 20/2007 (Bloomberg) -- Tribune Co. has a 50-50 chance of missing interest payments on some of the $13 billion in debt it will have after real estate investor Sam Zell buys the company, trading in the company's credit-default swaps shows.

Tribune said April 2 that Zell would lead a $34-a-share buyout that valued the company at $8.2 billion


Bloomberg


I assume the situation is much worse today than in 2007...

Nobody is perfect... :-)

Anonymous said...

Nice that old Sammy Zell made a bundle on that deal, great foresight,but the next question is what did he do with ALL that Cash, did he reinvest some of it in hedge funds, financials, BRIC mkts, gold, more property?

"Cassandra" said...

A real god (or goddess) would have bot some Rydex 4x-Short Financials or similar...

ST Bunds and UST notes even better if ccy exposure was hedged. Isn't the luxury of hindsight wonderful?

Anonymous said...

Spare a thought for the Blackstone Partners who unloaded some of the portfolio and their partnership not so soon after....

Anonymous said...

Just FYI, the picture accompanying your article is not Sam Zell.

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