Workshop note

Name change, what I'm reading, ideas on the docket

Hi all,

I missed writing these regular updates. After a couple of challenging months, I feel more settled in and at peace now. Life goes on, infatuation dissipates, memories start fading, albeit slowly.

While I’m excited again about researching and writing up stories, my output is nowhere near where I would like it to be. I’m thinking of a weekly ‘workshop note’ as a way of keeping in touch and giving you an idea of what I’m working on.

This could also become a way to get your input. There are usually more ideas sitting on the backburner than I have time for and it would be nice to occasionally get feedback on what would be interesting to you. That also means the workshop note would go to premium subscribers.

Irving Place a couple of blocks from me. If you look closely, you can spot the garbage sitting in the summer heat. Never change, New York. Never change. :)

Names

The other night I went to a friend’s place for a barbecue. He introduced me as a 'finance writer' which was not completely wrong but didn't feel quite right either. Typically, I don’t write about markets or specific stocks. At the same time I’ve been struggling to describe my work. It was easier to say what it wasn’t.

At that same barbecue we reminisced about what we missed most about working in an office (if anything at all). For me, it was meeting managers, both portfolio managers and CEOs. You hear the pitch, ask some questions, then circle up with the team afterwards to compare notes and debate. “Well, what’d you think?”

I thought that was the best way to learn from senior team members. I was always surprised to see what nuances or ideas others had picked up on and what frameworks they brought to the table.

I was reminded of this by this week’s excellent podcast with Stephen Mandel when he was asked about advice for young people starting in the business:

“The most important thing is to get themselves into an organization, it could be public markets, private markets, it doesn't really matter, where they are mentored by people who teach them really good fundamentals. A lot of that is sort of by osmosis.”

I wonder if there is a way to replicate this online, like in a podcast format. Hear the pitch, do some Q&A, then discuss.

Anyway, I was always more interested in the people and their stories than the quantitative analysis. Who was this person sitting across from me? Why did they spend their life investing capital or building a company? What was driving them? Where were they in their journey? Were they learning, adapting? Did they build networks and attract talent? Would they make good partners? What was going on with this human?

I find that to be the overarching theme in my writing as well. It’s more writing about people in finance and business, than about finance and business.

Who are the people making (and sometimes losing) fortunes? Can we forget about the hero worship and look at the lessons, good and bad, beyond the polished origin stories?

While there are some specific methods and ideas we can pick up from biographies, the big lessons revolve around the personal journey: the ambition, focus and grit required to will something into existence. The persistence and resilience demanded in the face of inevitable setbacks. The curiosity, cunning, and creativity that drive a story forward. It’s not a data-driven perspective on history. It is personal, messy, and up close. It’s what I relate to because I can find myself in those stories.

Which is a long-winded way of saying that I’m considering a name change from the generic Neckar’s Notes to something that better reflects this emphasis on people and their stories.😉

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Reading

I am re-reading the book Predator's Ball about Michael Milken, Drexel, and the rise of high yield credit which fueled the takeover boom of the 1980’s. It was a Cambrian explosion of new players and many of today’s private equity and credit firms can trace their lineage back to that time.

One story I tweeted was about Jeffrey Steiner who reinvented himself as a takeover artist after success as an entrepreneur and tech executive. His success rested on three pillars: his ability to cultivate relationships to access capital from European banks, his skill at valuing assets and executing deals, and his selection of people to bet on – he was one of the earliest backers of Carl Icahn.

It’s easy to forget that Milken financed not just buyouts but also entrepreneurs, everyone from Steve Wynn to Craig McCaw. Credit has come a long way since then and today a single firm can write a $750 million private loan, such as the one TPG made to Hamdi Ulukaya and Chobani. After stretching himself thin with traditional bank financing, Ulukaya needed capital quickly. On the one hand, TPG squeezed him and extracted a large warrant package. But on the other hand, Ulukaya needed a flexible capital solution in a very short period of time. And he didn’t want to sell the company. It was expensive capital (which is why private credit managers raised record amounts of capital in a yield-starved world) but it still performed a useful function and financed a successful company.

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On the docket

I'm currently working on a piece about Exor’s John Elkann who is transforming his family’s investment vehicle.

A few ideas sitting “at the tip of my tongue.” Perhaps next week we’ll do a poll for these and others.

• Marc Rich: trading genius and traitor?

• Sumner Redstone: everything is an antitrust lawsuit (and everything comes back to real estate)

• Kirk Kerkorian: value investing autodidact

• Floyd Odlum: from momentum to deep value, a recipe for every season

• Interpreting 1987: how investment legends responded to a non-fundamental sell-off

• Learning how to network from Michael Milken: if you ask how you can be helpful, you’re already doing it wrong.

There are plenty of others to explore, from Bernard Arnault to Richard Rainwater, from Sir Michael Moritz to Carl Icahn, from David Geffen to Li Ka-Shing. But let’s take it one day at a time.

Until next time!