Real Talk on Goldman Sachs, the Next “Warren Buffett,” and the FDA's Granola Problem

Oct 5 2017 | 12:59pm ET

Today, we dig into the FDA’s problem with “love,” the “next Warren Buffett,” Goldman Sachs’ gun stake, and how savvy activist investors outperform the market...

Quotes of the Day 

“We plan to exit this investment as soon as possible." 

That’s a spokesperson at Goldman Sachs. 

In the wake of the Las Vegas mass shooting, Axios's Dan Primack wrote an article titled "Following Private Equity's Gun Money."

The autho was talking gun investment divestitures after a weapon had been identified as being made by manufacturer Surefire. This firm raised private equity capital from Goldman Sachs and Broadside Partners about 10 years ago.

Goldman doesn't hold back after reports that Surefire's ammunition magazines were recovered in the shooter's hotel room.

Goldman says that they had invested in the company due to its position a decade ago as a government military supplier of illumination technology. Goldman says that it warned the company not to go into products outside of lighting.

"We stepped down from the board five years ago after they ignored our advice on this change in strategy and have tried to sell our stake repeatedly without success. We plan to exit this investment as soon as possible," Goldman said.

Axios writer Primack called around looking for others to comment, but he had little reception.

He has been writing about gun manufacturers since the Sandy Hook shooting.

The title of his 2012 Fortune article The Money Behind the Newtown Massacre effectively holds private equity managers and pension funds accountable for gun violence due to their investing in the companies that produce weapons.

As we noted in Modern Trader's "The Issue with Guns," gun manufacturers were two of the top performing stocks on the S&P stocks during President Obama's two terms, and boycott, divestiture, and sanctions (BDS) efforts have very limited impact on a company's stock performance anywhere it has been tried.

[Read more here]

"'Love' is not a common or usual name of an ingredient, and is considered to be intervening material because it is not part of the common or usual name of the ingredient.”

That is the Food and Drug Administration… 

(And the reason why we drink.) 

The FDA had to take a bakery to task for listing the word “Love” among their ingredients for granola. Even more outlandish is that the company had to issue a statement saying that it is fully cooperating with the agency's investigation.

We suppose it is a slippery slope. 

“Seth Klarman, the value investing giant who draws comparisons to Warren Buffett, has a very large position in Puerto Rico's controversial debt.”

That’s CNBC, making a really big deal about the fact that Klarman’s hedge fund owns $911 million in Puerto Rican bonds. The media has suggested that Klarman has been been engaging in a covert operation to hide his sizeable position. 

But let's get to the real meat of this sentence from CNBC writer Tae Kim.

Holy balls on a honey bear… how many times is a writer going to use the term “the next Warren Buffett” when talking about a hedge fund manager?

Why are editors pushing these comparisons? 

Don't the realize that the expectations are way too high and things always end in a terrific fireball?

Eddie Lampert, Michael Pearson, and Bill Ackman.

Each one of them received the moniker, and it was just a matter of time before something went awry. No one should vie for this title...

If anything, it’s a curse. 

Hedge Fund Reading List

Private Equity Reading List


Grab the Newsletter:

The Daily Alpha is published on FINalternatives

Signup here for the daily FINalternatives Newsletter, which includes the Daily Alpha. 

Follow @FINalternatives  Be sure to check out the award-winning Modern Trader and a very special offer for first-time readers and follow @moderntradermag. You can also pick up a copy of at Barnes & Noble.

Garrett Baldwin is the voice of the The Daily Alpha, the features editor for Modern Trader magazine, and the author of The Man with The Big Red Balloon.

In Depth

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...


CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...