Mood: vegas lucky
Topic: "Hedge Fund Hippies" (3)
Frodo is a teller of tales and a great fan of the seemingly trivial. The trivial often reflect upon the times, and are determining variables in the behavior of those who tell the tales. Frodo can name the sponsors of "The Howdy Doody Show," simply because he watched every one of the commercials for "Tootsie Roll Pops" and "Wonder Bread" whenever Mr. Bluster and Princess Summerfallwinterspring appeared on his black-and-white. One of the marketing mavens of the day, previously referenced by Frodo, was Mr. Ron Popeil. Dear reader, remember him as the creative entrepreneur behind the "Veg-O-Matic" and the "Pocket Fisherman?" Well, it seems that Ron is back in the news, and his return illuminates the shadowy world of high finance aand privileged investment.
Ron Popeil started his business in 1958, often appearing in late night TV advertisements himself. He sold his company, Ronco, for $56 Million in 2005 to a group of private investors ("private equity" as it is known) headed by a Mr. Richard Allen, who was advised on the purchase by the TEXAS-based investment bank SMH (which was probably Mr. Allen's first mistake, giving credence to a bunch of formerly drunken "Hook 'em Horns" frat boys from the worst state university not a member of the Southeastern Conference). In court papers Allen alleged that the investment bankers had neglected to advise him that Ronco only had $250,000 in cash at the time of the sale (free advice from Frodo to Mr. Allen, did you ever consider asking?). Allen further alleged that the investment bank then named one of its' own partners, John Reiland, as CEO of Ronco, in order to "cover up" their lack of due diligence in recommending the sale. Allen, it should be noted, had been CEO when the sale was completed, but the rest of the investors got together and canned him, thus naming Reiland to the post.
Ronco filed for Chapter XI bankruptcy last month. Another private equity firm, Marlin Equity Partners, has agreed to acquire the assets of Ronco at auction for $10 Million. Roughly speaking, this means that Allen and his former friends lost almost $50 Million because they bought a company that was unable to either dice vegetables or catch fish.
Frodo notes a certain similarity to a group of greedy TEXANS who felt they would be greeted like heroes, and whose expenses would be covered by the sale of the oil that was liberated from prior management. The losses in this case however, are in the billions of dollars, and in thousands of lives.
Why would anyone take advice from a TEXAN?