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Thread: Vulture Capatialism Affects Delphi And Cabelas...

  1. #1
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    Vulture Capatialism Affects Delphi And Cabelas...

    Some of you may know more of if this is correct or how bad it was...

    FNC's Carlson Rips 'Vicious' Billionaire Paul Singer for 'Vulture Capitalism' Tactics

    During his Tuesday broadcast of Fox News Channel’s “Tucker Carlson Tonight,” host Tucker Carlson took a highly critical look at billionaire hedge fund manager and political financier Paul Singer’s practices, which have made him a wealthy man.


    Carlson reminded viewers of the circumstances throughout the country in an age where the industrial sector thrived but now barely resembles that era.


    What has led to that, according to the Fox News host, is, in part, Singer’s practice of purchasing distressed companies, remaking them in a way that includes outsourcing the labor and selling them at a profit but at the expense of a company’s original employees.


    “[T]he model is ruthless economic efficiency: Buy a distressed company, outsource the jobs, liquidate the valuable assets, fire middle management, and once the smoke has cleared, dump what remains to the highest bidder, often in Asia,” Carlson explained. “It has happened around the country. It has made a small number of people phenomenally rich. One of them is a New York-based hedge fund manager called Paul Singer, who, according to Forbes, has amassed a personal fortune of more than $3 billion.”


    Carlson offered automotive parts supplier Delphi as an example.
    “During the last financial crisis, a consortium of hedge funds, including Singer’s Elliott Management, purchased Delphi,” he said. “With Singer and the other funds at the helm, the company took billions of dollars in government bailouts. Obama’s auto-czar compared the tactics to extortion. Once they had the bailout money, the funds moved most of Delphi’s jobs overseas, and then either cut retiree pensions entirely or shifted the costs to taxpayers.”


    “With lighter financial commitments at home and cheap factories abroad, Delphi’s stock soared,” he continued. “According to investigative reporter Greg Palast, of the 29 Delphi plants in operation when the hedge funds started buying Delphi debt, only four were still operating in the United States by 2012. Tens of thousands of unionized and white-collar workers lost their jobs. Paul Singer’s hedge fund cashed out for more than a billion dollars.”


    Another example that Carlson highlighted was Singer’s involvement with outdoors retailer Cabela’s and how Singer’s practices decimated the town of Sidney, NE.


    “In October 2015, Singer’s hedge fund disclosed an 11% stake in Cabela’s and set about pushing the board to sell the company,” he said. “Cabela’s management, fearing a long and costly fight with Singer, announced it would look for a buyer. At the time, Cabela’s was healthy. The company was posting nearly $2 billion a year in gross profits, off $4 billion in revenue. There was no immediate need to sell. But they did anyway.

    One year after Singer entered the equation, Bass Pro Shops announced the purchase of Cabela’s. The company’s stock price surged. Within a week, Singer cashed out. He’d bought the stock for $38 a share. He sold it for $63. His hedge fund made at least $90 million upfront, and likely more over time.”


    But in Sidney, Nebraska, it was a very different story,” Carlson continued. “The residents of Sidney didn’t get rich. Just the opposite. Their community was destroyed. The town lost nearly 2,000 jobs. A heartbreakingly familiar cascade began: people left, property values collapsed, and then people couldn’t leave. They were trapped there.

    One of the last thriving small towns in America went under. We recently sent two producers to Sidney, to survey the wreckage and consider what happened. Our producers talked to more than a dozen former Cabela’s employees. Almost all of them refused to speak on camera, fearful of legal retribution from the famously vicious Paul Singer.”

    https://www.breitbart.com/the-media/...alism-tactics/

  2. #2
    Grandmaster eldirector's Avatar

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    So.. buy low and sell high? Good thing or bad thing?
    Ryan "ElDirector"


  3. #3
    Expert indyartisan's Avatar

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    I heard he started out flipping firearms in the classifieds.

  4. #4
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    Quote Originally Posted by eldirector View Post
    So.. buy low and sell high? Good thing or bad thing?
    Not a thing wrong with that. Market manipulation is an issue to me, there is a difference.

    If three people own a company and need money so 15% is sold to another party to help cash flow. The 15% owner creates an issue with suppliers or customers to force the others to sell. Probably to simple, but is that capitalism or market manipulation?

  5. #5
    Master spencer rifle's Avatar

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    Buy low > pass off expenses to taxpayers > sell high.
    Rights are only as secure as the ability to wield sufficient force to defend them. - J. Neil Schulman

    “There's nothing wrong with the country a bad recession couldn't fix.” - Irving Kristol

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  6. #6
    Grandmaster Leadeye's Avatar

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    Quote Originally Posted by spencer rifle View Post
    Buy low > pass off expenses to taxpayers > sell high.
    This works when you can get friends in government involved, bailout money and pushing pensions on to PBGC, I would imagine that there were government players or their law/lobby go between guys that cashed in as well to make this work. I've watched companies die over the years from poor management, getting to the point where sharp well heeled operators can do what this guy does. Part of the trick is working to keep from getting in that position and having some top brass with a spine.
    Where's the Kaboom? There was supposed to be an earth shattering Kaboom.

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  7. #7
    Grandmaster ATOMonkey's Avatar

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    I don't see anything illegal or unethical about cashing out a failing business. Especially if someone is dumb enough to buy it after you've gutted it.

  8. #8
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    Quote Originally Posted by Ingomike View Post
    Market manipulation is an issue to me, there is a difference.

    If three people own a company and need money so 15% is sold to another party to help cash flow. The 15% owner creates an issue with suppliers or customers to force the others to sell. Probably to simple, but is that capitalism or market manipulation?
    Quote Originally Posted by ATOMonkey View Post
    I don't see anything illegal or unethical about cashing out a failing business. Especially if someone is dumb enough to buy it after you've gutted it.
    So you support market and finance manipulation because it is part of unbridled capitalism?

  9. #9
    Grandmaster HoughMade's Avatar

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    The only problem I see here is the gvt. bailout and it's lack of terms. The solution is either don't have bailouts or if you are going to persist down the bailout road, there have to be terms that prevent bailout money from, indirectly, funding outsourcing.

    Personally, I prefer the less-government option.

    As far as the concept of "vulture capitalism"....why do we hate freedom? Get the government out and if it still happens, well, that's tough and all, but business cycles gonna cycle.

    I suppose the government could step in and tell every company what it can and can't do on every decision...
    Last edited by HoughMade; 12-04-2019 at 15:03.
    ​Bullies suck. They also make you stronger.

  10. #10
    Grandmaster ATOMonkey's Avatar

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    Quote Originally Posted by Ingomike View Post
    So you support market and finance manipulation because it is part of unbridled capitalism?
    It's not manipulation. Everything is fully disclosed.

    The only reason this can happen is because these companies are already failing or have failed. Vulture is a very apt term, because someone can swoop in and take what's useful off the carcass that someone else killed.

    Delphi died because upper management mortgaged the future for temporary bonuses and then took off. Cabela's died because they priced everything 150% too high for some damn reason.

    In both cases the companies were drowning in read ink and were borrowing money to make payroll. All those jobs would have been lost regardless.

    Now, if you want to make a case that governments shouldn't interfere with capitalism, I won't get in the way of that.


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