The Predators' Ball/High Steppers, Fallen Angels, & Lollipops
Jackall, Robert
THOSE GIANT APPETITES THE PREDATORS' BALL the Junk Bond Raiders and the Man Who Staked Them Connie Bruck Simon and Schuster, $19.95, 385 pp. HKH STEPPERS, FALLEN AHGELS, & LOLLIPOPS Wall...
...Taken together, these books provide some intriguing views of a key occupational community in our society...
...Their insatiable ambition to be industrial statesmen serves Drexel and Milken by creating pressure in the market on virtually any.company whose stock is undervalued...
...Drexel's and Milken's saga may be a parable for our perilous economic times...
...Once in this game, one continues to buy new junk offerings from Milken or one runs the risk of being cut out of future lucrative deals...
...Perhaps Drexel and Milken, with brilliant efficiency, have simply mastered the institutional logic of our economic system and taken it to an expedient conclusion...
...So, many managers prefer to purchase other companies rather than refurbish their own declining assets, run down by years of trimming costs...
...The current watchword in American business is: "It is cheaper to buy than to rebuild...
...Both Drexel and Milken have fallen on hard legal times...
...But Milken and his associates: reject such a dim view...
...Fellow Wall Streeters have also directed considerable animosity toward Drexel and Milken...
...Wall Streeters pit themselves day after day against a chaotic and unpredictable market and they look for whatever edge they can get to beat the next guy to a trade...
...attention to stockholders' rightful claims...
...Big institutional investors now dominate our financial markets, often causing wild swings in valuation with their' 'quick in, quick out" philosophy...
...HKH STEPPERS, FALLEN AHGELS, & LOLLIPOPS Wall Street Slang Kathleen Odean Dodd, Mead, $17.95, 212 pp...
...One to smash the bulb with a baseball bat and one to find buyers for the fragments...
...In December 1988, Drexel agreed to plead guilty to six felony counts for fraud of various sorts...
...And, according to Odean, a key maxim of professional investors is: "The public is always wrong...
...Robert Jackall The Predators' Ball describes the ascendancy of Drexel Burnham Lambert, the investment firm that transformed capital markets in the last decade with high yield "junk" bonds...
...The best section of Bruck's otherwise poorly written and sloppily edited volume is entitled "Pawns Capture Kings...
...And one need only reflect briefly on the history of the Robber Barons, to whom some of Milken's associates like to compare themselves, to recall that today's moral depredations can easily become tomorrow's standard operating procedures...
...More and more firms can thus/come "into play," that is, become vulnerable...
...In three long chapters, admirable for their tenacious unraveling of extremely complicated transactions, Bruck details a series of hostile takeover bids by what one of her informants calls Milken's "monsters...
...Such ancient hostility against arrivistes is now coupled with an aggressive moralism, judging from publications like the Wall Street Journal and Barron's...
...One firm's legal problems are another firm's potential bonanza...
...Q. How many investment bankers does it take to change a light bulb...
...One might even become a target of another of Milken's monsters...
...Only a few American businesses regularly distinguish themselves with concern for workers or for local communities...
...In its heyday, Drexel saw itself, and was seen by others, as a brawling intruder into Wall Street's cozy "white shoe" world...
...As it happens, the many sermons, and the occasional outright gloating, about Drexel's current troubles do not seem to have deterred grabs for Drexel's share of the mergers and acquisition market, Wall Street's current big ticket item...
...Perhaps with this longer view in mind, Drexel has launched a crisis management program, complete with extensive advertising and public relations campaigns, to enlighten public opinion about the wonders of junk bonds...
...Staggering debt, private as well as public, has become a hallmark of the American economy...
...The book's title refers to Drexel's annual gathering of old and prospective clients, including Milken's loyal circle of associates in the corporate takeover wars of the 1980s...
...Odean's analysis is instructive here...
...She notes that the key metaphors of the Street are those of "dominance, violence, sex, gambling, and uncleanliness...
...In fact, the main point of acquisition is a big payday gained by "busting up" companies, selling off pieces in order to "pay down" the debt entailed by purchase...
...Kathleen Odean's Highsteppers, Fallen Angels, & Lollipops is an analytic lexicon of Wall Street's linguistic folklore...
...These are men like Nelson Peltz, Peter May, Victor Posner, and Ron Perelman who, emboldened by the financial power of junk bonds, buy companies principally for use as staging arenas to make runs at still bigger targets...
...They see them' * selves as avenging angels, forcing fat and indolent American managers to pay...
...The whole game works only because of Milken's ability to place the debt incurred by giant takeover bids with his "daisy chain" of cronies...
...indictments against Milken on similar charges are expected any day...
...A. Two...
...Journalist Connie Bruck's book focuses in particular on the remarkable career of Michael Milken, the "junk bond king," whose financial wizardry has been the money machine behind Drexel's success...
...If all goes well, one can get the "crown jewel" of a company-its most profitable enterprise, preferably with lots of cash flow-for free...
...With some exceptions, these would-be industrialists do not buy big companies in order to operate them...
...In her witty and entertaining book, Odean reports a joke that suggests corporate sentiment about the financial backers of "bust-up artists...
...Business managers live and die in the short term and, more'often than not, will take the money and run...
Vol. 116 • February 1989 • No. 4
