YouSaid · the spoken record

Jeff Gramm

lines on the record: 109
first: 2016-08-19
most recent: 2016-08-19
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“That was it, and it kind of showed them well, we have created a monster. And from that point on, the big institutions began to get engaged and they began to pay attention, they began to devote their proxies with a lot more thought. And that has in a funny way, it's empowered these activists because if you do have ideas like that resonate with investors or if you want to push for a CEO to be fired and the people like at Cowper's, well, maybe they're not as comfortable, you know, will publicly asking for someone to be fired, but well, maybe they think that they need to go, they support a lot of these activist campaigns. And so, like, you know, this empowerment of the activist, a lot of that is about the resolve of the big passive institutions.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Even for GM. Yeah, to resign from the board of directors. And so they're paying this guy who they view as the most engaged and best director. To leave”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“These people, like you have green mail Which really was pretty blatant in it will mistreatment of public shareholders. Like if you're a company and you buy out a loud and troublesome shareholder for a big premium over everyone else just to make them go away, you're clearly disservicing your shareholders. And then you had Ross Perot happen. And with Ross Perot, you know, GM. Like, is undergoing a few decades of decline. It's very public. Everyone knows that they're beginning to fall behind the Japanese. And their shareholder base are these big institutions that have been in GM forever, and they see GM pay Ross Perot three quarters of a billion dollars. That's a lot.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“The big mutual funds, the big pension funds. And there's a real turning point in the 1980s because you have the corporate raiders.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So Sure. Well, you had a period, you know, from the 60s until the 80s where a share ownership in the country had reconcentrated, you know, but into the hands of these big institutions. And the big institutions were not that engaged. They were not that involved at the moment.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. But Dan Loeb, you know, well, nowadays, first of all, I mean, he doesn't even do that much activism. And when he does it, he'll still do a public letter. But he knows that he needs to build consensus among the big institutions. Well, not the way that things in the 1990s were. And that was more a product of those times.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That. Well, at that time, there were lots of them, and he was not even the first one. Like, the first guy that really did that was like this crazy guy named Bob Chapman. And I mean, at that time, it worked because, you know, no one else was paying attention to these hedge funds. How to be shocking to get a letter like that. You know, I mean, you know, they didn't have the capital to just buy enough shares to replace You get to 5%.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it worked then because it got people's attention. It gave him a reputation that directors would be afraid of. But ultimately it also compels the management to circle their wagons. And well, nowadays it's not necessary because activism from hedge funds is credible. And so what you will really need to do is convince the vanguards and the cowpers of the world that your ideas are right. and doing that Well, is not about, you know, we're calling out the CEO's mom, you know? Which.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Just the dry powder available to them. Yeah. And so for them to get the attention of the board, they tried a whole bunch of different tactics. But the one that Loeb used was what I call the shame-driven activist. Where he needs to get the attention of the other shareholders, of the board of directors and of the management team. And he did it through town hangings and public shamings.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, since the late 60s Well, I think about like the beginning of the kind of activist shareholders as more beginning in the 90s And what you had there was, you know, like you had a period in the 80s where these activists had lots of power, like the corporate raiders. They ultimately had cash because of Michael Milken. And by the 90s and the 2000s, like the activists. They no longer have Michael Milken.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think that was a little bit of a product of the time, so you had to put To put yourself in the late 1990s and the early aughts, like the hedge fund business is a new industry. It has not been around that long. It doesn't have a lot of credibility. You've just had...”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm originally the book was just going to be a collection of letters and not necessarily all shareholder activism and not all financial activism. So like I looked at some PETA letters and the gadflies and I looked at the enranwan and ultimately.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Know, I want to say Tiffany something Tiffany Watkins or something, but it was like who worked in the accounts. And like I actually looked at that for inclusion in the book. I mean, I looked at a lot of these, you know,”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Always been. It's not, yeah, like it is like the way it is. Like, you're pretty adjustable as it is. And you're kind of completely self absorbed anyway. So, like, you don't will have the perspective to understand that. Like, well, surely people are going to talk about that my mom was on the board of Enron. Right.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Dark glasses Yeah. Well, it's been funny. I mean, at that time, when you're in college or a kid, A, like, you know, like you're.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know. I mean, even if you lose, like, do people really know much about Bob Dole's kids or, well, Mitt Romney's kids? I'm not sure they really do.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's a funny situation because I think in today's world, you realize if someone emails you a chain email, you probably are going to skim that chain. Of course. Arthur is not a hippie skimmed out. And I'm like, huh? Like, do I pretend I didn't see this? Well, no, just like replied all like, hey, will none taken”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. And those entities have basically fallen into the situation. They are effectively the arbiters of these hedge fund activist disputes. And so like, yeah, like you'll see Bill Ackman in the headlines on Canadian Pacific or something, but the people that hold the votes are these big pension funds and vanguard behind the scenes. And their vote is incredibly important. And so they are very, you know, I mean, you know, they're more engaged than people think in these issues, especially at the bigger cap companies.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. So, I mean, like the big dynamic that you see in this book is that the history of activism has been sculpted by this concentration in institutional investors that really began in the 60s with the big pension funds. But then... Kind of got kicked into HyperDrive with the index funds and indexation, which is, you know, Vanguard is a pretty old company, but this is a pretty recent phenomenon. I mean, even since the financial crisis, like you've seen a dramatic increase. And like in these big Passive institution BlackRock State. It's not just Vanguard. It's a whole run of stuff.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the book is about this activitable movement. It's about how we got there. It's about how it happened. And ultimately, in activist is a financial investor, we're trying to make a profit on their investment in the company. And the way that those guys all do it has changed over time because of a lot of external factors, but ultimately at their core, they are still these economic actors out to make a buck. And I think it's important as we look at this history and as like we understand how public companies work. You know, will people tend to focus a lot on the personalities of the activists and will Bill Ackman and David Einhorn, but a lot of the movement that you're seeing now is driven by the behind-the-scenes passive investors, the people like Vanguard or the big pension funds”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and so you know their incentives, like you know that Icon wants the stock to go up, and you know the management probably wants that $200 billion to play with or like to do whatever they want with. Like you as the shareholder. It's not just completely obvious who's right and who's wrong there, and it depends on your long-term view of the company and your view of the valuation.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“But, I mean, is he clearly wrong? I mean, if you believe in the business will long term, if you believe in the management, is he wrong to say, look, you're crazy. I mean, you know, you're crazily overcapitalized. Perhaps you should buy back some shares. Right. It's unique. It's unique in the history.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, they're in a very hard commodity business and they've built what will right now is the most viable company in the world. That's an insane achievement, right? Not only not only”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Like they do have to have this confidence that their ideas are right, even when they do tend to have less information. But it's not always black and white. Like, I mean, even in that Carl Icon case, like on the one hand, like you have. The most successful company in history, arguably, like, I mean, like they're in.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I think that's the whole issue is that ultimately it takes a lot of hubris. Because as investors, we are working off of extremely limited information. We know less than the board and the management knows about the business often. And so”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“No. And lots of times, like if you're a passive shareholder and there's an activist, like the activists wants to sell the company. And So you're deciding who's right here”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think in the ideal world, like you want the activist, shareholders long-term oriented and you do want them all to work together. It doesn't always happen.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, in the proxy tier era, it evolved to a lot more operating issues and the kind of activism that you see today. I mean, I remember there was in the chapter in the book that's about the proxy fight for the New York Central, the activist even talks about like the nature of their passenger trains and that they needed to build a lightweight train. So things evolved pretty quickly I'm away from the pure financial activism.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I mean, in the very early days activism, I mean, if it was, you know, from a financial investor's, well, guys like Ben Graham, well, first of all, there was not that much of that. And second of all, it tended to always be about financial issues, financial disclosure. or capital allocation. And really, like you saw a beginning in the 1950s with the proxy tier movement, that was a very big shareholder activism movement.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, I guess Like the larger companies tend to have higher quality boards and they tend to be just like to have higher caliber CEOs and boards of directors. And that is both intuitive and counterintuitive because in some ways you would think, well, at these, you know, well nichy small companies, like you might have these CEOs who really know the business, you know, but generally the bigger the company, the stronger the board, I think.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that's true. And I mean, that was a statement that I made in the introduction of the book where, like, I'm kind of explaining who I am and explaining the voice of the book. And, you know, I'm a value investor. I look for cheap stocks. And especially in a market like today's, it's hard to find a cheap stock. And if you do find one, it's often because there's an issue with how they're run.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Dilutive. Yeah. You know, so we had to convince the board, know you're doing fine. If you need to raise capital, like you should do it from the stockholders. And by doing that in a public fashion, it also got the stockholders behind the idea.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. I mean, in a funny way, even though I wrote a book about it, the age of the dear chairman letter is kind of passing. Like you go meet with a management and you meet with the board and you have a conversation with him and you meet with the other shareholders. You know, back then you're more trying to persuade the shareholder base. And so at that time. Like the Denny's board was considering doing a restructuring to equitize their debt. And so we had to...”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, but exactly. I think I played a role in them not doing a restructuring in the early 2000s. So we basically, it was a cheap stock because it was highly overleveraged. And you rarely see this as often, but it was a situation where on an enterprise basis, the company was extremely undervalued, you know, where if you could delever it, then you could realize value. Yeah. Like, you know, that stuff tends to be a lot more priced in these days.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And they had tried to kind of expand their, like their luncheon dinner business and had neglected to advertise their breakfast business. It hurt their results.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's also just a more mature and process oriented business. I think that when I began in it, I was just out of business school. I didn't know what I was doing. And I got, and I mean, I wrote a 13D letter like a pretty big public company, the Dennys Corporation. The moon's over my hammy, people. And I just think that back then it was just like, you know, it was a little bit of a crazier time in the business, but they had had some problems.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, my first one was in the early 2000s at my very first job, you know, which was like the early years of the hedge fund business. And so it was like a little bit of a crazier, you know, more like the Wild West.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, ultimately, I think it probably has a lot in common with being a public company CEO in that you have to communicate your strategy. Explain to them exactly what you're doing, explain to them how you think about things. And so when things will do go wrong, if you have a bad quarter or a bad year, you know, they can understand it. And I think that is ultimately an important job of a public company CEO too. It's like you have to keep your shareholders informed about how you operate.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So Buffett in his early career, I mean, well, first of all, you know, he worked for Ben Graham. So he worked at the Graham Newman shop that did lots of proxy fights and did lots of activism. And when he began his own fun in the mid-1950s in Omaha, he also did lots like of buying big stakes in public companies, you know, joining the boards and ultimately breaking apart the companies or driving them to, you know, improve profits. And so he did buy lots of these declining mature undervalued businesses. If you look at Berkshire Hathaway, that's effectively what happened there. Like it was a terrible declining business, but it was a net net. He bought control of it. And he ultimately began to use their cash. Their declining cash flow to invest in other businesses.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And in the Ben Graham case, it's not clear that the Rockefellers even knew how cash rich the pipeline companies were. And so that's amazing. Like it opened their eyes to that.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, well, just that, like, their whole proxy fight, and this got, well, big news was just for them to disclose information better.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so when I did my book, I looked at all of the old proxy fights. And, you know, there were a few like, you know, like the central leather 1911 that had a very small article. I love the way that's a fascinating.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That the right thing to do here was to distribute this cash. And so not only did that happen at the Northern Pipeline Company, but after this episode, the Rockefellers pushed all of the other pipelines to return their excess cash.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I mean, it was a long sloga. So at first, like, they basically told him to go away. He takes the train all the way out, like, you know, to Pittsburgh for the annual meeting. And like, he tells them that he's prepared a statement. And they tell him, well, you're welcome to come. And he gets up to give this statement. And the chairman asks, you know, would you like to make a motion? And he says, oh, yes, I would like to motion to give my statement. And the chairman asks, well, is anyone here to second that motion? And he didn't bring anyone. And so no one seconded the motion. He had to go all the way back to New York. But by doing that, they really made him angry. And so by the next year, he was extremely prepared. He ran a whole proxy fight. He won the proxy fight. He behind the scenes threw a very good letter that's in my book. He ultimately convinced the Rockefellers”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It helped his returns. It taught him about activism and governance, and he did a lot of activism after that. But ultimately, it was not like the investors that you see today that will have a third of their fund in one stock, and then it's a big home run.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I think that ultimately he thought that he possibly could do that. But, you know, like the answer there was for them to return that cash. So he quietly bought all that he could until he reached his position limit.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so when they broke apart the monopoly. You know, like they had a whole bunch of public companies, there were eight pipeline companies. And, you know, by the 1920s, when Ben Graham began to poke around, all of these things, like were very overcapitalized, had these boards that were not that engaged. And then their biggest holder is the Rockefeller Foundation, who at the time had a policy to not get involved in the operations of their shareholdings.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, exactly. And, you know, like with Yahoo, there's a discount because of the tax problem. But there was also in that stock and lots of other stocks, there was a governance discount. And like with Northern Pipeline, he thought, well, this is easy. I'll go explain to this company. Hey, you guys, you have all this cash just like return it to the shareholders. We'll all retain our ownership in your good company and we'll go from there. And they showed him the door.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. And I mean, ultimately, when you find those situations, like, you know, the market, like it's not always dumb. Like a lot of times it has that valuation because of a governance problem. And very early in his career he found the Northern Pipeline Company that's in my book where it was trading in the mid-60s and he discovered that they had over $90 per share in liquid bonds.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I mean, a lot of the stocks that he bought were exceptionally cheap on a balance sheet basis, and he writes about that, you know, that he likes these net nets where the cash and the current assets exceed all the liabilities. Cloud.”
2016-08-19 · Masters in Business · Interview With Jeff Gramm: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source