Following up on the bigger they are, the harder they fall micro-meme:Former presidential candidate and billionaire H. Ross Perot’s family office is being sued by J.P. Morgan to the tune of three-quarters of a billion dollars. The problem – withering collateral against derivative contracts.Media mogul Sumner Redstone is dumping assets to pay off creditors. The problem – piles of debt on top of slumping asset values (and the whopping hundred grand effort from the Midway sale makes it appear like someone is expecting a bailout too).Hedge fund manager Paul Tudor Jones’s flagship BVI Global Fund Ltd. is freezing withdrawals and splitting in two. The problem – highly illiquid emerging market securities brought on by the credit crunch and plummeting commodities prices.Former investment bank Goldman Sachs is posting big losses. The problem – a non-existent M & A marketplace combined with a proprietary trading businesses that is beginning to look like Global Alpha.
None of the above mentioned are going to have a problem putting food on the table anytime soon. Still, where would I place my bets?
Perot and Sumner dry up. For Perot it will be the much vaunted taste for municipal finance countered by a non-existent political profile, while in Sumner’s case it will be simple over-leverage in a dying industry. Meanwhile, Paul T. Jones and Goldman will become big winners as their ships right themselves. Their own bets are in – only time stands in their way, and that’s something they can both buy using planning and action (and a smattering of goodwill) as collateral.