Explaining Southern California's economy

Steven Cohen wants to buy the Dodgers, but people who worked for him keep getting arrested

MPR529/Flickr (Creative Commons-licensed)

One of the potential bidders for the Dodgers, due to be sold out of bankruptcy by April 30, is Steven Cohen, a secretive and monumentally successfully hedge fund billionaire. I've already written about how he made his money. I've also speculated on why he might want the Dodgers. What I haven't dealt with is that possibility that he could wind up in jail.

That's probably overstating the case. However, Cohen's firm, SAC Capital Advisors, has seen a number of former employees get in hot water with the Securities and Exchange Commission over insider trading. And the heat just got turned up a few notches. As part of an ongoing investigation into insider trading at hedge funds, the FBI has arrested three SAC Capital alumni (and they aren't the first to face prosecution). This is from CBNC's John Carney:

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Tom Barrack loses out on Summit deal, won't control studio that makes movies of his favorite 'Twilight' books

Twilight stars

AP Photo/Matt Sayles

Robert Pattinson, Left, Kristen Stewart, and Taylor Launter, right, arrive at the world premiere of "The Twilight Saga: Breaking Dawn - Part 1" on Monday, Nov. 14, 2011, in Los Angeles.

Lionsgate just announced that it's buying Summit Entertaiment, the studio that produces the popular "Twilight" movies, for $412.5 million. Not really hugely big news there, except that The Wrap is reporting that billionaire investor Tom Barrack's private-equity firm, Colony Capital, wanted Summit but dropped out of the bidding several weeks ago.

How can Barrack handle losing out on a chance to buy the studio that transformed the books he found...transformative! into movies? After all, it was the "Twilight" books that got Barrack through a dark night of the soul on a lonely yacht off the coast of Turkey.

I'm not making this up. The Wall Street Journal revealed all in 2010. The WSJ also ran the colorful memo that Barrack's "Twilight" experience compelled him to write to his employees.

Here's an extended taste:

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Who is Tom Barrack, the latest billionaire to covet the Dodgers?

Bill Shaikin of the LA Times is reporting that Tom Barrack, an LA-based billionaire real-estate investor, has joined the ever-expanding list of potential bidders for the Dodgers. The team was put into bankruptcy by embattled owner Frank McCourt and has to be sold to somebody by April 30.

Prospective somebodies include Rick Caruso and Joe Torre; Magic Johnson; Mark Cuban; and a furtive Connecticut hedge-fund billionaire, Steven Cohen

Barrack ads some new local flavor to the action. I feel obligated, however, to explain how the various Very Rich Men who are interested in owning the team made their money — and what that could tell us about how they'd run the Dodgers.

I've already tackled how Steven Cohen amassed his hedge-fund billions. Now I'll take a look at Barrack.

At base, the guy does real estate. From the helm of his $34-billion private-equity shop, Colony Capital in Santa Monica, Barrack manages this most debt-intensive of investments. His mojo is to zero in on "distressed" assets — properties that could be worth a lot more than their apparent face value and, being real estate, provide an obvious form of collateral to use for leverage — and, to put it simply, fix them up. This is from a New York Magazine profile of Barrack, a 63-year-old USC grad, that appeared in late 2010:

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