Harry Newton's In Search of The Perfect Investment
9:00 AM EST, Tuesday, September 9, 2008: Strange,
gamble: Shares of Washington Mutual (WaMu)
at around $4. Alan Fishman is my friend. He's good. If anyone can save WaMu,
it's Fishman. By
the way, Fishman is already rich. He doesn't need this. But knowing Alan, he's
doing it because he see it as a fun challenge, as solvable, and quick.
WaMu Snags Fishman
By PETER EAVIS, the Wall Street Journal
September 9, 2008; Page C14
of leading a bank as embattled as Washington Mutual out of a credit-crunch
crater deserves to get rich.
But new Chief
Executive Alan Fishman will have to perform miracles if he wants to make out
in his new gig. Mr. Fishman gets a signing bonus of $7.5 million. But even
bigger money is, rightly, tied to the performance of WaMu's stock and operations.
The latest hurdle:
WaMu announced Monday that it has entered a special supervisory agreement
with its regulator.
Mr. Fishman wouldn't have taken the job if he didn't think he could rescue
WaMu, which is sitting on a mortgage book that could, the company estimates,
end up showing $19 billion of losses.
strategy relies on earnings from the bank's healthy businesses, combined with
capital raised in April from private-equity firm TPG and other investors,
to absorb credit losses.
But the U.S.
housing market still is slumping. Losses could exceed the bank's expectations,
putting WaMu in a tight spot. Mr. Fishman could try raising new capital. But
an infusion would have to be large enough to convince participants that it
would put WaMu on permanently sound footing. And a large deal would be tough,
especially since TPG's protection against further equity sales could make
them very dilutive to other investors.
As a result,
Mr. Fishman might need to start talking to TPG about softening these provisions.
Of course, there
is a simpler strategy. Mr. Fishman could see whether J.P. Morgan Chase, which
tabled an $8-a-share bid for WaMu before the TPG deal, is still interested.
After all, $7.5 million wouldn't be bad for a few months on the job.
And from today's
Brooklynite Fishman, Industry Veteran, for Rebound
Sept. 9 (Bloomberg)
-- Washington Mutual Inc.'s effort to rebound from $19 billion in losses rests
on Alan Fishman, a lifelong New Yorker whose last banking job ended when he
sold his Brooklyn lender to WaMu's biggest rival.
moves to WaMu's Seattle headquarters after a 39-year career that began at
Chemical Bank and included a stint at beleaguered subprime lender ContiFinancial
Corp. from 1999 to 2000. Fishman sold Independence Community Bank Corp. to
Sovereign Bancorp for $3.6 billion in 2006.
WaMu's first new chief executive officer since ousted predecessor Kerry Killinger
took the reins in 1990, Fishman must reverse a 91 percent plunge in the stock
price that stemmed from WaMu's decision to wade into the subprime market.
He must also contend with heightened scrutiny after regulators told the lender
to boost risk management.
problem is really quite simple, but the problem is how the hell to get out
of it,'' said Charles Hamm, 71, who was succeeded by Fishman as CEO at Independence
in 2001 and played tennis with him in Brooklyn. "Whether the ultimate
resolution is a sale or liquidation I'm not sure. Alan is perfectly capable
of analyzing that.''
got off to a rocky start. WaMu shares lost as much as 24 percent yesterday
on concern its accord with the Office of Thrift Supervision will limit the
bank's ability to expand. The stock ended the day down 3.5 percent at $4.12.
win over investors including TPG Inc., the private-equity firm that led a
$7 billion cash infusion in April, only to watch as the stock price kept sliding.
TPG's investment has lost half its value.
his work cut out for him,'' said Gary Townsend, a former bank analyst and
co-founder of Hill-Townsend Capital Management in Chevy Chase, Maryland. ``He's
viewed as a turnaround person and I guess he can be. It's going to require
some assistance from the economy and then finally a willing buyer at some
chairman of Meridian Capital Group, said that while the bank faces losses
and regulatory issues, there are no plans to sell WaMu.
build a company to sell it,'' Fishman said in an interview late yesterday.
"The industry is fraught with this mess, not at WaMu but everywhere,
because a lot of guys were building to sell it.''
11th among subprime lenders in 2006, according to trade journal Inside Mortgage
Finance. The company said in July that rising delinquencies may lead to losses
of as much as $19 billion over the next 2 1/2 years.
his career at New York's Chemical Bank, now part of JPMorgan Chase & Co.,
in 1969 and worked there for 19 years. In 1992, he founded Columbia Financial
Partners LP, which specialized in buying and resurrecting financial-services
companies. While there, he became CEO of ContiFinancial, a subprime lender
close to insolvency, and helped guide it through bankruptcy in 2000.
Hamm, who was
approaching retirement, knew Fishman from philanthropic and business events
in Brooklyn where they both lived. At a gathering in 2000, Fishman told Hamm
that he would be interested in taking over as CEO of Independence, Hamm said.
He eventually won the job.
a near-perfect background personally, culturally, socially and businesswise
to do it,'' said Hamm.
Fishman orchestrated the $1.5 billion acquisition of Staten Island Bancorp
Inc., bolstering the bank's assets by 45 percent to $17 billion and adding
37 branches for a total of 116. Independence shares almost tripled from the
end of 2000 through June 2006 when Fishman sold the bank to Sovereign. Based
in Philadelphia, Sovereign is the second-biggest U.S. savings and loan, behind
real problem solver,'' said Robert Catell, 71, who was CEO of Brooklyn-based
KeySpan Corp. until it was bought by National Grid Plc last year. Catell was
on the Independence board and Fishman was a director at KeySpan. Catell said
they've known each other for 20 years.
worn tuxedos together many times,'' Catell said.
of the Brooklyn Academy of Music, Fishman has been involved in all of the
organization's major decisions over the past 10 years, including its plans
for future facility needs, said BAM President Karen Brooks Hopkins. He's co-chairman
of the Downtown Brooklyn Partnership, which coordinates growth and business
in for an energetic experience having Alan at the helm,'' Hopkins said of
he was approached by WaMu last month while on vacation in London. As he was
watching the Olympics, a WaMu representative called to ask if he would talk
to Chairman Stephen Frank. The deal was completed when he returned to the
my reputation in New York was that of a pretty straightforward CEO that had
taken a pretty quiet, small bank and made it a lot less quiet even in a market
like New York,'' Fishman said. "They looked at my age and said, `This
is a guy who should be mature enough to step into a very complex situation.'''
much for the commodities boom: Earlier
this year my commodities fund was up around 30%. Now it's up only 1.28% and
that's before fees, which will reduce it to 0%. The numbers below are weighted
based on how much they own of each. Cast your eyes down the list. You're get
a pretty good idea of what's happened to key commodities. This is bad news for
Harry. This is good news for companies which buy this stuff and use it to make
things. This is good news for inflation and the economy. Crude oil fell yesterday
$2.11 to $104.
Ranger and Tonto -- 2
The Lone Ranger and Tonto were holed up in the hills.
back from patrol, "Kemo Sabe, we are surrounded by hostile Indians."
The Lone Ranger
looks out and replies, "Looks like were done for for this time."
" What you mean we, White Man?"
Jonathan and Renee are on their very first date.
As they are walking to the cinema, Renee says, "If you give me a kiss,
Jonathan, I promise Ill be yours forever."
"Thanks for the early warning, Renee."
Aaron and Jonathan, two businessmen both in their 80s, meet one day in Brent
Cross shopping centre. Aaron asks, "So nu, Jonathan, whats new?"
"Vats new, you ask me?" replies Jonathan. "Mine secretary
is suing me for breach of promise."
"But I dont understand," says Aaron. "At your age, what
could you possibly promise her?"
This column is about my personal search for the perfect
investment. I don't give investment advice. For that you have to be registered
with regulatory authorities, which I am not. I am a reporter and an investor.
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reasons: Writing is good for sorting things out in my brain. Second, the column
is research for a book I'm writing called "In Search of the Perfect
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