Small investors are in danger of getting screwed, thanks to big activists, their Twitter accounts and the business media that cover them, says Doug Kass of Seabreeze Partners.
This summer, activists such as Carl Icahn, Dan Loeb and Bill Ackman have been hogging the financial headlines and brawling over stocks such as Dell, Apple, Sony, JCPenney and Herbalife, mostly to their own benefit.
Kass tells On the Money he’s concerned we’re headed back to the go-go days of 2006-07, when business-news outlets helped pump stocks and the media failed to provide a check on the market that small investors needed.
CNBC contributor Kass, who attended Warren Buffett’s recent gabfest to throw a few curveballs at Berkshire Hathaway, casts his net wide and says we’re all guilty.
He was particularly irked about the reporting surrounding Icahn’s Apple position, which helped push up the stock, and he was disappointed by outsize coverage of Omega Advisors’ 31,000-share Apple buy this quarter.
“My criticism is of the entire media business. The reason I point this out is because the small investor piles in when Apple is up 10 percent. It’s caveat emptor, but the poor lemmings pay top dollar.”
Kass went so far as to email CNBC’s “Halftime Report” host, Scott Wapner, who’s been in the thick of things, to complain about the coverage.
Omega boss Leon Cooperman was on the air last week discussing his view that Apple stock was cheap.
Kass blasted Wapner with an email headlined: “Lee purchased only 31,000 shares of APPLE!” He wrote: “I think your emphasis on Apple/Omega is hyperbolic and in the interests of good reporting you should quantify the importance of his Apple buy.”
Kass says he’d like to see reporters show how significant — or insignificant — such positions really are when viewed against the backdrop of total funds under management.
“They should say, we advise investors to be careful after Apple shares appreciated.”
He added: “That is the obligation of the media business.
“The job is not to regurgitate the headline, but to provide additional information to the retailer. These activists have learned how to basically manipulate the news purveyors and it’s a very dangerous thing. It’s good for people’s careers and you all do it to gain favor without thinking about it. This is a very important story.” –Claire Atkinson
Cider show
Wölffer Estate Vineyard in Sagaponack is renowned internationally for its rosé.
Now they are entering the lucrative hard cider market for the first time in the company’s history.
The cider market is hugely popular in the UK and has been growing in the US in recent years, with sales up 25 percent in 2011. And the top 10 producers grew 62 percent in 2012.
Wölffer, whose fans include Christie Brinkley, Brooke Shields and Sarah Jessica Parker, announced its cider plans Thursday.
Joey Wölffer, a co-owner, says the cider will be drier and more natural than commercial ciders, and will use the company’s existing equipment, knowledge and experience.
“It’s a huge departure for the winery,” she says, adding that Wölffer is targeting women, since 50 percent of cider drinkers are female.
Wölffer will produce two ciders, a white and a rosé, made from apples grown at Halsey Farm Apples in the Hamptons.
Wölffer’s sales have more than doubled since 2006, from 12,000 to 25,000 wine cases. Since 2008, revenue has jumped 49 percent, leading to an increase in profits of 52 percent. The biggest seller is its rosé, at $16 for a 750ml bottle.
The cider will sell for $4 retail, and a four pack will be $16.–Julie Earle-Levine
Well suited
New York is the fastest-growing market for Suit Supply, founded and owned by Dutch entrepreneur Fokke de Jong. To complement its Soho flagship store, the company is about to open an 8,000 square-foot space on 59th Street and Madison Avenue.
The company competes with J.Crew and other bespoke suit makers, but it has created its own niche, with quality Italian-fabric suits starting at $359.
The company does everything in-house: designing, manufacturing and selling.
Its hallmark is unusual locations: Downtown, it’s a loft space; in Chicago, a penthouse. Suit Supply also has stores in Seattle, Philadelphia, Atlanta and Las Vegas.
De Jong started the company out of his dorm room. He launched it with $10,000 and sold suits out of his car.
He says sales have been growing at 35 to 40 percent each year, and the company has revenues of more than $100 million.–Julie Earle-Levine