Carl Icahn: "I Fired 12 Floors of People"

you know for example right now you're you're going after AIG we can talk about it but one of the things you want to do is break that company up I assume that you want to own that company only for the period of which it would be that it would get broken up and then you'd want to leave no not necessarily sometimes a lot of times but you talk about activists list let's go for the first one I still own it 31 years ACF but let me tell you a little story about ACF and I know mine listen a few minutes you have your drinks a few minutes later for something but I'll tell you the fast little story here so I was a kid you know 31 years ago compared to today and I see this ACF and I'm I'm a workaholic and I keep working on companies I see this company sells for 30 bucks and I'm looking at the rail cause they own and I look at all the stuff that they got they don't make any money and I look at the you know I'm an old Graham and Dodd guy I still AM and and you look and say this is so cheap so I think all the money I made by that time had I you know it you know I had a fair amount of money I mean nothing like today I guess but enough to you know put in four or five hundred million or borrowing or whatever I did and I bought a lot of the stock so now we're going in and we're saying you know this is so cheap it's 30 bucks and he kind of all this assets they're not making any money but what the hell so I finally get controlled the company I get the company and now I go in and you know I'm a good math guy I don't believe in micromanage II so I meet the CEO and he psalmist I think I would love to have you I mean we had after a bit of fight we still love to have you aboard you know people boom I said great let's be friends so they manufacture rail cars I won't bore you with the details but they and they had a lot of companies and in the rail car business the secret is very simple that you make rail cause but the government wants to ascent a visor so the government says okay you get in other words you can depreciate the rail car over five six seven years but you can keep it for 40 years so you get this great depreciation so it's great tax incentive so that secret is you got to make money though to use the tax benefits right so these guys kept buying companies and every company they bought they lost money so that's what it was the real problem so now we go and they got 12 floors on 3rd Avenue when realist that was pretty good I was earlier and I say okay you are the guys at least the rail cause you're the guys that do all the dog work and that's a true story and it's sort of amazing but it still applies a lot to today maybe not as much well pretty much as much you're gonna you're gonna listen to this it's hard to believe I know so I go in and I you know a good math guy it was good enough as guys a good poker player I'm gonna go understand what they do so it's a mist icon take the go to the 12th floor we go to the 12th floor right at the yellow pad and they try and explain and I bye bye and you do this and these guys do this these guys do that I go to the seventh floor who got spending the whole day go home take a look at my yellow pad I can't figure out what the hell they do so I go back the next day and on the seventh floor a ninth floor eighth floor a boo boo boy and I say I'm not an idiot I can't figure out what the hell they do it's like razzle dazzle this guy does that and I study us for what do you need him to do that oh this is very arcane stuff you're not gonna understand it I say okay fine so finally I say to him I'm going to st. Louis I want to see the guy who's the CEO oh I want to see the guy that manages the stuff that makes the rail cars here don't go mr. Icahn don't go so I say well why should I go he said this scare to you I said what do you mean scared where did I do he said man they depend on us they depend on us and we tell them what to do and they are very worried that you might do something with us that's what I'm not threatening to do anything but I'd like to see her but don't go so I go back eight for ninth floor seventh floor boom go back home can't figure out what the hell's going on so I said screw these guys so I called the guy his name is Joe in st. Louis is it look Joe I want to come see see of course but it's like I'd love to see it I said do me a favor don't tell the CEO I'm coming I just want to come myself and talk to you but don't get nervous about anything is why should I be nervous I said like just got Joe it's like a John Wayne character he was a captain in the Marines a tough guy I was scared of him and and and and I and I'm sitting there looking at him good talking and we'll laughing and he's showing me stuff I understand what he does is there so that boom boom bah so I said I want to have a drink with him so we go out and have a drink and we're sitting there having a martini the two of us I said Joe when he asked you something I don't want you to think that he intends to do anything because I don't want you to be nervous you know why should I be nervous I said I just want to tell you I can't I wouldn't know how many of those guys in New York you need to support your operation here because I honestly can't figure out what they do and he says I'll tell you what you should do I'll tell you how many supports I need I need minus 30 so I go I say Joe what the hell's that mean - 30 okay you don't have the balls to do it all tell you to do just like that so what's that get rid of all of them tomorrow get rid of all of them and only 30 people less that have to support them with the numbers that they don't need from me so so I go and I say hey it's unbelievable I can't believe this now today I would have done it immediately got rid of all bunch of 12 flaws but then I still was wondering you know maybe this guy's drove a little crazy you know how could I get rid of 12 floors of people so I figured how do I do that and be meanwhile I knew the guy who owned the building and he says you know Carl I could use the lease if you get out and I don't think these people do anything I watch him I think I said [ __ ] he's a real estate guy what the hell does he know so I now go and I figure what the hell do I do so this is a consultant around and you know cuz something's okay sometimes you know not too often but sometimes but I thought these guys had nice guys Columbia University at those days and they were the great leasing experts of the world you know we seen they do this for all these companies I call him in three guys come in and one is the professor Columbia and he says mr. Icahn we understand your problems very arcane I said yeah I heard that word before I really arcade so I say I want to know what they do don't worry about it three weeks we'll be back it's quarter of a million dollars I said okay I'll pay a quarter of a million come back in three weeks they come back in three weeks now this is sort of hard to believe and but it typifies America but people who don't [ __ ] who don't believe it comes back in three weeks would book like this big book you know boom boom boom yellow grabs grid grabs green grant I say hey I ain't gonna read this book I said and I'm colorblind anyway so so I say so I say all I want you to do here's a yellow pad I did very well in school I'm a numbers guy tell me what they do and I said here's your quarter of a million bucks so I give it to him and he looks at me he smiles he says you know something you've been square with us mr. Icahn you seem like a good guy so I'm gonna tell you something we don't know what they do either I'm not I'm not I'm not joking I am not joking but he is the funniest thing I mean it's really sort of funny I said screw it I called Joe up you know he comes over he's a great great do it I get I get in this severance nobody was mad got rid of the whole 12 floors sold the lease for ten million dollars that's was a lot that and and and if you shut down a grocery store let's say you're born a grocery store shut it down you'd hear from somebody you know somebody didn't get the apples right you know somebody the pears were rotting or something if you had a flower shot the you know the roses wilted it was like out of a science fiction movie it's like they never existed I never got a letter I never got anybody calling me it's they left it was it was like an EB one of those bombs you know it just hit the thing and you know kills all the people and the building stays I but but I follow I follow those principles a lot of what I do do very many companies there are very many companies we are and it's nobody's fault really but it's just the CEO doesn't care he's making a lot of money and today it's very dangerous because a lot of these mediocre companies are borrowing money and they're borrowing money very cheaply and that's what theoretically makes the earnings that I think are very questionable [Music]

Channel: Investor Talk

Views: 475,068

Rating: 4.8155265 out of 5

Keywords: Carl Ichan, Investments, Business, Long Term, Short Term, Stocks, Bonds, Activist, Activism

Id: WSatPoD2W-o

Length: 8min 35sec (515 seconds)

Published: Fri Aug 23 2019

Reddit Comments

[u/TFWnoLTR]

I work in commercial office space leasing myself, so this was really cool to listen to. I've dealt with a few tenants who seem to be staffed with people who do nothing but eat money and overcomplicate simple processes.

Like I have this one right now who are trying to move into a nice space of ours, and getting a design specified by them is like pulling teeth because they have 8 teams of 4 to 12 people working on it and communicating with me through their real estate agent. They hold about 6 hours of conference calls a week and often try and get me in on them. I stopped after the first meeting. It's been 4 months since the lease was signed and we just got their approval on plans this week, and I guarantee there will be tons of costly changes and in the end they will complain that it's my fault it wasn't delivered on time and within the budget.

Mind you this is a very small office we are building for them to lease. Like maybe 18 or 20 people will be working in it. I've done offices dozens of times that size with hundreds of people working in them and only had to deal with one or two people who made all decisions and we had hammers swinging within 4 weeks of the lease being signed.

Some companies waste tons of money on flashy corporatism. My employers own at least several million square feet in commercial property, all being operated by about 5 managers with unique responsibilities, including myself, 3 accountants, and a handful of assistants. We handle our own construction and maintenance too. Capitalism can be inefficient too, but at least when it is it can change quickly and is incentivised to do so.

[u/patron_vectras]

A neutron bomb. Like a neutron bomb went off.

[u/tien1999]

QualityCapitalism ^{_^}