Are You Smarter than a Multi-Billionaire?
Carl Icahn is probably worth as much as the collective net worth of my monthly readership. But none of us made as big a blunder as he did last year.
Palm Coast, Florida – December 11, 2008 – How do your real estate investment decisions stack up against those of the 18th richest American? Wouldn’t you think that someone worth $14.5 billion (that’s $14,500 million) would be sharper than we are? I’m talking about Carl Icahn. Among other roles, Icahn is the Chairman of WCI Communities. WCI developed the recent tower condominiums in Hammock Dunes (Palm Coast, FL). They were named America’s Best Builder in 2004 by the National Association of Home Builders and Builder magazine.
In early 2007, Icahn bought 14.5% of WCI Communities shares for about $16 per share and began a battle with the board to take more control of the company. In May 2007 he offered $22 per share for the remaining outstanding shares. The board’s response was negative. They claimed the shares were worth more. But a few months later, Icahn succeeded in gaining the board chairmanship.
What a difference a year makes. In August, WCI filed for Chapter 11 protection from creditors under the Federal Bankruptcy act. Shortly thereafter, their stock was de-listed by the NYSE and began trading on the "pink sheet."
According to a recent SEC filing, Icahn and associate sold 6,096,175 shares in a private transaction for a total of 2 cents (three-billionths of a cent each). The group still owns or beneficially controls 3,848 shares.
Icahn’s miscue makes me feel better. I joke (to maintain my sanity) when I tell people that I was able, with my acute analytical skills to determine the exact day the local real estate market reached its peak. That day was July 15, 2005, the same day I BOUGHT my last piece of investment property. And applying those same highly honed talents and the same methodology, I can state with certainty that the market hit bottom on March 6, 2008. I know this because that’s the day I SOLD my last piece of investment property.
I didn’t lose as much as Carl, but it was a lot for me. And I did have to show up with a check at closing. All in all, it was very painful, but thinking about Carl lessens my pain. Gosh. Don’t you wish you were rich enough to stupidly lose as much as Carl?
Just when you thought things can’t get worse
Time to buy is usualy when everyone else is selling. Time to sell is when everyone else is buying. That’s what can be done in a normal market that one can see as history repeats itself. The markets today are still predictable from the action of others. The world economics are now what to watch, as the USA is now just another player in this new world economy. The low, is yet to come.
Candor
I appreciate our candor