Tuesday, January 13, 2009

Former NYT Editor To Control Car Industry

In an article today, Bloomberg picks up on a theme that we commented on yesterday regarding Steve Rattner's imminent appointment to the throne of all things auto. Rod Lache, auto analyst at the 100x levered Deutsche Bank, comments sagely on the possible appointment of Quadrangle's head honcho, "Based on what I know of him, he fits the bill. He is a fund manager. He can look at a plan and say it does or doesn't make sense."... Well, that's some serious selection criteria right there...

We decided to dig a little deeper and familiarize ourselves with just how good of a fund manager Mr. Rattner is. As Quadrangle is a private equity shop, they are lucky in that unlike every hedge fund out there they have not had to liquidate, build a moat around their HQ to protect from angry investors, suspend redemptions, or create gated asset pools in the past 3 months, so that counts favorably to the application. Nonetheless, Rattner's comments about certain public companies for which he previously worked as a reporter, raise an eyebrow or two. Despite the 70% decline in NYT stock since Steve declared the company "safe", it seems he is best friends with Arthur Sulzberger, who is obviously on top of his game, especially with the appointments of Phil Falcone and the inimitable Scott Galloway to the NYT Board of Directors. How about Scott's private equity experience - surely he has looked at some auto companies to decide if their plans make sense... Well, unless Alpha Media Group, Brensan Communications, Cablevision, Cinemark, DataNet, Dice Holdings, MGM, NTELOS, Nuvox, Pro Sieben, Suddenlink or West Corp. have some unheretofore undisclosed auto subsidiaries, it would be somewhat questionable just how good Steve is at looking at auto planes that make sense...

Bottom line, we are a little confused about the natural fit of Mr. Rattner to the position of auto Czar... Especially since it might be a little tough to run Chrysler and Quadrangle at the same time. Like most asset managers, Mr. Rattner probably has quite a few portfolio companies that in recent years may have accumulated just a little extra debt than the surgeon general recommended and could potentially be in need of a little extra paternal care... One thing sure is that Steven's wife, Maureen White, former National Finance Chair for the Democratic Party has had nothing to do with this decision.
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