1. Baron All on the Beach
Some of us on Wall Street are smart enough, tough enough, ambitious enough and lucky enough to be able to buy a $23 million beach house.
As for the rest of us? Well, we console ourselves by making fun of the guy in that $23 million house -- especially after spending a recent postblackout Saturday evening in New York City with a bowl ofmelted-and-refrozen ice cream from the Five Dumbest Things lab freezer.
Yes, that's pretty much encapsulates our attitude toward money manager Ron Baron. For most folks in the investment community, it's sufficient to describe Baron as the head of Baron Capital Group -- an outfit with a few mutual funds and a few billion dollars under management.
But we at the lab think it's just as important to identify Baron as this summer's Lizzie Grubman: the fabulous and successful New Yorker whose personal travails in the Hamptons -- the standard summer weekend spot for fabulous and successful New Yorkers -- make him or her a fount of schadenfreude for The Rest of Us.
Here's why: Sometime between the summer of 2001 and spring of 2002, Baron bought himself a modest, $23 million beach cottage on the quaint-sounding Further Lane in the village of East Hampton.
Unhappily for Baron, once he'd settled into his $23 million worth of quaint, he discovered that the reality of his weekend getaway didn't quite match the idyllic splendor in his mind's eye.
That's because the beach right over the dunes from Baron's house -- an area known as Two Mile Hollow beach -- turned out to be a beach where consenting adult males gathered on hot summer nights to consent to practices that the Supreme Court found to be constitutional only two months ago. In private, at least.
But Baron, as we learned from
magazine, wasn't happy about this particular right being exercised on the beach near his house. He formed a group called the Further Lane Association. The FLA, in turn, hired folks to videotape the activity on the beach, with the hopes of presenting such tapes to the local police to spur them to enforce anti-public-lewdness laws.
Meanwhile, members of the gay community in the Hamptons have been accusing Baron of being antigay and mean-spirited. The FLA, they say, is a sham organization whose only member appears to be Ron Baron. That has prompted a spokeswoman hired by the FLA to go around saying, no, Baron isn't homophobic, and yes, there are other members in the FLA, though none of them want to identify themselves as such in public.
Man! What's more fun than learning that someone with $23 million to spend on a vacation home -- or any home, for that matter -- isn't instantly getting his own way?
Is Baron homophobic? Or is he just particularly energetic about quality-of-life issues? Would he have been just as outraged to discover similarly intense heterosexual activity on Two Mile Hollow beach? We have no idea.
Instead, we'd like to focus on Baron's claim that when he bought his beach house, he had No Idea that gay men were gathering on the local beach for late-night encounters. "He was not aware," says the FLA spokeswoman, who says she's spoken with Baron about the subject. The broker who handled the deal over the winter said nothing, says the spokeswoman: Baron "wasn't told." (Baron didn't respond to questions that his assistant requested be emailed to his office; Sotheby's, named by
and the FLA spokeswoman as the broker, didn't call us back.)
Let's assume, for a moment, that Baron is telling the truth. That raises an interesting question. What kind of guy spends $23 million house without a half a minute of research on the neighborhood? It took only a few mouse clicks, in fact, for the research lab to dig up a 1998 story from
The East Hampton Star
in which a local resident alleged that local police were harassing gay men at Two Mile Hollow beach by showing up at midnight to peek into cars and write parking tickets.
When we called up that resident, one Richard Cabot, he told us that whatever happened at Two Mile Hollow Beach this summer -- we didn't press him for specifics -- has always been happening there. "I would think that everybody knows what goes on at that beach," said Cabot, who has lived in the Hamptons full-time for 30 years. "It's no secret."
Hmm. Let's hope that the investment research at Baron Capital Group runs a little deeper than the due diligence Baron did on his new home.
Our alternate theory, however, is that Ron Baron wasn't surprised at all -- he knew exactly what he was getting into before he bought the house. In this scenario, Baron thought to himself, "The heck with adapting to the unique character and flavor of my new surroundings. I'll make my new surroundings adapt to me."
After all, you don't amass $23-million-beach-house wealth by trying not to impose on other people. To get that kind of wealth, you've got to impose all over the place.
By the way, we're sure it's completely coincidental that earlier this year, Baron and two of his associates agreed to pay $2.7 million to settle allegations that in 1999 they manipulated the shares of energy company
in order to influence a deal in which Southern Union was involved. Baron, who neither admitted nor denied guilt, was quoted by the
Securities and Exchange Commission
as telling a trader over the phone, "Do your buying today, and the end of the day, just buy
SUG up into the 20s. ... You know, 20 1/4, 20 1/2, something like that."
Yes, if you don't like the way the crowd is moving, sometimes you have to give it a little nudge.
2. Hey, BID Spender!
But let's return to our original assumption -- that the Sotheby's broker never told Ron Baron about the neighborhood, and that Baron's got an unhappy surprise.
Sotheby's and Ron Baron. Sotheby's and Ron Baron. Why does that sound so familiar?
Now we remember! It's because back in early 1998, Baron started making a big bet on
Back in the days when Baron built up a huge position in the stock, it was trading between $15 and $45 and paying 40 cents in dividends per year. At one point, his Sotheby's stock was worth worth more than $1 billion, we figure.
But that was then. By the time Baron started unloading his position in 2002, Sotheby's was at $16 and falling. The 8.8 million shares Baron still owned as of this April -- down from his peak holdings of more than 23 million shares -- are now worth $71 million.
Yes, Hampton real estate isn't the only arena in which Baron got screwed by Sotheby's.
3. If Your PC Freezes Up, Then Just Re-Buddha It
As we have learned over the past few years, salesforce.com has a close affinity with the Dalai Lama -- the spiritual-leader-in-exile of Tibetan Buddhism.
Boy, we wish some of the Dalai Lama's wisdom would rub off on us right now. Then we'd understand what the heck is going on.
See, we're a tad confused by a poster just sent us by salesforce.com, a company that sells customer relation management programs that users tap into over the Internet instead of installing as software on their own computers. "Success. Not software" is salesforce.com's mantra.
The poster, advertising an evening with the Dalai Lama at San Francisco's Davies Symphony Hall, features a photo of the Dalai Lama in a meditative pose beneath the headline "There Is No Software on the Path to Enlightenment."
Wow. Pretty soon, we suspect, we'll see the pope in full-page ads for the Mach3. The tag line, we assume, will be along the lines of "Get Shaved By the Trinity!"
OK. OK. Maybe this is just our squeamishness. If the Dalai Lama signed off on the poster, let's assume there's nothing wrong with it. Besides, at salesforce.com -- headed by ex-
executive Marc Benioff -- the commitment to Tibet and other causes isn't just chatter.
The company donates 1% of company employee time, 1% of equity and 1% of profits to charity. It has given $32,000 to set up email access for Tibetan refugee settlements in India, Nepal and Bhutan. It's donated $100,000 to provide computers for eight Tibetan schools. And, in honor of the San Francisco evening with the Dalai Lama, a $100,000 contribution is being made to the American Himalayan Foundation and the Tibet Fund.
Which brings us around to a burning question of ours: What the heck does a sales force have to do with Buddhism anyway? Face it: One of the Buddha's Four Noble Truths was that craving is at the root of suffering. Craving for things. Craving for eternal life.
But heck, if craving isn't at the root of salesmanship, what is? A good salesman craves his commission. A good salesman gets the customer to crave what he sells. How do you reconcile what salesforce.com sells with what the Buddha taught?
A salesforce.com spokeswoman says this is an unanswerable question, like asking, "Is there a relationship between marketing departments and being Catholic?"
4. Talk About Working on Your Short Game
It's too bad that clothing retailer The White House agreed to be bought by fellow clothing retailer
instead of going public.
See, once we at the lab heard about The White House, which sells only black clothing and white clothing, we were looking forward to many productive years of
making fun of the place. Now the thrill is gone.
Oh, well. One falls, a thousand rise in its place.
Yes, instead of The White House, we'll go after Natural Golf, which earlier this month filed to go public on the Amex.
We quote from Natural Golf's form SB-2:
We are a golf improvement company. The Natural Golf system uses a combination of grip, stance, swing and equipment that is substantially different from conventional golf systems.
Our swing system is similar to the swing of Moe Norman, legendary Canadian golfer and a member of the Canadian Golf Hall of Fame. He won 54 tournaments in the 1960s and 1970s, including seven consecutive Canadian PGA senior championships starting in 1979. Moe Norman is regarded as one of the best ball strikers ever by the professional golfing community.
Yes, sounds like just the stock we want to put in our 401(k).
A friend of a friend of someone at the research lab supposedly makes good money teaching the Natural Golf system. We're glad someone does. In an apparent typo, the company's summary financial results list two separate sets of numbers for 2002 (we believe that one of those sets should be for 2001). Either way you look at it, the company's scorecard is written in red ink.
5. Gruesome Twosome
Of course, what with The White House teaming up with Chico's FAS, maybe Natural Golf could team up with 2nd Swing, the used-golf-equipment retailer --
about which we've written previously -- which filed a revised IPO statement with the SEC this month.
See, 2nd Swing and Natural Golf seem to have similar handicaps, revenue-wise. Plus, we love 2nd Swing's motto: "It's not you, it's your clubs!"
Yes, at 2nd Swing they could tell you, "It's not you, it's your clubs!" Meanwhile, at Natural Golf they could tell you, "It's not your clubs, it's your swing!" We smell synergies.