1. Return to Spender

Here at the Five Dumbest Things Research Laboratory, we like to make fun of rich people. Yes, we know, it's childish and immature. But it is an inexpensive form of entertainment.

That is why we were so happy to read that May 22 story in The Wall Street Journal about Edgar Bronfman Jr., the one that assessed the chances of his possible bid for Vivendi Universal's ( V) U.S. entertainment assets.

What we most enjoyed were the efforts of Bronfman's camp to portray him as a hard-hitting player in the entertainment biz -- a guy who can make things happen. Which may be true, except for the nagging perception that Bronfman is little more than a patsy, a guy whose prior attempts to be a hard-hitting player in the entertainment business helped blow much of his family's fortune.

Thus, we were treated to the spectacle of a Bronfman spokesman defending his boss' record at the helm of beverages giant Seagram -- his management, that is, until just before he made the unwise decision to team up with Jean-Marie Messier, the financial hole noir of Vivendi Universal.


Seagram's Lite
Bronfman's Watered-Down Returns

As the spokesman explained to the Journal, "Seagram's market capitalization more than doubled between 1994, when Mr. Bronfman became CEO, and 2000, when he sold the company."

To which we say, big whup.

After all, market-cap growth is a meaningless measure of stewardship. Shareholders hold shares, not market caps. And as market caps grow, individual shares don't necessarily come along for the ride.

Let's say, to use a simplified example, you own 50% of Company X, which has a market cap of $10. Company X merges with Company Y, worth $90, to form Company Z. Gosh, you think to yourself, my company's market cap is 10 times what it used to be! But don't get too excited: Your stake is still worth just 5 bucks. And if you paid a premium for Company Y, your shares are worth even less.

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