What Makes These Investors So Smart?

[USA320Pilot]

What makes these investors so smart?

Speaking last week at a Merrill Lynch airline conference in New York, America West Chief Executive Doug Parker said the merger proposal generated so much interest that the airlines had to turn away potential investors.

"We find ourselves in this very strange condition of being airline executives who are actually telling equity people, `We don't think we can make room for you,' " he said. "It's foreign territory for us."

John Luth, chief executive of Seabury Group told the Charlotte Observer, he sees no way a bid could emerge that could top the America West-US Airways partnership, but it's possible new investors could pop up to replace at least part of the existing lineup.

Raising outside equity might prove tougher, Luth says he thought at the time. Yet when he, Lakefield and Parker would give the 50-page presentation to eight potential targets, they were impressed. Six expressed interest.

"It was the highest percentage of acceptance I've ever witnessed," Luth said.

See Story

Regards,

USA320Pilot

 

[FA Mikey]

Its all how you word it. Its all how you paint it. You try to make it look as though these are the top financial institutions throwing money at you.

Who says they are smart? Time will tell if they were lucky or sitting with a new tax write off.

If I presented a business plan to 8 potential loan sharks and six offered me money. Does that mean I have a great business plan, were they were impressed?

 

[700UW]

And here is whole article:

Charlotte Observer (Free Subscription)

Who's betting on US Airways

A look at the five companies that want to be big owners of the merged airline, their investment and piece of the airline they get in return: Wellington Management Co. $150 million. Boston investment management firm. Receives 14 percent of new stock. Air Wisconsin Airlines Corp. $125 million. Appleton, Wis.-based regional airline. Will get contract to fly commuter planes, 13 percent of new stock plus board seat. PAR Capital Management. $100 million. Boston hedge fund. Will receive 10 percent of new stock plus board seat. ACE Aviation Holdings. $75 million. Based in Montreal, parent of Air Canada, which expects to receive maintenance contracts from airline. Gets 7 percent of new stock plus board seat. Peninsula Investment Partners. $50 million. Charlottesville, Va., hedge fund. Gets 5 percent of new stock.

 

[usair_begins_with_u]

Yeah we sure dide.... we all learned who's smart.. GE jumped out of the game as soon as they could...

 

[deltawatch]

75% of our east coast mainline routes will be flown with 70-90 seat aircraft by our new smart investor, Air Wisconsin.

 

[BoeingBoy]

The headline writer apparently got ahead of events - only time will tell if these investors are "so smart" or not.

Warren Buffet probably thought he was smart to invest in US.

British Airways probably thought they were smart to invest in US.

David Bronner probably thought he was smart to invest in US.

Jim

 

[Walmartgreeter]

I suspect Warren Buffet thought he was smart to invest in US.

As I heard it, Buffet ended up making a large profit on U stock. He held on to it until sometime around the UAL merger attempt. Mark.

 

[BoeingBoy]

I suspect Warren Buffet thought he was smart to invest in US.

As I heard it, Buffet ended up making a large profit on U stock. He held on to it until sometime around the UAL merger attempt. Mark.

[post="276757"][/post]​

That could be, Mark. I only know he said his US investment was one of his biggest mistakes. Along with saying something to the effect that a capitalist should have gone to Kitty Hawk and shot Orville....

Jim

 

[700UW]

MISTAKE NO. 2: INVESTING IN ANOTHER TROUBLED INDUSTRY

Remember the old joke, “How do you become a millionaire?†The punch line is “Start as a billionaire and buy an airline.†That’s what Warren did in 1989, when he invested $358 million into U.S. Air’s preferred stock. It was a short-term mistake, because six years later, in 1995, Warren wrote off most of that investment. U.S. Air had good management, but like textiles, the airline industry was the wrong industry to invest in.

The preferred stock paid Berkshire a 91.4 percent dividend each year, but U.S. Air suspended its dividend in 1994, and Warren tried to find a buyer for his preferred stock. A student once asked Warren why he invested in an airline. Warren said the airline industry would have been better off if a capitalist had known about the Wright brothers and their Kitty Hawk flight and shot them down, because there hasn’t been any value added to the capital invested in the whole airline industry. He said, “The Wright brothers’ flight was one small step forward for mankind and one huge step backwards for capitalism.â€

He called his investment in the airlines temporary insanity. He jokingly says that he “now carries an 800 number for Airlines Anonymous,†and whenever he gets the urge to invest in an airline, he calls it and says, “Hi. My name is Warren and I’m an airaholic.†And he says the guy at the other end talks him down. At the time of this mistake, an investment banker said, “Buffett still walks on water. He just splashes a bit.â€

In 1996, the best year ever for U.S. Air, Buffett was eventually paid back some $660 million, nearly twice the original purchase price. The mistake was buying in the wrong industry without favorable long-term prospects. But even that mistake, like Berkshire itself, turned out pretty well.

 

[USA320Pilot]

In an article titled “US Airways – America West merger may Draw more Bids†Bloomberg News reported on June 10 Seabury Group CEO and US Airways financial advisor John Luth said, “We believe there will be one or more parties who will want to provide additional equity interest.â€

Bloomberg quoted America West spokeswoman Elise Eberwein who noted there may be some “piecemeal type offersâ€.

Southwest Airlines CEO Gary Kelly told Bloomberg, “I wouldn’t discount the thought of making a bid but, realistically if all we’re interested in is paying some amount for gates in Philadelphia that won’t compete with the bid that’s in the tableâ€.

According to the Charlotte Observer, Luth says he sees no way a bid could emerge that could top the America West-US Airways partnership, but it's possible new investors could pop up to replace at least part of the existing lineup. There's much more interest in the airline industry among potential investors than there was six months ago, Luth says. Despite the industry's troubles, investors are now beginning to witness the industry restructuring they've been longing for.

Complete Story

Regards,

USA320Pilot

 

[calibrator]

The headline writer apparently got ahead of events - only time will tell if these investors are "so smart" or not.

Warren Buffet probably thought he was smart to invest in US.

British Airways probably thought they were smart to invest in US.

David Bronner probably thought he was smart to invest in US.

Jim

[post="276756"][/post]​

 

[Dog Wonder]

Seabury Group CEO and US Airways financial advisor John Luth said, “We believe there will be one or more parties who will want to provide additional equity interest.â€￾

 

[Dog Wonder]

Is it possible the Seabury group president and US Airways advisor, whose company by the way stands to make more than all of US Airways senior management combined on this deal, might be be playing P.T. Barnum here?

Capitalists may make a lot of money but they usually aren't very nice people.

 

[700UW]

Seabury has made a fortune off of both US Airways Bankruptcy. Too the tune of millions. $36 Million first one and can make another $12 million from this one.

Seabury stands to make $$$$$