Cerberus: Den of Mini-Ballers or of Satan?

by Kaiser Edamame

Portfolio.com has a portrait of Cerberus Management founder Stephen Feinberg.

Some choice quotes:

But then, Feinberg is not trying to win a popularity contest.

No shit, really?

There is little at the office to distract staffers from the business at hand—almost no art on the walls, no fancy woodwork. “It’s not a place you bring clients to impress them,” says a former employee, who adds that those in the satellite offices refer to headquarters as the Death Star.

“His ego is having no ego.”

Do real people say things like this about people? Have you ever thought about one of your colleagues or friends something along these lines? “He has an 800lb gorilla on his back, and its the desire to make money for his clients.” Do Business rags just make this up?

“Steve didn’t care. He was a get-it-done person, and he wanted to get it done.”


They named their new company after the three-headed dog that guards the gates of hell in Greek mythology. The company has long held that the symbolism refers to the fact that one eye is always open, presumably protecting investors’ money.

The symbolism refers also to the fact that Cerberus Capital Management serves at Hell’s pleasure.

Recommendation: We recommend a Steve pair trade — long Feinberg, short Schwarzmann, a bet on Stevevergence. Feinberg may be a “get-it-done” person, but minions of the dark lord are excluded from mini-baller status. (Aside to Portfolio, how could you not mention Cerberus deals which aren’t getting gone? Or are they getting done?)

HT to reader Kyle S

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  1. Ruthless Gravity
    August 14th, 2007 | 10:00 am

    What’s the recommendation on Rattner?

  2. jake
    August 14th, 2007 | 11:00 am

    but, doesnt this dovetail nicely with the Satan Portfolio?

  3. August 14th, 2007 | 11:28 am

    It both does and doesn’t. It’s important to note the Long or Short Investing Rule Conflict Rule of Investing which states:

    “When investing rules conflict, and because of non-sensicalness this will not be a non-recurring event, Long or Short goes with what is most correct, as determined by arbiter of correctness, justice and smarts, Long or Short.”

    In this case, you are adhering to the Satan’s portfolio to an extent, as you are longer Feinberg’s evil more or less. But the backstop on our reasoning is the LoSIRCRoI rule.

  4. To The Hilt
    August 14th, 2007 | 11:57 am

    “Stevevergence” is easily the best new word since Shakespeare invented “subprime.”

    (Antony and Cleopatra, Act II, Scene V)

    The gods confound thee! dost thou hold there still?

    Should I lie, madam?

    O, I would thou didst,
    So half my Egypt were subprime and made
    A cistern for scaled snakes! Go, get thee hence

  5. IEVT
    August 14th, 2007 | 7:19 pm

    I have a very interesting suggestion for your readers. It’s about the 07′ august puts of TYCO (NYSE: TYC) which are very very mispriced: I don’t have much money to buy them, but I think it’s a great deal…

  6. cmsd2
    August 15th, 2007 | 9:01 am

    re TYCO options:

    Ah but as the great contemporary philsopher Will Young said: “Think about it”.

    You made the following cardinal mistakes:
    1) using yahoo as a source of fact
    2) using a quote which is 9 days old
    3) relying on the pricing info when the volumes have been close to 0 across the entire option chain

    The intrinsic value of the 30$ option (if parity is 1) is almost exactly 15 bucks, and there’s almost no time value left since there are only 2 days to maturity.

  7. nm
    August 15th, 2007 | 10:16 am

    Regarding 1) and 2), I checked the data on BB about 1h ago and it’s identical. Don’t know about 3) though (market maker?).

  8. cmsd2
    August 15th, 2007 | 10:25 am

    100 option contracts are worth 1 share perhaps?

  9. nm
    August 15th, 2007 | 10:39 am

    Might be that they trade ex-exercise, so that you can’t profit… Afaik you need to mention it some days prior to the last trading date if you want to exercise.

  10. August 15th, 2007 | 11:02 am

    Dude was/is a tout. He has been edited.

  11. hps
    August 15th, 2007 | 1:31 pm

    Tyco spun off Tyco Electronics, so some of the options trade as a package of TYC & TEL:

    TYB/TYU/XML/KMO are adjusted TYC/TYE/VPA/
    options and have 25 shares of TYC equity
    COV equity + 25 shares of TEL equity.