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The Billion Dollar Mistake: Learning the Art of Investing Through the Missteps of Legendary Investors



The Billion Dollar Mistake: Learning the Art of Investing Through the Missteps of Legendary Investors

Stephen L. Weiss

ISBN: 978-0-470-57266-5 October 2009 272 Pages


Important investment lessons gleaned from the mistakes of accomplished professional investors and billionaire businessmen

The Billion Dollar Mistake is an up-close account of the career-defining mistakes that some of the world's most brilliant billionaire investors have made, and a revealing look at what we can learn from them. Drawing on author Stephen Weiss' twenty-two years experience at some of Wall Street's most prestigious firms, the core of this book is based upon original research and interviews with these legendary investors, who discuss the most significant trade or investment that went against them, the magnitude of the loss, its effect on their businesses-and on their personal lives. To some, these fascinating accounts will read like a novel; to others, it will be a treasured and unique investment guide.

This intriguing book skillfully examines the causal relationship between the quirks of each investor's personality and the mistakes they have committed. Along the way, Weiss provides a series of compelling narrative accounts of the individuals' road to success, the particular mistakes they made, the character flaws that led to them, and the lessons learned. While some investors made errors of judgment, others made errors of perception. The Billion Dollar Mistake

  • Uncovers important lessons learned from the failures of some of the most enduring and accomplished investors, including Kirk Kerkorian, Bill Ackman, Aubrey McClendon and Leon Cooperman
  • Discusses how to incorporate these lessons into your investment discipline and avoid the same missteps
  • Reveals common mistakes made by bigger investors that the average investor can relate-the only difference is in magnitude with more zeros attached to the loss
  • Includes insights on improving your investment endeavors by refining your approach to today's markets

Learning from the missteps of the best in the investment business can help you succeed. With The Billion Dollar Mistake, you'll discover how.

Acknowledgments ix

Introduction 1

Chapter 1 Kirk Kerkorian: Due Diligence Is Due Every Time 11

Chapter 2 David Bonderman: Does This Mean I Also Overpaid for the Rolling Stones? 31

Chapter 3 Aubrey McClendon: Falling on the Wrong Edge of the Two-Edged Leverage Sword 51

Chapter 4 Bill Ackman: Detour from Discipline 69

Chapter 5 Nick Maounis: “Trust, but Verify…” 89

Chapter 6 Leon Cooperman: The Pirate of Prague Meets the Prince of Princeton—and the Boy from the Bronx Gets Squeezed 109

Chapter 7 Richard Pzena: Fashions Change, History Persists—or Does It? 129

Chapter 8 Geoff Grant: Style Drift—It’s Hot Till It’s Not 149

Chapter 9 Volkswagen and Porsche: The Hare Finally Wins and the Shorts Get Squeezed 171

Chapter 10 Chris Davis: It Was Dressed like an Insurance Company, but It Didn’t Quack Like One… 195

Chapter 11 Madoff Investors: Hook, Line, and Sunk 215

Epilogue Me Too: Mistakes I’ve Made and Lessons I’ve Learned 235

Notes 237

Glossary 241

About the Author 249

Index 251

“Concentrating on personal finance don’ts is a clever idea. Mr. Weiss writes about 11 big investors — from the very well known, like the billionaire Kirk Kerkorian, to others like Richard S. Pzena, who runs his own investment firm. The author zeros in on one enormous error that he says each of the 11 made — a mistake, in the words of the book’s title, that cost each $1 billion or more… the book is an intriguing reminder of what not to do when investing your money.”
—The New York Times

“Great investors are often put on a pedestal and worshiped by those trying to emulate them. This book removes the pedestal and allows you to truly learn from them. Author Stephen Weiss… has truly crafted a great read and has transformed the lessons of legendary investors into an entertaining and educational narrative. Definitely check out The Billion Dollar Mistake as you're bound to become a better investor from it.”
— Market Folly

Weiss creates a fascinating look at these cases with up close narrative reporting. In some instances the famous investors themselves review their mistakes and provide a surprising candor on how and why they failed. You almost feel like an eavesdropper in a closed door meeting learning untold secrets. Who knew investing could be so riveting! - 800 CEO Read (Dec. 2009)

When a great investor flubs it, everyone can learn a lesson. With that in mind, author Stephen Weiss delves into the biggest mistakes of such Wall Street luminaries as Bill Ackman, Leon Cooperman and Richard Pzena. – Barron’s (Dec. 2009)