Chapter 9: The Fall, April 1, 2000 - June 30, 2000 - Episode 1Listen to podcast
On Saturday, April 1, Larry goes into the office to catch up on the work he’s had to ignore during the roadshow. Louise joins him in the evening for dinner at Sequoia in Southside Seaport with her Aunt Hattie who has advised them that the chowder is “to die for”. Hattie is in the personal wealth management group at Merrill Lynch and would clearly like to advise the Lazards on much more than chowder.
“Well,” says Aunt Hattie, looking up from the chowder, “today is the day that your liquidity should actually be in your account at Barcourt.”
“Yup, the money’s there; I checked,” says Larry.
“I’m sure you two haven’t had much of a chance to think about how you are going to invest your—”
“I bought my mother a place in a retirement home,” says Louise.
“She didn’t tell me that,” says Hattie, annoyed.
“I only told her an hour ago,” says Louise.
“Well, I’m very happy for her, of course. That’s very kind of you…”
“It was Larry’s idea.”
“How very considerate. I know how proud Ruth must be to have such a generous son-in-law. I do wish you two had talked to me first, however. There are many tax implications to such an investment, and it’s very important that it be structured in the right way. We have a very good group that can be an enormous help in transactions like this. In fact, for clients in the very high wealth category, which includes the two of you, our people are happy to actually handle transactions like this one completely. So you hardly need to lift a finger except to tell us what you want to accomplish…”
“We’re not clients of Merrill Lynch,” says Larry.
“Well, that’s what we’re here to talk about now, isn’t it? That’s certainly something that can quickly be arranged. In fact…”
The fish arrives. Hattie has to pause in her pitch to send hers back since the head is still on the plate and one dead eye is looking at her balefully.
“Oh, I just hate that,” she says after the waiter leaves with the offending fish. “I sometimes think they do that just to annoy me. Now where were we?”
“I was just explaining,” says Larry, “that we are going to talk to several firms before we decide who will manage our ‘personal wealth’.”
“Well, certainly, dear, you ought to do that,” says Hattie. “But time’s awasting and, as they say, time is money. You won’t find any better than Merrill. There are several investment opportunities that will close just this week and I’d hate for you two to miss the opportunity—”
“We’re going to have to pass on those,” says Larry. “We’re not going to make our minds up that quickly.”
“I’m not sure that’s wise, dear,” says Hattie. “You have a big responsibility now to manage all that liquidity wisely.”
“I also have to manage my company,” says Larry. “Remember, most of our net worth — the vast majority of it — is tied up in the stock we still own. We haven’t even sold five percent yet.”
“Well, dear, of course; but that’s something we can help you with as well. I’m not the expert in this, but Merrill has put together programs for other executives to assure that they will realize most of that locked-in value. We know you can’t sell all of that stock now but you should be protected against a possible decline. We could arrange synthetic ‘put options’ or various kinds of ‘straddle’ or ‘collars’ I think they’re called. We could lend you money using the locked up stock as security. These are the discussions we need to be having.”
“Why in the world would we want to be in debt when we’re rolling in cash?” asks Larry. “I just paid off our mortgage this morning.”
“You what? Oh, no. You see, this is just the kind of thing we can help you with. That’s not a good use—”
Louise interrupts before Larry can: “That’s something we both wanted to do. We don’t like being in debt.”
“Debt is an important investment strategy,” says Hattie. “Perhaps as a next step I should introduce you to some of the specialists who will work with you at Merrill to help you—”
“You know who you could introduce me to, Hattie?” asks Larry with his mouth full.
“What’s her name, your e-commerce analyst,” says Larry. “Merrill doesn’t cover hackoff and it would be very helpful for us if you did. That would help increase the value of the rest of our assets.”
“Well,” says Hattie, “I’m not sure I can arrange that but I’m certainly willing to try. But you don’t mean to say, dear, that you’re going to base your decision of who handles your personal wealth on what coverage the company receives, do you?”
“Yeah,” says Larry, “that is what I mean. It won’t be the only criterion, but it is a very important one.”
“You’ve worried about the company all these years,” says Hattie. “Now it’s time to worry about yourself. Yourself and Louise, I mean, of course.”
“How the company does and how WE do are not separable,” says Larry. “Hattie, I’m serious about this. If Merrill wants to manage our personal wealth, it’s time for Merrill to cover hackoff.”
“Oh, I don’t know…”
“I know,” says Larry, more firmly.
“How is Uncle Augie?” asks Louise.
Hattie takes a deep breath and cuts into the now headless but also cold fish. “He’s as well as can be expected, Louise dear, thank you so much for asking. He sends his best to both of you, of course. The dear man will not take care of himself. Sometimes I think he wants to die just to spite me.”
“Understandable,” says Larry, but under his breath so Hattie doesn’t hear him.
Not much later, Larry and Louise are sitting outside in the back of the highspeed catamaran ferry to Atlantic Highlands. It’s an early warm spring night, so they are comfortable on the stern where the bulk of the cabin blocks the wind. As the boat crosses New York harbor, they have a great view of the downtown lights dominated by the twin lit rectangles of the World Trade Center.
“Thank you,” says Louise.
“For being nice to Aunt Hattie. I appreciate it.”
“Yeah, well let’s see if the gabby old bitch can help us get coverage from Merrill. I doubt it.”
“Well, if she doesn’t, then I won’t feel bad at all about not giving her our money to manage,” says Louise. “What do you think we ought to do about investing it? Is this a good time to put it back in the stock market?”
“Personally,” says Larry, “I’m not in any hurry. Mostly because I don’t have time to think about it. There’s stuff at the company I’m worried about. But also the market seems sort of shaky. There was a bad announcement from Big Router today.”
“What’s the money in now?”
“We bought the Knicks.”
“No. I’m serious. What is the money in?”
“Remember, we talked about it. I didn’t think we had enough cash to buy the Knicks but Madison Square Garden Corporation really wanted to get rid of them. I only had to pay fifteen million in cash and the rest in hackoff stock.”
“Larry, you didn’t. You COULDN’T. I thought the stock was restricted. We can’t even sell it for six months.”
“It is restricted,” says Larry, “but they accepted it even with the restriction. They’ll have to hold it for the six months.”
“What about Alan Houston’s contract? We agreed that—”
“You were absolutely right about that. I insisted they buy it out as part of the deal. But, funny thing, when we discussed it with him he said he’d play without the contract if he could just stay in New York. He even promised he’d try dribbling when he got the ball.”
“Oh-my-God,” says Louise. “Oh-my-God. I think the money has gone to your head. Well, I guess we’ll have to have a party. Do we invite all the Knicks? I’d really like to meet Clyde Frazer; see if he really uses all those big words even when he’s not announcing games.”
“April Fools,” says Larry.
“What…? Oh no… Fuck you.” Louise hits Larry. Not hard.
“Gotcha,” he says.
“You did. This is all so unreal I don’t know what to believe and what not. Okay, where is our money if we didn’t buy the Knicks?”
“I told Barcourt to just buy some safe government bonds for now to park it in,” says Larry. “They didn’t want to and, of course, they have at least as many good ideas for our money as Hattie, but it’ll be reasonably safe there. We could lose a little if interest rates go up but I just don’t feel right about jumping into things without thinking it through. And I want to give the money to someone to manage that’s going to give hackoff some additional coverage.”
“You know what Aunt Hattie said to me in the ladies’ room?”
“She says she’s not sure Merrill can cover a company with such a horrible name. She can’t even bring herself to say ‘hackoff’.” Louise giggles.
“Doesn’t stop her from wanting to manage the money hackoff made for us,” says Larry mildly.
“Yeah. It’s getting cold. Snuggle me.”
“You want to go inside?”
“No, just snuggle me. The City looks like it’s covered in jewels.”
The boat rocks as it speeds over the wake of a hulking container ship leaving the harbor for Taiwan with empty containers to be refilled. The air gets colder. A few of the lights in the City twinkle out.