Stephen A. Cohen, who was the focus of one of the most intensive insider trader investigation in history, is the subject of a new best-selling business book that debuted at # 3 on the Wall Street Journal best-seller list (January 18-19, 2016, p. C10).
The book, Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street (Random House), was released on February 7, and as of today’s writing is in the top four best-selling books in three Amazon.com sub-categories.
The author is Sheelah Kolhatkar, is a current staff writer at The New Yorker. She is a former hedge fund analyst. Her features focus upon Wall Street, Silicon Valley and politics. Kolhatkar has appeared on numerous business television programs, and also been a guest columnist in several business magazines, as well as the New York Times.
Who is Stephen Cohen, and what exactly is this book about? Please read this summary taken from the publisher’s website at http://www.penguinrandomhouse.com/books/234210/black-edge-by-sheelah-kolhatkar/9780812995800/.
“The rise over the last two decades of a powerful new class of billionaire financiers marks a singular shift in the American economic and political landscape. Their vast reserves of concentrated wealth have allowed a small group of big winners to write their own rules of capitalism and public policy. How did we get here? Through meticulous reporting and powerful storytelling, New Yorker staff writer Sheelah Kolhatkar shows how Steve Cohen became one of the richest and most influential figures in finance—and what happened when the Justice Department put him in its crosshairs.
“Cohen and his fellow pioneers of the hedge fund industry didn’t lay railroads, build factories, or invent new technologies. Rather, they made their billions through speculation, by placing bets in the market that turned out to be right more often than wrong—and for this they have gained not only extreme personal wealth but formidable influence throughout society. Hedge funds now manage nearly $3 trillion in assets, and competition between them is so fierce that traders will do whatever they can to get an edge.
“Cohen was one of the industry’s greatest success stories. He mastered poker in high school, went off to Wharton, and in 1992 launched SAC Capital, which he built into a $15 billion empire, almost entirely on the basis of his wizardlike stock trading. He cultivated an air of mystery, reclusiveness, and extreme excess, building a 35,000 square foot mansion in Greenwich, Connecticut, and amassing one of the largest private art collections in the world. On Wall Street, Cohen was revered as a genius.
“That image was shattered when SAC became the target of a sprawling, seven-year government investigation. Labeled by prosecutors as a “magnet for market cheaters” whose culture encouraged the relentless hunt for “edge”—and even “black edge,” or inside information—SAC was ultimately indicted in connection with a vast insider trading scheme, even as Cohen himself was never charged.
“Black Edge offers a revelatory look at the gray zone in which so much of Wall Street functions, and a window into the transformation of the U.S. economy. It’s a riveting, true-life legal thriller that takes readers inside the government’s pursuit of Cohen and his employees, and raises urgent questions about the power and wealth of those who sit at the pinnacle of modern Wall Street.”
A less biased, although equally positive review appeared in the New York Times, written by Jennifer Senior on February 1, 2017. One of her points is: “But my hunch is that readers will most remember “Black Edge” for showing them just how alarmingly pervasive insider trading was in the years surrounding the 2008 collapse. It became commonplace, domesticated — dare I say it? — normalized.” You can read that review by clicking on this site: https://www.nytimes.com/2017/02/01/books/review-black-edge-an-account-of-a-hedge-fund-magnate-and-insider-trading.html?_r=0.
And, in case you feel sorry for Cohen, the last line in Senior’s review says, “[Kolhatkar] notes that in 2014, Cohen made $2.5 billion by trading his personal fortune alone. ‘He is making plans to reopen his hedge fund,” she writes, “as soon as possible.’”
Please continue to monitor our website at 15MinuteBusinessBooks.com, to see if this book rates one of our monthly selections at the First Friday Book Synopsis for presentation. Randy and I will discuss this very soon!
I am frequently asked what has been the best book, the most influential book, and the most enjoyable book that I have read for the First Friday Book Synopsis over the 17 years we have been conducting the program. I entertained that question as recently as last night, as I distributed fliers for our August 1 program in Dallas.
The best book was Good to Great by Jim Collins.(New York: Harper Business, 2001). The most influential book was Winning the Global Game by Jeffrey Rosensweig (New York: Free Press, 1998). But, those explanations are for other posts.
In today’s post, I will cover the most enjoyable book.
Novel-like in its presentation, this book took you inside the operations of the company as well as inside the brain of its author. The book makes you feel as if you were celebrating with the author in good times, and struggling with him to feel the anger and pain in hard times.
In every event covered in the book, you not only read the facts, but also, the attitude and feelings that accompany them. Most striking was the story of a leaked e-Mail that found its way to the Internet, jeopardizing the future of the company. Another was the anger that Schultz expressed when he wanted his shops to smell like coffee, not burnt cheese, causing him to ask if they were going to start serving hash browns.
The story of VIA was captivating, as were the issues of expanding the business internationally.
Starbucks has been the subject of many books, articles, and posts over the years. The company’s success speaks for itself. But you will find nothing that takes you inside nearly as much as this book.
I sometimes wish that Schultz would keep his mouth shut. When he speaks out about politics, education, and other social issues, I visualize boycotts, picket lines, and lost customers. But, he can’t do it. He is outspoken and opinionated. And, he has enough money to cut his losses. There is no question that this book would not have been my choice for the most entertaining work had Schultz been modest and laid-back. That is simply not him.
It is dated now. Starbucks has moved on. Schultz and the company have solved many of the problems you read in this book, and they have been replaced by new challenges.
However, history is history. And this one is fun. Perhaps that is because I am a customer and have experienced in the stores much of what I read here. But, what makes it fun is going inside the boardroom, operations, and brain of its author.
For a period of time, this book was # 1 on the best-seller lists, such as the New York Times and Wall Street Journal.
You can read a review of this book written by Bob Morris on our blog by clicking here.
I will explain why I selected the best book and most influential book in future posts.