I was hoping it was going to be an easier evening than this. I thought I was going to talk about what sort of MAC I was wearing on my skin… Whether I wore waterproof mascara during rainy scenes. — Damian Lewis
This is what Damian says receiving yet another question about the world of finance at Times Talks 😀 The conversation about Billions is quite involved, varying from shorting a company to CEO compensation to performance coaches to Bobby Axelrod’s knitwear, so it deserves its own separate post with links to particular Billions episodes and what is going on in the real world as needed.
Cara Buckley first asks what it was about Billions that made Damian come back to America for another cable show.
“I think, first and foremost, as an actor, what you chase is stories.”
Damian finds the best stories in those that derive from real news and draw parallels between real stories and the characters one gets to play: Like Homeland and Billions. He argues TV has changed for the better in the last decade with networks having greater ambition and filmmakers doing work in TV. TV still comes with its risks, he says, because even when you are someone quite fastidious, like Damian, trying to understand the ambition of the project before you take a role, you really don’t know what will happen with it. He says Homeland became HOMELAND and Billions became BILLIONS because people liked them and he feels lucky. I think Damian is being way too humble here because the way HE brings Brody and Bobby to life is a major reason for people to fall for Homeland and Billions.
Damian says Brody is a “tumbleweed blown across this bleak landscape of his life from the moment he decides to sign up” where as Bobby is “blowing the tumbleweed… kicking it about in no uncertain fashion.” He expands on Billions: “I hope Billions continues to maintain a cogent argument between regulation and the public sector, the good that it does, but also it’s not without its vanity, not without its ambition, as embodied in Paul’s character; and the libertarianism of the private sector, where, you know, the true definition of libertarianism is that every man should be able to do as he wishes as long as he does not harm his fellow men… Bobby gets the first half of that right and he is less good with the second half.”
We watch a clip from Episode 1: The Pilot in which “Axe” is grilling PM Danzig and Analyst Ben Kim.
Danzig and Kim tell Axe Lumetherm is being bought by Electric Sol. Its price was $41 and is now trading at $35. They envision a 17% jump when the deal closes. Danzig plans to buy 2 million shares which Axe agrees with. Danzig then shares new piece of information: Scott Kazawitz will be the chairman. Ha! Axe knows Kazawitz. He is an animal. He controls Electric Sol and owns 19.3% of Lumetherm through his stake in Southern Wind. Southern Wind had a block trade (i.e. sold a lot of shares) through Merrill Lynch last Thursday at lunch time which Axe thinks is because they wanted people to miss it. Kazawitz is using the potential merge to temporarily prop up Lumetherm but he will use the block trade to get out of both Southern Wind and Lumetherm… which means they need to get out NOW! Short! Danzig shorts at $41 and covers at $31.19 when the merge crumbles making extra $18 million for Axe Capital.
Damian says, once the clip is over, this scene echoes what is going on right now with Tesla Motors proposing a bid for Solar City: yet another evidence for how current Billions is! You may read the details about what Damian refers tohere. In a nutshell, billionaire Elon Musk is the chairman of Solar City and the chairman and the CEO of Tesla. Besides, he is the largest shareholder in both companies owning 22% and 21% of their shares, respectively. Musk is now using the potential merge to prop up Solar City. This, as Damian rightly points out, echoes Kazawitz trying to boost Lumetherm in Billions.
Buckley then wants to hear about Damian’s meetings with hedge-fund managers to prepare for his role.
“They play their cards quite close to their chest generally.”
Damian says the hedge fund guys consider themselves risk averse. They do the research and make the bet only when they are confident about it. The bet is often shorting a company exactly like Jim Chanos has short Tesla and Solar City because he thinks they are overvalued and underperforming companies. And the outcome is a “gladiatorial dynamic between the main characters” where, Damian says, Billions also sets itself. The fight between Axe and Chuck, is not very different from Jim Chanos and Elon Musk going at each other like crazy at the moment.
Damian talks about activism: Hedge-fund managers see themselves as market regulators. They find overvalued and underperforming companies with lazy boards receiving big bonuses but not really working for the shareholders. While the board is telling the shareholders 3.5% return is great, the hedge-fund guy does the analysis and notices the company can do 5-6% which means it is badly run. This is activism and Bobby Axelrod does exactly that in Billions.
In Billions Episode 3 Yum Time, Axe gets a controlling stake in the badly run Yum Time, convinces “reasonable” board members and shareholders to put together a consortium. They go in to kick CEO Hutch Bailey III out of his seat and off Axe’s Christmas list, too! 😀
Does Damian believe this is what the hedge-fund guys do?
Well, yes, in certain circumstances 😀 Damian argues, as soon as the activists make what they have done public, a well-respected billionaire with enormous power may decide to short the company making shareholders sell their shares in panic and let the stock fall.
Billions Season 1 Episode 4 deals with this very problem. Axe shorts a trucking company Cross Co: It is not doing well and there is also news that Yum Time is likely to cancel its distribution contract with it. What Axe does not know is our very own respectable billionaire Chuck Sr is determined to crush him. With a little help from his billionaire friends, Chuck Sr makes his move to name the episode: Short Squeeze.
What’s Short Squeeze? Suppose there is a certain stock thought not to be doing well. So, people short it. But sometimes the company may have some good news and the stock may rise in price and the short sellers now have to cover at a higher price and lose money.
Chuck Sr and his friends block buy and prop up Cross Co turning the stock into a “strong buy” now predicted to go up to $90 per share. If, say, Axe borrowed at $40 and the price goes up to $90 then he would need to cover at $50 per share now. And, suppose he has 1 million shares… Yeah he is screwed — see Axe’s reaction when he finds out he is being short squeezed.
“…there is a little part of me that responds to the stubborn little kid, that is the hedge fund guy, and he is the little kid, you know, who had his lunch box stolen by the cool kids, who is in the corner of the playground just going ‘but I’m right I’m right I’m right… and I’m going to see this through and screw all the rest of you.’ Because they do swim against the tide to make that bet. And I quite like that.”
It’s no surprise Damian is making a good case for the hedge-fund guys. We already know from his wonderful profile “Blue Blood, Blue Collar” by Lauren Collins in the New Yorker that Damian sees himself as a champion for his characters. Bobby Axelrod is no different.
In the New Yorker piece, Damian argues acting is equal to “mounting a case” for him:
“If you pick up an eighteenth-century play, at the top it says ‘The Argument,’ and then you have a list of characters, and then you have the play… I was just always struck by that—that, of course, good drama is about conflict. And if there’s conflict there’s an argument, and there’s two sides of the argument, and, therefore, one must advocate for one side of the argument, just as much as a lawyer does in court… I will always find a defense for characters, and that’s why it’s fun playing characters that are morally ambiguous, or are at least perceived superficially as being problematic.”
We watch another clip from Billions: Axe, having messed up a deal pretty badly, is having a session with Wendy in Episode 11 Magical Thinking.
Cara Buckley wants to know about performance coaches working at hedge-fund companies. And when Damian says Steve Cohen had one, Buckley comments some speculate Bobby Axelrod is based on Steve Cohen of S.A.C. Capital.
“It’s for me to know and for you to find out.”
Fair enough. He adds: “They have performance coaches. And they are, from what I gather, very valuable and extremely useful in, really as you see, Maggie and her brilliant performance in this.” These performance coaches seem to be integral to the success of these companies yet Damian does not think many performance coaches are married to the US district attorney 😀 He finds THAT “a delicious piece of writing” because it sets the show up.
The next question, which Buckley calls a “soft ball question” is inspired by Damian quoted in his New Yorker profile: “I just found, for Bobby, once we made the choice that he was a jeans-and-trainers guy, and that he liked wearing knitwear that he was going to take the space. It was a way to find the expansiveness of the king.”
What about Bobby’s knitwear in Billions?
“So, a pair of jeans, and sneakers and, as you mentioned a nice bit of knitwear was the way he’d like to be.”
Hedge-funds are separate from Wall Street: “They are not down on Wall Street. They are more Midtown or up in Greenwich.” They, in fact, target Wall Street. When a major bank or a company get news they will be investigated by one of these guys, they have a board meeting within the hour and switch to war mode to deal with the attack coming their way.
Billions uses costume to play with the fact hedge-fund guys are a separate breed. They seem to borrow a little from the West Coast dot-commers: “dressed down, a bit more hip, fashionable, and casual.” Bobby does not really need a Tom Ford suit to show off. He can do it with his $83 million dollar Hamptons house!
Does Damian think hedge-fund managers deserve the compensation they have?
“If you believe in the free market, which you guys do, then there can be no limit on compensation. And you are valued at market price. Having said that, we all know that waiting for the market to self-regulate in order to maintain stability and keep our economy healthy also maybe does not work… Witness 2007-2008…”
Damian cites charitable giving as a great tradition in the US. There may be a number of reasons for why these billionaires are setting up multi-million dollar foundations to help poor kids: it may be a political gesture or for some good publicity or just to keep the SEC off their back when they are being investigated for some fishy trade they have done: “But, I think, as long as they are setting those foundations up and helping people with all that money, then that seems to me to be a pretty equitable way for the money to go around and a pretty good way to do it.”
He adds one last defense for his guys: “There was not a bail out for the hedge funds after the crash of any kind. The banks were bailed out. And I think that will be my last defense of them. Because I want to look suitably enigmatic about what I actually think about them.”