Ivan Boesky's smile, like his personal fortune, stretches to such exaggerated proportions that it finally loses its familiar, human aspect and begins to chill its audience.
It is a gaping smile, a wide flash of teeth that engulfs the lower half of his lean face. It appears without warning or discretion, as bright and loud as a neon sign along a blackened highway. It attempts to advertise what is most important to Ivan Boesky these days: his hope that the world will no longer regard him as simply an automated moneymaking machine; his aspiration to renown unconnected with corporate mergers and hostile takeover bids; his desire to be known by something other than his Wall Street nickname, "Piggy."
"I don't want you to think that I am just a greedy guy," he says.
"I'm not just a greedy guy."
He bares his teeth once more, and this time it is apparent that the smile is "like a nervous twitch," as a former associate of Boesky's describes it. The upper half of Boesky's face does not change its expression. His cheeks are unflushed, his eyes maintain a steely gaze, and his intense concentration -- often remarked upon by colleagues and competitors on Wall Street -- is unbroken. And yet his mouth is open, and the corners of his lips are pulled far back, reaching for his ears.
At 48, Ivan Boesky is the world's leading practitioner of an arcane pursuit known as arbitrage, a form of speculative investment that involves betting huge sums of money on the outcome of proposed corporate mergers and takeovers. Although Boesky goes to great lengths to persuade the world otherwise, his profession draws heavily on the principles of high-stakes casino gambling. He sometimes bets as much as $250 million on a single takeover play; in a single day, he can win or lose as much as $60 million. So it is hardly surprising that the pace of Boesky's life suggests the feverish courage -- and desperation -- of an all-night high roller in Las Vegas.
"This is my plasma," he declares, pausing during a recent speech in Washington to accept a cup of coffee handed up from the audience.
"I was thinking, vampires live on blood. Well, I live on coffee. This is vampire's plasma."
He grins widely and unironically at his analogy.
There is indeed something otherworldly about the life that Boesky leads. He sleeps two, perhaps three hours a night. He eats stintingly, nibbling on fruit and fish at irregular intervals, all the while downing cup after cup of steaming black plasma.
On most mornings, Boesky arrives in his office high above Fifth Avenue in Manhattan well before rush hour, after an hour-long ride from his Westchester County estate. There he assumes a perch before an impressive bank of high-technology equipment: video terminals, news wires, stock ticker tapes, and 160 telephone lines connecting him with his staff, brokers and stock exchange floor traders.
He does not sit. All day, he stands.
When the stock markets open, Boesky's office erupts in boisterous activity. New merger deals are on the wire; stock in which Boesky may hold a $100 million position is going up, now it's going down. Buy! Sell! In a single day, Boesky may acquire or unload as many as 3 million shares.
He makes "60 decisions an hour," says Steven Oppenheim, his tax adviser. "I've seen him trade in and out of a security and then in again within an hour," says Martin Peretz, president and editor in chief of The New Republic and one of Boesky's limited partners.
"He shouts at people and they shout back," Peretz continues. "It is an egalitarian atmosphere, even though he is quite clearly numero uno." If you are too polite, Oppenheim explains, "you may not get his attention. You can say, 'Ivan! You horse's rectum!' . . . You can deal with him on a very direct basis in language that is clear, concise, and not necessarily all found in the Oxford dictionary."
The way he treats his employes reminds Stephen Fraidin, Boesky's lawyer, of the joke a former Green Bay Packer used to tell about Vince Lombardi: "He treats us all equally -- like dogs."
In the afternoons, Boesky retreats from his office to the Harvard Club, just off Fifth Avenue in midtown, where he holds meetings with his staff and others late into the evening. The club suits well the image that Boesky cultivates in interviews and public appearances. It is a stately and comfortable place, suggestive of a quiet Victorian eminence not ordinarily associated with the ruthless, turbulent world of hostile corporate takeovers where Boesky has made his fortune. The room where Boesky holds court most evenings is dark and pleasingly musty; it has red carpeting, black studded-leather chairs, and glowing orange table lamps with brass bases. Stuffed ram and buffalo heads are mounted on the walls, which also hold oil portraits of renowned Harvard graduates such as Franklin D. Roosevelt.
Boesky's smiling visage is not among the portraits -- he never went to Harvard. He received a law degree from the Detroit College of Law, which admitted him on the basis of uncompleted undergraduate work at Wayne State University and the University of Michigan. He was born and raised in Detroit, where his father, a first-generation immigrant from Russia, owned several restaurants and provided, Boesky says, an example of industriousness. His main Harvard connection is a fellowship for journalists in public health studies that he has funded at the university.
It is often near midnight when the gleaming stretch limousine that attends Boesky's every movement whisks him away from his Manhattan club and back to his mansion in the country. Once home, it may be hours before he falls asleep, even though he exercises vigorously nearly every afternoon and evening (friends say Boesky can play tennis or squash for hours on end before he begins to tire). "I guess I finally need that exercise to go to sleep at night," he says, "because my body's still working."
His body, he explains, is like "a Mercedes on the Autobahn that doesn't stop running. I don't brag about that. I'm not proud of it. I've often thought it would be nice to sleep a long time."
On weekends at what she calls the Boesky "farm," Seema Boesky tries to urge her husband of more than 20 years to slow down a little and breathe in the bucolic serenity that surrounds them. But she rarely succeeds.
The problem, she says, is that after the first peaceful moment or two, Ivan "begins building the next farm.
"He says, 'Why don't we have cows in the yard! What if we were to take down that hill! Who owns that piece of land?!' Before you know it, we're building a city."
Boesky declares himself incapable of stopping, unable to pause even for a solitary moment to "contemplate a blade of grass.
"I don't know how to be any other way," he says. "I sometimes fantasize about how it would be if my eyes didn't see all that they see, my mind didn't think all that it thinks."
What he sees, what distracts him, are "nuances, particularities, colors that are probably heightened beyond what they might have been. Therefore my brain doesn't get a chance to rest as much as it might. Maybe like an artist it's a blessing; on the other hand, maybe it's more peaceful to be less observant. This whole conversation's very existential! But it's true."
He goes on to compare himself to the French Impressionist painter Renoir, who grew his fingernails several inches long because his sense of touch was painfully acute. Boesky implies that his obsession with work and the whirlwind pace of his life similarly shield him from the terrible power of his own unguarded soul.
It is obvious that Boesky feels in some ways ambivalent about the great wealth he has amassed since 1975, when he left an unglamorous job at a brokerage house and began on his own to make enormous sums of money at the practice of arbitrage.
At times he speaks openly about a deeply personal obsession with money. He once told The Atlantic: "Imagine $500 million in one-dollar bills, or better yet, in a pile of silver dollars. I wonder how tall that would be. It would be like Jacob's ladder, wouldn't it? A Jacob's ladder of silver dollars. Imagine -- wouldn't that be an aphrodisiac experience, climbing to the top of such a ladder?"
And on occasion Boesky will declare that what is good for him is good for all the world: "Anyone who thinks that greed is a bad thing," he preaches, "I want to tell you, it's not a bad thing. And I think that in our system, everybody should be a little greedy . . . You shouldn't feel guilty."
But a few weeks after delivering this apologia on greed to a small group of businessmen and academics at Randolph-Macon College in Ashland, Va., Boesky opened an interview in New York City by declaring emphatically, "I can honestly tell you that money's never motivated me from the beginning -- therefore, it doesn't motivate me now . . . I never think about it . . . I don't talk about money at home. It has never been a topic at the dinner table."
Boesky likes to think of himself as a kind of capitalist virtuoso, akin in spirit to Renoir or Horowitz or Wynton Marsalis. That he spends his days buying and selling stock in $10 million and even $100 million increments, that his personal net worth is estimated at something over $150 million, that he travels by limousine, helicopter, and private jet -- these are all the products of a happy coincidence, an accident of fate.
"The falloff in our world is financial," Boesky explains. "But had I been interested in the violin, the falloff might have been a prize or a scholarship. It so happens that the falloff is monetary."
This notion of moneymaking as high art, which might be regarded as a logical, if recondite, extension of President Reagan's free enterprise ideology, is shared and reinforced by those closest to Boesky. "It's not at all money -- most people don't know that or understand that," his wife says. "He just by chance ended up on Wall Street and found that interesting." Fraidin, the attorney, compares his client's devotion to financial gain to the unrelenting drive of "a great athlete, or a great surgeon, and I must say, a great lawyer."
If such analogies sound to some a mite pretentious and defensive, that "tells us more about our society than it does about Ivan, really," Fraidin says. "We sort of respect somebody who dedicates himself to hitting a tennis ball perfectly, but we feel a little uncomfortable about somebody who does that where all he's doing is making money."
Yet what plagues his friends and family is that even on Wall Street, the mecca of avarice, Boesky is singled out -- it was Fortune magazine that first called him a "money machine." His wife complains, "I haven't seen an article yet that says that Ivan is a human."
And so Boesky has taken matters into his own hands. Traveling the country to make speeches promoting himself, his profession, and his book -- "Merger Mania," a kind of textbook on arbitrage -- Boesky repeatedly decries the "myths" that have sprung up around his work. Particularly vexatious to him is the persistent confusion of arbitrage, which in theory is a form of passiveinvestment, with the kind of corporate "raiding" practiced by the likes of T. Boone Pickens Jr., Carl Icahn and Saul Steinberg. Such raiders (Boesky likes to call them "corporate entrepreneurs") buy stock in companies for the express purpose of taking them over, although often the raids end when the besieged management buys off its adversary with a huge "greenmail" payment. "We've never greenmailed," Boesky says emphatically. "We've never taken over anybody on an unfriendly basis."
A second "myth" Boesky attempts to explode is the perception that he is like a "Mississippi riverboat gambler." Arbitrage, he argues, "is the most conservative equity investing that exists" because it is removed from the wild volley of world events that knocks the stock market up and down. "In any deal, there are certain things that are either going to happen or not happen . . . Most of those issues are identifiable. And once identified, they can be analyzed and predicted with probability."
And yet the risk is undeniable -- and Boesky admits that risk is at the center of his motivation.
"Ever since I was a boy, I was at risk," he says. "That's the only way I know to feel peaceful. I feel very comfortable when I'm in that state because I feel in command."
All of these explanations and justifications of his work, offered over and over in speeches, lectures and in his book, reflect Boesky's most profound worry: that arbitrage generally, and Boesky particularly, are unappreciated by the great public beyond Wall Street. Boesky says that he cares "a lot" about what the world thinks of him, "as a citizen." And he fears that arbitrage, for all his efforts to improve its reputation, is regarded merely as the brainchild of a fundamentally and extraordinarily "greedy guy." Thus Boesky talks at great length about his role in maintaining a healthy stock market -- about how arbitrageurs buy stocks when everyone else is selling, and about how their aggressive trading helps the market stay liquid during times of crisis.
There is validity in his arguments, but the issues are subordinate to a broader plea, which he makes for both himself and his profession:
"There is some social goodness to it," Boesky says.
Ivan Boesky is rich not because he invents or manufactures things that people want to buy. Nor is his wealth the byproduct of some ingenious new service that he has created and sold to a grateful public. He does not employ hundreds of workers or bolster a network of dependent wholesale suppliers with a portion of his revenue. He is, in the parlance of economists, unproductive.
What he does is make money out of money. He begins each day with an enormous pile of cash and attempts to enlarge its size through quick-hit, opportunistic investments.
Boesky plays what he and other arbitrageurs, known familiarly as "arbs," call "the spread" -- the difference between the price of a stock before a takeover or merger, and its price afterward. In classic merger arbitrage, which Boesky says occupies about 80 percent of his time, an arb acts only after there has been a public announcement of a proposed merger or takeover attempt. Then he invests heavily in the target company's stock, gambling that the deal will go through as planned (thus earning shareholders a premium above the stock's market price), or that the attempted takeover will force some other action to raise the stock's price.
Boesky buys as much stock as possible "on margin" -- that is, by borrowing heavily. "I love margin accounts," he says. "I can't sleep at night if I don't have a big enough margin."
A second kind of arbitrage play that Boesky has pioneered, and that has attracted him considerable attention on Wall Street, is something he calls "risk arbitrage." The distinction arises from the timing of Boesky's stock purchases. During the 1984 takeover of Getty Oil, for example, Boesky began buying Getty stock before the public knew there would be a bid for the giant oil company.
Boesky says he made his early buys because he believed Getty's stock was undervalued and because infighting among the Getty family members who controlled the company made it a likely takeover target. Boesky was not the only one to arrive at this conclusion -- oil industry analysts had published reports arguing that the sum of Getty Oil's parts, if liquidated, would make the company worth about twice its current stock price. But in this deal, as in many others, two things distinguished Boesky from his arbitrage competitors and the public: tenacious research and the guts to back up his instincts with great sums of money.
The scope and nature of Boesky's research is legendary on Wall Street. Because his success or failure in any deal hinges on his ability to correctly predict the outcome of one specific event -- an attempted takeover -- Boesky works fervidly to learn all he can about what is likely to happen. Not only does his firm excel at what might be called "conventional" research -- tracking news wires, ticker tapes, regulatory filings, speeches and so on -- it is also renowned for more unusual forms of investigation.
It is said, for example, that one of Boesky's assistants spends his days tracking the movements of corporate jets around the country in the hope that the flight paths of these planes will reveal the intentions of their executive passengers. Boesky himself relies on a network of friends and contacts in the financial community to keep him well informed. In his office, in his limo and while flying in his private jet, he works the phones from morning until night, sometimes calling the principals in a takeover deal every day to find out what move they intend to make next.
In the Getty deal, Boesky's tenacity and prescience earned him somewhere between $50 million and $100 million in just a few months, according to published estimates. It happened this way:
In October 1983, Boesky began buying large amounts of Getty stock, which was then trading in the $70s. Even though no deal had been announced, the stock's price had risen steadily throughout the year because of the widespread perception that Getty was ripe for a takeover.
On Dec. 28, 1983, as Boesky had hoped, a bidder for the company emerged: Pennzoil Co. offered $100 a share for 20 percent of Getty, and the company's stock priced jumped almost $20 in a single day of trading.
Convinced that the Pennzoil bid would provoke some other company to offer even more for Getty, Boesky kept buying, eventually amassing more than a million shares. (Boesky's "Piggy" moniker reflects the exceptionally large positions he takes in some takeover deals, compared with his more cautious arbitrage competitors.)
Again, Boesky was right, and he was duly rewarded: Early in January, Texaco offered $125 a share for the entire company, and a short time later, the deal was concluded. Boesky sold his shares to Texaco and walked away a happy and considerably wealthier man.
Not all of Boesky's arbitrage plays work out so well. A year after the Getty deal, Boesky was holding more than $250 million of Phillips Petroleum Co. stock when corporate raider Pickens abandoned his attempted takeover of the company and left Boesky facing potential losses reportedly as great as his earnings from Getty-Texaco. Boesky's acquisitions and sales of Phillips stock over the next two months, during a subsequent Phillips takeover attempt, raised questions about whether he was trading on inside information (see box).
Still, Boesky wins more than he loses -- he says that 85 percent of the deals he has invested in since starting his own firm have turned out profitably. "Therefore," he quips, "it becomes a justifiable occupation."
All of the elevated talk about Boesky's "artistry" is one aspect of a deliberate building up of images and endowments and monuments unrelated to moneymaking that are intended to survive when Ivan Boesky passes on.
"I would hate to think that all I contributed was stock as my legacy," Boesky says. "I feel very anxious to plant as many worthwhile seeds as I can." And there is an urgency about the task that is unusual for a man who has not yet passed from middle age, a sense that even when Boesky serves eternity, he has no time to waste.
He talks about his various philanthropies, which have included large donations to a number of Jewish causes and institutions, art museums and universities (he is a trustee of New York University, among others). And he talks about his four children, two of whom are now in college -- about his need to "leave behind me people who can carry on this idea . . . to give society their very best energies. The money part of it is of far less importance."
At least part of Boesky's concern about his legacy seems to arise from a suspicion that his lean, well-tanned body -- his "Mercedes on the Autobahn" -- may not long endure the daily punishment that he inflicts upon it.
Asked if he takes sufficient care of himself, Boesky responds with an odd joke: " 'So far, so good' said the man falling out of the 35th-floor window."
He smiles widely, and his teeth once more consume his face.
"I can't predict my demise," he says more seriously. "But I suspect it will occur abruptly."