TCU Acceptance Rate 1979-2012

I updated the data from the TCU Fact Book for 2012. Looks like TCU is still being selective (which is a good thing. The acceptance rate went up slightly from 2011 but still near all time lows at just less than 41% of students that apply get into TCU. When I was a freshman I can still remember TCU beating OU in 2005 who was then ranked 5th in the country if I remember correctly. Since then TCU I believe has become more popular. However, I would rather TCU be a strong academic power then just "popular". Maybe soon TCU will be the Northwestern of Texas (same school colors)

William I. Koch vs. Koch Industries The Family Lawsuit

I found an interesting find in the William I. Koch vs. Koch Industries trial that I covered in a previous three part series (part1, part2, part3). The document I found was 112 pages (much of it talks about historical court cases). What is even more interesting that the court case had 10,000 pages of exhibits (which would be twelve feet in a library).

William and Fred Koch along with other plaintiff dissents) owned 47.8% of Koch Industries stock. Fred Koch (father of all Koch brothers) set up trusts in 1966 and 1967 which gave all of his shares to his sons except for Frederick (some speculate it was because Frederick stole petty cash from the family). The trusts were actually interesting because the income of the trusts was paid to charity for 20 years and t he principal would be paid either to the Koch brothers or to some beneficiaries. Today, these are known as Charitable Remainder Annuity Trusts (CRAT trust) which is creative today and must have been innovative back then. According to the court case Charles began working at Koch in 1961 and became an officer one year later and was elected president in 1966. David came on board in 1970 with William joining in 1974 (three years after he completed his PhD from M.I.T.) William rose to become head of Koch Carbon in 1976 and was elected vice president of corporate development for Koch Industries in 1979.

In March 1980 William wanted more liquidity and cash flow for Koch Industries. Charles came up with an estate planning and liquidity program while Don Cordes and Tom Carey of Koch Industries talked to the plaintiffs to help them with any issues or concerns they had.  In the mean time William Koch didn’t like how Charles was running the company and talked to the plaintiffs. William talked to the plaintiffs to try to change the board of directors to do what they wanted.  The deal breaker would be J. Howard Marshall III who would help William, Frederick, and the other plaintiffs to gain a majority interest (over 50%).  Marshall III owned 4%. William however knew he had a problem because he didn’t have the number of shares he needed to elect a new board of directors. To fix this William called the First National Bank of Wichita and wanted to add two new directors. Charles hopped on a plane to see Marshall II to see if anything could be done. According to J. Howard Marshall II autobiography “Done In Oil” Charles went to visit Marshall II and Charles asked “What do we do now?” J. Howard Marshall II who himself was a business man after spending many years in government agencies suggested that he would offer his son $8 million $203 per share for the Koch stock that would change the board. Marshall tried to make it more of an emotional offer and his son took it. William got wind of this and increased the offer price to J. Howard III.

At a December 5, 1980 meeting Stuart Varner who was a board member of Koch Industries suggested that William Koch be asked to resign. William didn’t want to however the board thought it was time for him to go. In 1981 William hired Davis, Polk, and Wardwell to represent him and Morgan Stanley and Lehman Brothers were also brought on to determine what if Koch Industries should be publicly traded to fix the problem of liquidity and cash flow that William had been complaining about.  In a May 18, 1981 meeting the estimates from Morgan Stanley and Lehman said Koch Industries could sell between $140-$170 per share. Charles thought some of these figures were high because they did not take into account working capital. Both Morgan Stanley and Lehman said Koch Industries should not go public unless it needed to.

In 1982 Goldman Sachs was brought in and examined 100 pages of evidence from Koch Industries analyzing historical earnings balance sheets from 1977-1982. Goldman came up with a value of $1.6-$2.2 billion and valued the stock between $110 and $140 per share. William did not like this number and questioned Goldman Sachs about whether they were doing analyzing their discounted cash flows models correctly (used to figure out value). William then brought in Bain & Co. (keep bringing in advisors until you get the number you want right?).  Lehman revalued the shares in July 1982 and came up with an average of $175 per share.  On July 26, 1982 this profile came out in Fortune that discussed part of the battle that had been going on at Koch Industries. By October 1982 the case was even affecting mother Mary Koch who called Don Cordes and was upset that the Koch brothers were not able to solve their issues in court. By November  of 1982 Bain had come up with $187 per share while William and Bain wanted to make a counter-offer of $240 per share or a 28% premium. The plaintiffs all got together and met with Goldman Sachs and Bain & Co and agreed on the $240 per share counter offer. Koch Industries however did not think $240 per share made any sense after Lehman said it was really worth $140 per share. Koch countered with $167 per share ($95 in cash and $72 over a 15 year period at 10% interest). The plaintiffs did not want this because when you calculate a present value it was very low compared to what they thought they could get. William thought the stock was worth $212-$245 per share. In May 1983 William gathered up the plaintiffs to discuss what they all thought a fair price was. William of course wanted more than everyone else and the group also had to determine the cost of waiting out the ligation.

Finally at midnight on June 4, 1983 the final draft had been approved by both sides with the deal closed only six days later.  The plaintiffs were paid $200 per share on June 10, 1983 (the legal cost for “experts” was over $1.5 million). Charles, David, and William at the time each around 20% of the common stock (Fredrick owned 14%). The Simmons family (Mariorie Simmons Gray, Ann Alspaugh, and others) owned 13% and J. Howard Marshall II owned 8% (the one who married Anna-Nicole Smith). Koch employees and other people owned just 4%.  

Not only did the plaintiffs get a $200 share price but they got part of an offshore exploration property. This was however short lived as Bill Koch believed that brothers Charles and David Koch had cheated them out of money.  On December 31, 1982 the book value of Koch Industries was $1.54 billion (meaning what the worth of just its assets). The company in 1982 earned after tax earned $309 million. The company had a book value of just $133 per share.

This whole share price war reminds me of the classic book “Barbarians at the Gate” which discusses the merger between Nabisco and R.J. Reynolds with investment bankers coming up with higher and higher offers but made crazy assumptions. The Koch trial seems to be similar. Koch Industries told William Koch what the company was worth but William wanted a higher price. He kept hiring advisors to tell him his higher number was right. However, in the end I think William Koch made out pretty well.  When the whole thing was said and done Bill walked away with a $500 million check. William is now worth $4 billion. Not too shabby if you ask me. 

Charles Koch Relentless Goals: Being a Billionaire, Death Threats, and Giving Back

Source: Wichita Eagle

Apparently, the Wichita Eagle gave me an early Christmas present with this recent profile of Charles Koch. In 1998, Bob Cox of the Wichita Eagle did an in depth profile similar to this one.  The Koch family seems like one interesting family with David, Charles, and Bill. This profile shed light on who Charles Koch really is.

In the article it discusses how Charles Koch gets his hair cut from his wife (even though he is worth $31 billion and historical net worth 1984-2012 here) because he doesn't have time to go to the barber. Koch also use to be an avid skier until his knees gave out and has had both knees replaced and his right shoulder. This was after years of playing tennis, squash, golf, and polo.  These days he works out for an hour and a half doing weighting lifting, Pilates, and aerobics and follows a strict diet. He was diagnosed with prostate cancer in 1999. Koch is very competitive. When he played tennis with his friends and wife he hit the ball so hard that it hit the woman in the lip causing his wife Liz to curse him out.

His wife Liz has been at his side for their 44 years of marriage (which seems rare these days). She claims she is only one in the relationship that let her hair grow out.What is funny though is that when Liz first met Charles he wore a strip shirt and madras (picnic shorts). Liz also put up with Charles having books all over their apartment when they were first married when Charles was teaching himself about different subjects (economics, psychology, history) in the 1960's that Liz didn't even have a closet for her clothes. Even brother David Koch admits Charles reads "like a demon".

Charles was also competitive in the business world as well. Right before he joined his father’s company it had $70 million in annual revenue in 1960. In 2012, this number increased to $116 billion. Koch is a hard working man who is always working. His father Fred yelled at him when he was trying to save money for estate taxes (estate taxes have to be paid 9 months after death which makes it hard if your assets are all tied up in company stock). Charles bought two trucker companies (instead of one) and his father was furious with him. I personally think Koch is a workaholic however I think one of the side effects is becoming a billionaire. He also doesn’t like wasting time as he listens to audio books in his car because why waste 10 minutes of time. He doesn’t seem to work for money.  Charles Koch wakes up every morning to do what he loves doing: running a business. He doesn’t plan to retire and probably will work until he dies.

Growing up in the Koch family wasn’t easy either. The tennis gene must of rubbed off on his son Chase Koch because he appeared in Sports Illustrated under “Faces in the Crowd” in 1996 for a stellar tennis record. Just three years earlier Chase hit and killed someone in an accident. People make mistakes no question and growing up with Charles Koch probably wasn't easy as at 13 years old Chase had to go out and do work on the cattle feedlot in western Kansas. Charles said he thought his son believed he would have a full time job and be able to go out with his friends as night in Kansas. Chase worked 12 to 13 hour days 7 days a week as well. Charles when he first started work at Koch worked 7 days a week too. Charles preached family values and economics to his kids. Every Sunday afternoon Charles would teach his kids about economics. Chase would go to sleep while daughter Elizabeth would act interested. Chase who is not 35 now Vice President of Koch Agronomics Services. Elizabeth graduated from Princeton in 1999 is 36 years old with a degree in English literature and an MFA from Syracuse in 2011 and now works at Black Balloon Publishing in New York. The Koch kids seem to be good people or done anything crazy that has got in the press.

What truly is crazy is that the Koch family gets hundreds of death threats from wackos all the time. Not only this but Koch Industries has received cyber threats, bomb threats, and employees have also been threatened to. The family has a result has to hire security guards around the clock to protect themselves (tax increase I would point out). This seems pretty crazy for guys that just want to spread the good word of liberty, limited government, and prosperity. Speaking of prosperity Charles points out that "even those who live in poverty, have more money and opportunity for jobs if they live in a free-market economy rather than one controlled by dictators".

I consider Charles Koch to be a great American. Greatly expanding a business his father started into a $115 billion per year is not easy. In addition to creating jobs, improving the economic condition of his own 60,000 employees he is trying to spread the message that free markets actually do improve the life of everyone (even  poor people). I personally don't think Charles Koch is motivated by money. He is motivated to do the right thing by explaining not only how he was successful but how other people can be successful. In addition to all of this, he and his brother David have given $46 million to local Kansas charities and $1 billion in the last 12 years to various causes. If after reading this you don't have any respect for Mr. Koch you probably don't have any decency. 

Kochs’ Quest To Save America

Source: Wichita Eagle

It seems as if more information came out about the Koch brothers over the weekend. The Wichita Eagle published this article on October 11, 2012. On the Wichita Eagle website (Kansas.com) it said that this was an exclusive and only part 1 of an extensive interview. I am hoping for more articles out of this of course. As you may know I have been interesting in the Koch family for quite some time and did a historical net worth of Charles and David here, a Koch family history, the $1.3 billion lawsuit between all the Koch brothers,  growth in the 1990’s,  as well as current growth, even David Koch dating.

There was not only the original article that came out but also some photo galleries that can be seen here and here. Some separate articles are quotes from Charles Koch, David Koch, and Dr. Richard Fink (executive Vice President of Koch Industries). Growing up the Koch family had a strict dinner policy. At 6:30 a big bell would ring and they had to come into the house and sit down with parents. David admits he was scared when he was diagnosed with prostate cancer in the 1990’s. He actually believed he wouldn't be around very long. His prostate cancer is under control and David has generously funded causes to help find a cure for prostate cancer as he donated $25 million to M.D. Anderson Cancer Center in Houston. As part of his legacy David wants people to know he tried his best to make the world a better place and improve the lives of others.

What we learn in all this recent news is how the Koch brothers have been personally targeted by the Obama administration for using their first amendment rights to speak out against the administration. Wichita Eagle mentioned the death threats in this article. Not only has Charles and David Koch (David said he got 100 creditable death threats) been getting death threats but employees as well. Of course these death threats are from deranged people who don’t actually have all the facts and watch MSNBC all day, read Media Matters online, and listen to fools like Ed Schultz on the radio. I haven’t even heard of President Obama getting death threats and you would think that would be likely with all these so called “racists” out there. At any rate, the death threats on the Koch family have caused them to hire more security for them and their family (tax increase of course).  The article mentions how Austan Goolsbee (Obama’s chief economic adviser claimed Koch Industries was not paying their taxes (which is actually a crime under federal law to disclose confidential tax information). Stephanie Cutter Obama’s chief campaign manager claimed she “was going to call their BS”. Apparently, Ms. Cutter has not seen a video where Koch Industries calls Cutter on her BS here. This video talks about the falsehoods associated in a Bloomberg article that discussed the dealing Koch had in Iran. In May 2012 David Axelrod called the Koch brothers “contract killers”.

Also it is learned that Dr. Richard Fink told the Koch brothers in January 2009 around the same time when President Barack Obama was sworn into office that there would be a price to pay for taking on the president. One of the risks might be to put Koch Industries at risk as well as the family legacy. The government does have the power to do much harm to Koch Industries as it can “randomly” audit the company, refuse permits, or treat them in a way that would not be business friendly. David Koch talks about how we will have inflation by buying bonds to finance debt.  This has forced interest rates to very low rates and as Charles points out really doesn't help the people who save money (Koch praised John Allison’s new book on the financial crisis which I am currently reading). Fink points out that the interest alone due to China by 2025 will be enough money to fund China’s military budget.

Another interesting point that people forget is that Charles and David Koch are more libertarians than anyone thinks. Charles even admits that if Democrats supported free markets and limited government they would donate to them (it just so happens that the people who endorse free markets are Republicans). They support people who want limited government, strong property rights, and people who want everyone to prosper. Both Republicans and Democrats have failed this test and Charles points out that even under Romney the country will just decline as a slower rate compared to Obama.  Although people claim that the Koch brothers want more deregulation to make more money this is a foolish statement. If markets are deregulated allowing more competitors into the same businesses as Koch how does that benefit them if they would face even greater competition? It is actually against their self interests to want more competitive markets. However, the Koch brothers rise to higher morals and want a system that makes the world a better place for everyone.

Dr. Richard Fink was looking to fund a free-market organization and went to Koch (after buying a $1,200 plane ticket to Wichita). Fink wore a polyester based suit and made a presentation to Charles in 1977 in search of seed funding of $150,000. Charles admits the fact that Fink wore a polyester suit helped (petroleum based which Koch has businesses in). Then there were the invitation only economic seminars which the first one in Chicago with only 17 people having nonstop lectures (people couldn't even taken bathroom breaks).

Clearly, the Koch brothers have benefited society through their charities (they donate to the arts, medical institutions, and schools). In addition creating a business that now has 60,000 employees they create products that people use every day (toilet paper, Dixie paper cups, along with blended gasoline). David Koch’s technology group is even making water cleaner to drink. I really admire them for their success in not only running a business but promoting an economic system that really would lift people out of poverty and increase the standard of living for everyone. To the Koch brothers I tip my hat to both of you. 

Bill Koch Holds Kirby Martensen (Oxbow Employee) Captive?

Today, I just learned of this bizarre news story from Oxbow Energy (especially for a Friday afternoon). Oxbow says it began a year long initiation beginning in March of 2011 to investigate whether a certain executive was trying to defraud the company of $40 million. Oxbow claimed an employee named Kirby Martensen was getting kick backs.  Martensen who worked for Oxbow Corporation for 16 years relieved millions in compensation and bonuses. As you may know I have covered Bill Koch in numerous places in his profile here, his school days, and the $1.3 billion family lawsuit with Charles and David Koch.

In this news story it is alleged that Kirby Martensen who was an executive for Oxbow Energy was held captive by Bill Koch. Martensen was promoted to be the senior vice president of Asia. Interestingly more than 75% of Oxbow's fuel grade petroleum exports profits come from just the Asia operations. Martensen is claiming that Oxbow was trying to relocate part of the company in order to evade $200 million in taxes.What is interesting however and maybe something Bill Koch can use in his defense is the fact that Martensen himself was alleged to self dealing, stealing, and breaching a fiduciary duty. Koch did a review of thousands and found Martensen was worried about if Oxbow was actually doing things that were legal.

Martensen claims that Koch tried to discredit him and used "false pretenses". The story gets a little stranger when Koch drove Martensen to Bear Ranch for the night and had breakfast the following morning. Koch showed Martensen around his private city. Martensen was then interviewed for his peer review and which lasted several hours and seems was a meeting to tell him he was going to be terminated. After this he was escorted to pack up his stuff and a sheriff wasthere to escort him out. After this the story gets bizarre as Martensen claims he was kidnapped and taken to the Denver airport for a 2 in the morning flight on March 23, 2012 on a private plan that went from Denver to Oakland, California. Martensen then basically left refusing to go to the Marriot Courtyard Hotel. In this whole process Martensen claims he suffered from anxiety, fear, humiliation, and distress.The official charges are false imprisonment and civil conspiracy. Martensen has already hired John Houston Scott (because three names just makes you sound smart) from San Francisco to defend him.

Bill Koch has a history of losing court cases. He lost the $1.3 billion case against his brothers. He lost the case against the wine he claimed was counterfeit wine. Last year he was in a lawsuit for real estate having to do with his private school. I haven't even touched the numerous lawsuits he has got into with his love life. In general Koch is on the wrong side of the lawsuit however the accusations made seem like something out of a John Grisham novel and the truth remains to be seen. A book could probably just be written on Bill Koch's court decisions. No question though Bill Koch is an interesting man and which is why I continue to blog about him.

William Koch: Culver, MIT, and Other School Days

After making the comment that William Koch had learned nothing after 13 years and getting three degrees from MIT including a PhD in chemical engineering I did some research to learn more about his school days.  I found this profile from his high school Culver Military Academy where he graduated in 1958. It should be pointed out that Charles Koch also went to Culver Military Academy but was expelled after drinking on a train. Even though students go to places like Culver before college it has more of a college schedule with Wednesday being the busiest day with activities from 8:20 a.m. to 11 p.m. There is no surprise that 99% of the graduates matriculate into colleges.  It is interesting the classes are ranked by how much time it takes students on homework. So for example a Level A class will take less than 30 minutes in homework per class while a Level E class will take more than 90 minutes per class of homework.

William seemed pretty busy when he as at Culver. He was on cross country, basketball, track, football, baseball, boxing, volleyball, softball, and graduated cum laude. According to the June 1994 edition of Vanity Fair from an article called Wild Bill Koch’s Grand Desires by Bryan Burrough, William as a kid was “nerdy, awkward kid”. He also like to start mischief when he was six he swallowed a hog ring which lead to a hospital visit where they had to pump it out. He was also competitive and didn’t like to lose. The Koch family had a pool growing up and William got upset pretty easily and sometimes would go crazy. In one instance his twin brother David Koch was hit with a polo mallet and David fought back. In a very dangerous fight William got a butcher knife but finally put it down after he realized he could kill his own twin brother. During middle school at the age of 13 Bill almost failed out (interesting for someone who later got a PhD in chemical engineering) and says he was clinically depressed. William went to M.I.T. like his older brother Charles and all joined Beta Theta Phi, where William was the house “humorist”. William was also a pretty decent athlete making the basketball team at M.I.T. his freshman year. Twins David and Bill both got their master’s degrees in chemical engineering by 1963 however they both took different paths. David went to go out in the real work and work while William spent the next eight years at M.I.T. getting his PhD. David claims his twin brother William had a country club attitude when it came to school, and just “lazy years, full of days tinkering in university labs, playing rugby, and chasing women”. Perhaps spending a total of 13 years in school was a way for William to avoid having to work in the real world which makes his comment about never really learning anything even more interesting.

As people say it really isn’t where you start out in life it where you end up. William Koch seems like he has gone through many different things in his life time (depression, various lawsuits, and marriages). However, today he is waking up everyday going to work in charge of Oxbow Corporation and worth $4 billion. If you read he was on the verge of flunking out of middle school you might not have guessed he would have been a billionaire or ever got a PhD. 

Genome Sequencing Cost 2001-2012

Interesting the genome has gone down dramatically since 2001 and most likely will continue to go down. The  big decrease seemed to come after 2008 and I suspect will be very affordable within the next 10 years and perhaps just another test that the doctor does. As more genomes are sequenced we can compare them, look at them over time, and see how they change to get cancer, diseases, and other illnesses along how they repair. It is amazing how the free market works when people get greedy and want to serve their fellow man.

Patrick Soon-Shiong: Billionaire Taking Genome From 8 Weeks to 1.47 Seconds

Since I am always interested in new technology I thought it was pretty cool when I saw this story about Patrick Soon-Shiong who is a billionaire are selling companies he started. Currently, he is worth $7.3 billion and is chairman for Nanthealth.

What Patrick wants to do is launch a genomic supercomputing platform that would reduce the time needed to sequence a cancer genome from currently 8-10 weeks to just 47 seconds. Soon-Shiong just presented some data that showed that after collecting 6,017 cancer genomes from 3,022 patients (having over 19 different types of cancer) they were able to be analyzed in 69 hours which is very quick. This was also a lot of data coming in at over 96,000 gigabytes of data. The idea is to provide real-time information to doctors and patients to help them make better decisions when it comes to health. Nanthealth who worked with oncologist (cancer doctors) saw incorrect recommendations drop from 32% to basically 0%.  

I have always wondered why supercomputers where modeling climate change, weather, or the earth’s crust. Putting a supercomputer to use for things like helping patients is a much better use of taxpayer money if it can lead to timely information that can be used by patients. As the number of people on the network grows, doctors will gain more information, meaning they will be able to help more people.  In 2012 it is estimated 1.8 billion people will get cancer and the supercomputer will be able to analyze about this amount (5,000 patients per day). The cost of the genome has dropped dramatically and will continue to drop as the quality increases (one thing I worry about right now is how accurate the genomes are however this should prove over time).

 I discussed in this post the failure of the war on cancer from the government. This has the potential to also help sequence other types of diseases that could give doctors and patients again more data. Trial and error will give quick feedback to what really works and what doesn’t work. This is how a market system works. I suspect however privacy groups will be up in arms about sharing any type of information as they always are. One question I always ask if they are so concerned about privacy why do they post about their bowel movements on Twitter or Facebook?

William Koch: Wine Lawsuit, Chamber of Commerce Meeting, and Not Learning A Damn Thing At M.I.T.

As you may know I have covered William Koch many times before in a profile, the $1.3 billion lawsuit, and his own private town. In recent news it was decided in court today that Koch waited too long to file a lawsuit against Christie's after Koch had purchased a wine was supposedly belonged to Thomas Jefferson. Judge John G. Koetl wrote a 38 page opinion (I guess he had a lot to say about it). There is what is known as statue of limitations that basically say if you are harmed you have a limited period of time before you can come forward and after that you can’t really do anything about it. I taught in my business law classes it was 3 years but in this case it was 4 years starting in 2000 and Koch waited until 2005 to file the lawsuit. The bottle was bought in 1988 for $100,000 and relied on Christie’s for representation. Koch filed the lawsuit after he sent samples to the Woods Hole Oceanographic Institution to carbon date it and they said it had less of than a 5% chance of being from the period it was claim to be from.

In other news, William Koch made an appearance recently at a Chamber Commerce of Breakfast that was held 7:45 a.m. on October 2, 2012 at the Palm Beach Chamber of Commerce. Tickets were only $30-$50 for non members or guests. I found this  article from the Palm Beach daily News that actually talked about the event. Apparently there was an audience of 570 people which is pretty good for 7:45 in the morning. William introduced himself as “just a hick from Kansas”. He claims that he was a nerd while at M.I.T. and couldn't compete with the Harvard men when it came to getting girls. William is married to Bridget Rooney who has a family that owns the Pittsburgh Steelers (mother in law refers to Bill as poor Koch brother even though he is worth $4 billion). My favorite part is that even though he got three degrees from M.I.T. (including a PhD in chemical engineering) he claims he didn't learn “a damn thing”. During he said that he learned from trial and error (mostly error he says). He also lost $200 million over is careers in bad business deals (one of them was Checker cab and an onion pill to lower cholesterol while he was at Koch Industries).  On management Koch believes that you have to find great people and motivate them through bonuses and money to entice them.

William Koch is a truly interesting person. He seems like the type of guy you would want to have lunch or dinner with and hear his life story of the good, the bad, the ugly, and interesting. In this recent article Koch revealed his literary side in front of presidential candidate Mitt Romney. Romney was at Koch’s home and Romney had mentioned the book “Men to Match My Mountains” and Koch said, “You know, the title of that book comes from a poem” and then Koch recited the whole poem from memory.  I hope Bill Koch writes an autobiography one day so we can all learn about his interesting story.