Andrew Osborne is justified to feel hard done by. A single four-word remark in a long phone conversation has cost him a small fortune. The words were “something like 350 sterling”, an amount which bears a curious symmetry to the £350,000 fine which the FSA has just levied on him. Given his long years and senior position, he can probably pay it without having to eat bread and water, but it’s still pretty eye-watering. It also looks like rough justice, as he himself claims.
Osborne was a managing director at Merrill Lynch, the brokers with the unenviable task in 2009 of trying to restore financial stability to the pub chain Punch Taverns, a confection of debt built on a sliver of equity. For months, it had seemed odds-on that Punch would collapse, but the “dash for trash” in the spring that year propelled the share price up from 40p to around 160p, and offered a get-out-of-gaol opportunity. Read more
It’s been a gruesome week in the mobile phone market. The almost embarrassing dominance of Apple (ideas for spending $90bn of spare cash, anyone?) provided a cruel contrast to the desperate plight of the opposition. The maker of Blackberrys ditched its founders. Nokia, the one-time rubber-boot manufacturer, tried to stay positive, boasting that it had sold a million Windows-based Lumia phones in the last three months. During that time Apple shipped 37m iPhones. It has sold 315m of them worldwide.
The eclipse of Nokia is one of the wonders of the age, providing fodder for business school studies for decades to come. At the turn of the century, its position in the burgeoning mobile phone market seemed unassailable. Its combination of market dominance and mouth-watering margins meant that it could outspend and out-develop any competitor who came up with a better product. It sold its billionth phone in 2005, and in late 2007, deemed the world’s fifth most valuable brand, the business was valued at €100bn. Read more
David Einhorn’s personal £3.6m ($5.6m) fine from the UK’s FSA for market abuse amounts to the second largest individual penalty for in the regulator’s history, and finally gives it a high-profile scalp, the FT says. Few US hedge fund managers come more high-profile than Einhorn, who often seeks publicity for controversial shorts, reports the WSJ. In a conference call with investors in his Greenlight Capital fund, Einhorn disputed the FSA’s ruling. “This is like a traffic cop with a quota at the end of the month, with a faulty radar detector,” he said, according to Dealbreaker. Read more
David Einhorn, one of the world’s highest profile hedge fund managers, and his firm, Greenlight Capital, have been fined £7.2m by UK regulators for trading ahead of a 2009 equity fundraising by Punch Taverns, the FT reports. Mr Einhorn, who will personally pay £3.6m, is the most prominent figure to be ensnared by the UK Financial Services Authority, which has traditionally lagged behind US enforcers in tackling market abuse. His fine is the second largest ever handed down by the FSA to an individual for market abuse and will send a chill through the City. The case is a key step in the FSA’s campaign to hold market professionals to account and to tackle the high rates of suspicious trading ahead of mergers and rights issues. The WSJ says it represents a rare instance when a hedge-fund manager is personally held responsible for allegedly improper trading.
According to the FT’s hedge fund correspondent, Sam Jones, the hugely successful Paulson & Co (he of subprime bet fame) currently denominates a third of its $33bn of assets under management in a share class bolstered by huge positions in the gold market.
In fact, the FT reports: Read more
We might have expected David Einhorn’s Greenlight Capital to have suffered terribly during the recent equity rally.
But no! Mr Einhorn might scold the Obama administration for pursuing “short-term popularity over our solvency” and advise everyone to buy gold, but funds under his management seem to be holding up relatively well. Read more
This time last year, David Einhorn – the hedge fund manager behind Greenlight Capital – took to the stage at the Ira W Sohn Investment Research Conference in New York and in a rather forceful speech – even by activist standards – announced that he was shorting Lehman Brothers and that the firm was indeed, as its CFO had many times said, “incredible” — just for all the wrong reasons.
Einhorn’s detailed takedown had Lehman executives on the ropes for weeks thereafter. And, of course, it was all correct. Read more
Hedge fund investors who made money last year by betting against investment banks are now buying gold as a way of betting against central banks. The gold bulls include David Einhorn, founder of hedge fund Greenlight Capital, who last year came under the spotlight for his short selling of shares in Lehman Brothers, after arguing that the bank did not have enough capital to offset its exposure to falling property prices. Other funds looking at gold include Eton Park and TPG-Axon, the FT reported. Read more