KEY POINTS:
There is nothing like a bit of good publicity to drum up business, and last week hedge fund managers linked to the short-selling of Lehman Brothers and HBOS into oblivion had the kind of coverage even their money can't buy.
"Vulture capitalists" (UK's Daily Telegraph), "The hedge fund hyenas" (Daily Express), and "Greedy pig US billionaire helped bring HBOS to its knees" (Mirror).
What to the rest of us would be actionable is to them a 22-carat endorsement. After all, if you're a predator, you don't want people to think you've gone all compassionate. What they prey on are vulnerable companies and their shares. Their weapons, besides a ferocious intelligence and detailed research, include the one deployed so devastatingly last week: short-selling.
Judging a firm's share price to be due to fall, they will borrow shares from an institution, sell them to a third party, and rely on the prices diving by the time they must buy shares to return them to the institution by settlement.
Their trades have the ability to move shares in the direction they desire and even bring companies to their knees. The consequences don't concern them; the profits do. Four of the men said to be involved in last week's turmoil are among the Premiership players of share dealing.
They have corny nicknames (Philip Falcone as "The Midas of Misery", and Simon Cawkwell "Evil Knievil"); extravagant habits (Falcone paid £24 million ($64 million) in cash for Bob Guccione's 27-room New York mansion; and they write books with creepy titles. Cawkwell's is Bear Essentials, David Einhorn's Fooling Some of the People All of the Time.
But there is one fundamental difference between these men and the Premiership footballers: they are far, far richer. Crispin Odey, for instance, and his wife Nichola Pease, known as the Posh and Becks of finance, are worth almost three times the Beckhams' £125 million, thanks in part to bonuses such as the £28 million he paid himself earlier this year.
What they all have are commercial cojones. Falcone, in his early days, once lost everything on a company called AAB. He recovered and is said to have made £280 million backing HBOS shares to fall.
But critics say the scale on which they bet creates the very vulnerability they claim to have spotted. They reject this. Cawkwell says: "If a man running a bank can't finance his business, he is the one to blame, not me."
Jacob Marley could not have put it better.
- INDEPENDENT
