I do the intros and then we get straight to it.
‘Paul, Mike, thank you for coming in. I want to talk gold.’
Summers goes into silky mode. ‘Dave, you’re certainly talking to the right people. We broke more AIM gold mining companies than the next three competitors combined. We trade more mining stocks than anyone else, we do the largest volume in the sector and, of course, Mike’s reputation is second to none.’
Mike opens his mouth and looks as if he’s about to say something, but instead belches a mass of stale breath and runs for the door. Maria points him to the gents and we don’t see him again, though I occasionally think I can hear someone retching massively.
Summers doesn’t even pause for breath. ‘Oysters.’
‘Oysters?’
‘He ate some bad ones last night, entertaining investor clients. Ours is a round-the-clock business, as I’m sure you understand. He didn’t want to miss today’s meeting, and I did warn him, but he’s incredibly committed to the business. And with your reputation … Well, you don’t need me to tell you, you’re a legend. Everyone in the firm wanted to join us today when they heard about your call.’
Bring it on. I love flattery, and this guy is a second dan black belt. I can see we’re going to get on well.
‘Paul, roughly how many gold mining stocks are there on AIM that are under-valued relative to proven resources?’
‘How many? Almost all of them. That’s AIM. You know how it works. If you mean serious under-value, where they’re starting to have targets on their backs to be taken out, I’d say, currently, about twenty.’
‘And what about the Canadian exchanges? And the Aussies? How many are there in the total mining universe?’
‘Again, if we’re talking serious under-value, globally, perhaps fifty. A lot of people know them, of course, and are watching them. Including the mining majors. But there hasn’t been much merger and acquisition activity since the credit crunch hit.’
‘Excellent. I want to buy them.’
‘Which ones?’ His voice is a gratifying half an octave higher. The City of London is a wonderful place. It’s never too late to have something completely new happen to you.
‘All of them.’
‘All of them?’ He’s almost squeaking now.
‘Draw up a list. And Paul …’
‘Dave?’ He’s licking his lips, nostrils slightly flared, getting excited. Really excited. He smells huge wads of cash coming his way. He’s right.
‘If any of these stocks starts moving before we bid, even by accident, we pull out. Of everything. I don’t want any leaks to friends and family. No one gets paid back for past favours by being tipped off so they can front-run my bids.’
Paul manages to look vaguely hurt when I say this. As if he would. Yeah, right.
‘We accumulate our initial positions carefully, over a few weeks, until we’re ready,’ I explain. ‘And then, when we go, we go for all of them together, cleanly, on the same day, all over the world.’
‘Multiple bids for fifty companies, all at the same time?’
‘That’s right. Because God is on the side of the big battalions, and weight of money always wins. No one’s bigger than us. The whole sector will be re-rated after this.’
‘Amen to that.’
How about that? He came in here an atheist, and now he’s got religion.
I’M TRYING again with Two Livers. I’ve got tickets for Figaro at Covent Garden. I’ve taken a box, organised a Michelin-starred chef to provide the catering, ordered the finest wines – better than anything the Opera House ever serves – and I make sure Tom drops me off half an hour early so I can fuss unnecessarily about the details and generally irritate everyone.
On the way Tom passes me the evening paper.
‘Front page news – isn’t that the bloke you saw at the Treasury?’
It’s true. Lord Bigmann’s political career seems to have taken a bit of a dive. Apparently he’s been having a little bit on the side that Lady Bigmann knew nothing about. Several little bits on the side actually, and they all look quite tasty. Someone dug up the dirt and now the papers have splashed it. In fairness, it’s nothing I wouldn’t do myself as a matter of daily routine, but political life in Britain is governed by a golden rule of hypocrisy: don’t get caught and, if you do, make sure you’re not caught doing something the Establishment – and, in particular, your political masters – might be jealous of. Lord Bigmann did get caught, the ‘ladies’ have sold their stories to the press and now there’s talk of him resigning. So far Lady Bigmann is standing by her man. Looking at her picture in the paper, I wouldn’t want to be in his shoes right now. She looks like she could eat a Northern scrap-metal merchant for breakfast and spit out the rusty bits. Isn’t life a bitch?
Dinner at the Royal Opera House has been planned with meticulous detail. We’ll start with a selection of amuse-bouches with our champagne, and then we’re going to be eating foie gras terrine washed down with Tokay, followed by lobster with all kinds of interesting bells and whistles with a Grand Cru Chablis. This chef knows his stuff and I’m sure it will be a hit. As for the opera, all I have to do is not fall asleep. It’s three and a half hours with one interval. I considered popping something to make sure I don’t nod off, but on reflection decided to avoid drugs and alcohol altogether for twenty-four hours beforehand, and get an early night – alone – which was a challenge worth accepting for the prize I’m seeking.
So I’m feeling uncharacteristically alert and refreshed, in some ways almost disturbingly so. Without chemical assistance of one sort or another to smooth out life’s little wrinkles, even small things seem to irritate me. In fact I’m pretty snappy. Chill, Hart, chill. All you have to do is stay awake and let the food, the wine and the performance take care of the rest. There’s much less chance of fucking up, because most of the time you’ll be sitting in silence, taking in the opera, which has great reviews and will hit the perfect cultural chord with Two Livers. The less you speak, the smaller the chance of saying the wrong thing.
The door of the box opens and I can tell she’s arrived even before I turn to greet her. The trademark scent of Un Bois Vanille drifts through the box – just a hint, nothing more, because she actually knows how to wear perfume. When I turn and see her she takes my breath away. I know it sounds corny, but she truly is a vision. If I could capture the moment as she stands in the doorway, I’d carry it with me forever. She’s wearing a long black satin evening dress by Stella McCartney, which opens temptingly to reveal her tanned and toned legs as she comes into the box, with a crystal pendant set with diamonds by Kiki McDonough that I bought her a couple of Christmases ago. No coincidence, and a good sign.
She steps forward and, instead of the usual air kisses, I lift her hand to my lips and kiss it. I don’t think I’ve ever done that before to anyone, at least when I was sober.
‘Thank you for coming. You look amazing.’
‘Wow – peonies! Someone took some trouble.’
That would be Maria. She recalled that Two Livers loves peonies, and rang a florist to get vases of them sent over.
‘I remembered how much you like them.’ OK, so I could have given Maria the credit – it would make me look generous and modest and mature and well-balanced, and all those other fine things – but I’m a banker. If I can possibly take the credit for someone else’s work, I will.
‘Bullshit. I bet Maria remembered. You’d never … well, maybe you would.’ She leans forward and gives me the briefest peck on the lips. ‘So are you going to pour a girl a glass of champagne?’
The great thing about a date at the opera is that it doesn’t force you to deal with each other. There’s the opera to talk about, to read about in the programme, to watch and listen to. Then there’s the food and drink to divert you and, best of all, the people-watching. Covent Garden draws the best and worst of London society. The old Establishment have to dig deep by their standards to afford the tickets, but mandarins, academics,
newspaper editors and businessmen are all there, as well as the New Money that dominates so much of London life, the arrivistes, the foreigners for whom London is a convenient bolt-hole, the tycoons and oligarchs who wouldn’t know Strauss from Stravinsky. And, of course, the City is there too. In the City, cultural pretensions are an essential item to acquire once you’ve done money – part of the means by which you show you’ve arrived, you’re not just a one-dimensional banker but a rounded, cultured, elevated individual who understands and appreciates the finer things of life. Even if you haven’t a clue what’s going on and find it hell to have to turn your Blackberry off for three and a half hours.
So I’m surprised when, towards the end of the interval, as we’re sipping fine wine and talking about the performance – and no, I haven’t fallen asleep – Two Livers seems distracted, partly absent from the conversation.
‘What’s up? Am I boring you?’
‘Not yet.’
Ouch. I look hurt, and she laughs.
‘Joke. Relax. I’m not bored with you. Ever. So long as you don’t try to be someone else, that is. You’re Dave Hart. You’re exceptional and you’re interesting, and you’ve done amazing things. And deep down you’re capable of being quite decent. By City standards, anyway.’
What’s going on? I’m not sure how to respond. I think those were all compliments. And what does she mean by ‘deep down’? I don’t have a deep down.
‘Is that what you’re afraid of – boredom?’
‘Isn’t everyone?’ She looks me squarely in the eye. ‘Aren’t you?’
‘Yes. All the time. Every day of my life. But how do you deal with it? How to keep the demons at bay? They’re always there, you know. Only a heartbeat away.’
She takes my hand and we have beautiful eye contact. I wish more women did that. I can feel a stirring. This could be a great night.
‘Dave, you keep the demons away for me. I never know what the hell you’ll do next. Probably most of the time you don’t know yourself. But there’s always something. Always.’
She’s right. I hadn’t thought about it before. Probably because deep down I’m too shallow. ‘I know. I can’t sit still. Ever. Otherwise, what’s life for?’
She’s squeezing my hand now and nods towards the stage. ‘Do you really want to see the second half?’
‘Not if the alternative is going back to your place.’
‘Let’s go.’
Fuck the opera. Mind you, it did the trick.
‘THIS ACTION in the mining sector is amazing. You sure know how to make an impact.’
I’m having breakfast at George on Mount Street with Arthur Morgan, an American ex-hedge fund manager.
Arthur is still only thirty-six years old, but he has grey hair and worry lines. He’s had a tough couple of years. He’s effectively been through the entire cycle of the hedge fund industry. He started as a trader at Schleppenheim, got promoted early on because he was good, and then left to start his own fund. In those early days, he was what used to be called a new-issue ‘flipper’. The market was hot for new issues of shares, especially by high-tech companies, and some of these shares would see their prices soar by fifty per cent or more on the first day of trading. Some even doubled. People who bought them at the issue price could sell them – flip them – the same day for a huge profit. The big investment banks allocated these shares to their favourite clients, and people like Arthur made sure they were the favourite clients. If they got an allocation, they guaranteed to give the firm in question a big chunk of their profit back in brokerage commission on other business in the market. This kept the firms happy, ensured that the flipper kept getting allocations, and everyone made out like bandits. The only people paying for the party were the companies whose shares were underpriced when they came to market, but since this is something most companies only do once, and a soaring share price is seen as success, they didn’t mind being raped. In fact, they rather liked it.
And, of course, the new-issue flippers made sure they gave the best parties and invited all the key decision makers from the big banks. They even let some of those people invest in their funds, allegedly at times on preferential terms.
It was all too good to last, and eventually, about a decade into this great new game, word filtered through to the regulators and they finally party-pooped the whole thing. Allocations of hot new stocks could no longer be tied to brokerage commissions and other perceived inducements were cracked down on. The idea that key personnel in the investment banks could profit alongside the funds they were allocating hot stocks to was banned (it had actually always been banned, but there are bans and there are bans).
So the smart money moved on. Arthur got into managed futures, running highly technical, trend-following macro strategies that allowed him to benefit from whatever was happening in the markets by doing the same thing as quickly as possible after it had already happened in the markets, and hoping to profit sufficiently by the time the trend changed, so that he could bank a decent return.
Great idea, until the crunch came and suddenly trends went haywire, losses piled up and Arthur found himself dealing with a bunch of people who’d invested in his fund and now wanted their money back. Being an honourable man, he gave it back. Others ‘closed’ their funds to redemptions, but he didn’t and lost most of the money he was running and found the business could no longer cover its overheads – or his lifestyle. He personally paid off all the creditors and wound it up, honour intact but wallet empty.
So now he’s a specialist headhunter for the hedge fund industry. He’s quite successful because he’s got the credibility of someone who’s worn the T-shirt himself, and somehow he manages not to puke when he has to pander to some of the strutting teenage egos who appoint him to hire smart people on their behalf.
‘SO FAR so good,’ I tell him. ‘The mining thing’s worked out well. On paper we’re well up, but bid timetables are frustrating and nothing’s over ’til it’s over.’
‘Dave, the compliment’s a genuine one. You came back from …’ He’s at a bit of a loss as to what to say next.
‘The dead.’
He laughs, and it does seem genuine. ‘You came back from the dead, raised the biggest fund anyone can remember, and now you’re swinging that money around like crazy. It’s amazing. Your fund is moving markets and changing the way things are done. First conglomerates, now mining.’
I could sit here and absorb compliments all day. Especially real ones from someone who doesn’t think he’s going to get anything out of me except breakfast. Unfortunately, I’m quite distracted by the newspaper. It’s the latest in the Bigmann saga. The Daily Post is carrying an exclusive about how the good lord was salting away money on the side in the Turks and Caicos Islands for years before entering politics. Tax dodging the old-fashioned way, not even very smart, and it probably wouldn’t make the front page if he didn’t have a ‘tax adviser’ who looks stunning in a tiny bikini.
Normally these things are kept discreet, but someone must have found her and persuaded her to spill the beans – and do a great photo shoot on the beach in the Caribbean with a photographer, a make-up artist, wardrobe, design, lighting … Poor Lord Bigmann. An unlikely Lothario, with his huffing and puffing – must be Viagra. Probably feeling like a marked man now.
The tax adviser in the bikini managed to push the day’s other big story off the front page. On page two there’s an article about some rap artists who’ve been caught with one of the biggest hauls of cocaine ever discovered in the UK: more than half a ton, with a street value of over thirty million pounds. The plods think they were using their nationwide tour to distribute it on an industrial scale. They’re denying it – well, they would, wouldn’t they? – and claiming a stitch-up, but the coke is real, it’s huge, and whoever has that kind of money to throw around just to stitch someone up? I hope the D Boyz look good in orange pyjama suits with HMP on the back.
But I don’t have all day to muse. I turn to Arthur. ‘That’s what
I wanted to talk about. The fund management industry. Where does it go next?’
‘I’m not sure it has to go anywhere. It went through a rough patch in the credit crunch, but that was to be expected. Fortunately, people have short memories. They’re still paying crazy fees to a bunch of kids for taking their money and going to the casino with it. Life is good, at least in hedge fund world.’
‘So where does the innovation come from? How does the industry continue to justify those fees?’
‘It doesn’t. You don’t change a perfect scam unless you have to. There are always smart new people entering the industry, of course, but they generally get picked up early on by the big players and put to work as slave labour with minimal share of the economics. But they’re wannabes, so they can hardly complain.’
‘That’s exactly what I was thinking, Arthur. The people who run these firms think they’re God. Some may indeed be quite good, but most are mediocre, and a few are really crap, but they take big gambles which, in good times, with strong markets, tend to work out. They cream it off, knowing they’re only a second away from the world waking up and saying to them, “Guys, you’re stark naked.” So they don’t really build their firms, don’t invest for the future in growing their own young talent within the firm. And that’s the opportunity.’
‘What opportunity?’
‘The opportunity to mount a raid, to poach the number twos who actually do most of the work and the smart newcomers who’ll never be given their head.’
‘But which firm are you talking about, Dave? Do you have someone in mind?’
‘All of them.’
‘All of them? But there are hundreds. Do you want to go after them all?’
‘Why not?’
‘What would you do with them?’
‘I’d put them in a huge warehouse full of computer screens and phones – let’s call it a trading floor. I’d give them capital to trade however they want and a really bright boss who’d keep an eye on them, making sure none of them went nuts and getting them to stay within their trading limits. The ones who did well, I’d give them half of what they made. I’d take any losses on their behalf.’
The Ego's Nest (Dave Hart 5) Page 10