The Evil Diaries: Protective Aggrandisement

For those such as myself who are sceptical about Foxtons (FOXT) what follows here is hardly a surprise. However, for others, it may come as a revelation. Feast here: http://www.dailymail.co.uk/money/news/article-3113604/Estate-agent-Foxtons-risks-huge-legal-bill-charging-616-fix-light.html.

This cost, if the Courts sustain it, is not an insurable, still less an insured, risk. This is because it’s not a risk; it’s a rip off.

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I spoke to Kevin Foo on Saturday last on the subject of Victoria (VOG) and Cameroon. Boko Haram is about a thousand kilometres away. So sales of Victoria on the grounds of their imminence are misplaced. More importantly – see this morning’s RNS – Victoria is going very well and financially in the driving seat. Apparently, one broker has suggested revenue of $50m in the year to May 2016 or perhaps $18m post tax profit and rising. There has to be a discount for valuation purposes since Cameroon is pure Africa as regards political risk. On the other hand, it is Africa that is providing the opportunities. The extent of these are nowhere near properly considered. I bought a further 100,000 at c. 74p.

One has to remember that, every time this stock rises, private investors sell into the strength just to realise anything in a generally weak market. On the other hand, this constant tendency to liquidation is bound to cease one day – perhaps soon.

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Concha (CHA) today announce yet another deferral of an announcement. Just what is going on?

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Protective aggrandisement: for many years (I have virtually grown out of it now), noting that many so called important people in the forefront of the nation’s life behave as if they think they are terrifically important, I wrote to plain misters with the style Dear Sir Whatever… Had I been challenged I would merely have remarked that the addressee might have picked up a knighthood between my posting the letter (it was always post in those days) and it being opened. I am sure that a few recipients felt that this aggrandisement was quite in order since, as I have remarked, many think very highly of themselves. My general view is that most businessmen only get knighthoods because they have paid money to party coffers – they then sublimate themselves into thinking that they are important. I hasten to add that not all businessmen fall into this category since one or two are strikingly remarkable given the human condition. I am here thinking of the likes of Sir James Dyson.

However, I was a little surprised that Anthony Oppenheimer, the owner of this year’s Derby winner Golden Horn, started the year as Mr Oppenheimer but, by 14th May 2015, had emerged in the sports pages of the Daily Mail as Sir Anthony Oppenheimer. I decided that I must have missed something or the fact that Anthony Oppenheimer is a baronet where the latter condition had been kept well concealed since the death of his father, Sir Philip Oppenheimer, in 1995. Scrutiny by TV cameras after the Derby revealed that he was plain Mr Oppenheimer. The Daily Mail’s conduct, given its reputation as a fact checker, must be counted to have been aggravated protective aggrandisement.

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About thirteen years ago, there was a tiny company, quoted on AIM, called Room Service, which was in serious trouble with its business and more than a few entirely reasonable people reckoned that not merely did it need to raise cash quickly but there wasn’t much point since it was a useless, shortly to be insolvent, company. A young market maker, whom I encountered over lunch shortly after the denouement, recounted to me that, being a bold bunny (a requirement of any market maker either then or now), he used his position at Evolution to keep selling Room Service short. As it happened he sold short more capital than was in issue, let alone capital that might have been regarded as in free float. The buyers were half-witted private investors who, unsurprisingly (these guys are mad), claimed that had they been able to take delivery of stock they would have been able to do something (it was never specified as to what) to save the company. Needless to add, the young market maker sat back waiting for either a hugely dilutive placing or insolvency – at which point he would on behalf of his firm, Evolution, harvest the fruits of his good judgement.

Here squalid populism stepped in and the shares were of course suspended and an FSA (now FCA) enquiry followed. Also, a rabble rouser, of the squirtiest variety, corralled an action group which managed to get hold of yet another bent lawyer (there is no shortage of them) to pipe up down at the FSA. So the FSA duly decided to lick the bottoms of the undeserving and there was some sort of compensation paid to holders. Evolution was fined £500,000 and no doubt had to pay yet more of me learned friends a substantial sum. The head market maker at Evolution, Chris Potts, lost his job and has since forged another career.

Looking back, the wise and honest approach on the part of the FSA would have been to identify that there had never been any limits on a market maker’s conduct of his book in force (either within Evolution or, more importantly, the LSE) and that a “delivered stock basis” should have been compelled. Such a basis would surely have caused a stunning squeeze which would have resolved everything.

The trouble was that Blairism had by then really taken hold across the land and systematic promotion of lies had become central to policy-making. Therefore an injustice was done.

Moving swiftly along, I take the reader to current affairs in the form of another tiddler, New World Oil and Gas (NEW) which has got an appreciable unsettled position in play. It is not clear what happens when it is settled or what is being done to settle it. However, unsurprisingly, another posse of protesters seeks delivered stock to enable its voting plans to be given effect in company law. The posse seeks to use the Room Service affair as a precedent. I do not know what happens now but I suggest that some bright spark at the LSE arranges a “delivered stock” market where buyers can compel delivery. That’ll do the trick. As for engaging the FCA, the posse should not bother. The FCA’s past endeavours indicate nothing other than that the incompetence the FCA showed thirteen years ago cannot constitute a precedent.

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Finally, I listened to Liz Kendall on the Andrew Marr show yesterday and would, were I a Conservative, unhesitatingly vote for her to be the next leader of the Labour Party.