After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.
When one of the daughters went to go overseas to live, I asked Mrs B how she went at the airport and she said she ‘sobbed like a nutter’ as they said goodbye.
I couldn’t be there as there was a major deal going down but I always loved that particular saying.
So this week, I can only describe how I found myself ‘sobbing like a nutter’ when I was informed that one of my old clients, Lord Rothschild, had died.
It wasn’t for the fact that he was an old client (well his firm was, but not him personally) or the fact that a family had lost a loving father.
No.
It was the fact that when he died, he had 15,000 bottles of wine left in his cellar.
Now, I’m not a greedy man but I calculated that if he had a bottle and a half for lunch and a bottle and a half for dinner, then he left about 15 years of wine quaffing on the table (or in the cellar) if you like.
We always used to ponder, after a long lunch, would you prefer to leave this world a few years earlier, by playing up and ignoring your doctor’s advice, or would you prefer to follow their advice and live five years longer but as a boring old git.
As Lord Rothschild died at the ripe old age of 87, did he either live a few years longer than he should have or did he have 20,000 bottles to start off with, when he was 82?
It is one of those things that you have to ponder and I can only go by my observations of life.
We used to have a wealthy English client who lived on his vineyard in France, which produced the most wonderful Bordeaux, though he wasn’t allowed to drink it, as he had blown up his liver and other bits, climbing the corporate ladder on the way to obtaining his wealth.
We would fly into Mérignac Airport on a Friday afternoon and leave on the Sunday, having gorged ourselves on fabulous wines, baguettes and cheese, whilst he had to do with water and the odd grape.
On the trip home, we would always vow that we didn’t want to end up like him, so on the Mondays and Tuesdays following our visits, we would live like monks and then eventually slowly slip back into our old ways as the week went on.
By Friday, we would have forgotten about our sobering flight home talk and be back on the old expense account and living it up large.
I can’t explain to you what it is like, when you’re constantly in the midst of a deal that can bring in £500,000+ in commission and then having to go out for corporate lunches and dinners as well, just to keep all parties entertained.
If the corporate card didn’t get smashed for 5% of the commission over the course of the deal, then you were failing.
Go hard and play hard was the motto and as long as you kept bringing the deals in, you were OK, though you were always only as good as your last deal (and expense claim).
Smoking in the boy’s room
There was a time when Kerry Packer, Lord Rothschild and Sir James Goldsmith got together and made a joint bid for a UK listed company.
They had set up a company called Hoylake and then put in a £14bn bid in July 1989 for British American Tobacco (BAT PLC).
They hatched this deal together whilst dining in the Grill Room at Simpsons on the Strand.
They basically booked up all of the surrounding tables, so no one could hear their discussions.
We were none the wiser, until they announced their plans to leverage themselves up and break BAT up into different companies and flog off enough of them to pay down the leverage.
However, in the run up to this bid, we did have some interesting dealings in BAT call options, from our wealthy French-living non-liver-functioning English client.
He was getting some interesting ‘mail’ from somewhere and as this was one of the largest takeovers in UK history at the time, we decided to go and visit him on one of our monk-life Tuesdays.
After much probing, he finally admitted that he was getting his ‘mail’ from one of his friends who loved dining at – you guessed it – the Grill Room at the Savoy.
His friend was deaf, so he could lip read what these three financial titans were talking about and between the deaf one and the fried liver one, they had hatched out a plan to leverage off of this insider information.
If I told you that they had brought 250 BAT call option contracts at 13p at 11.00am (before the bid) and sold them in the afternoon at £1.25, then I would not be lying.
Each contract equaled 1000 shares, so they were leveraged up on 250,000 shares and in those days, an average house in England was worth about £55,000.
Talk about the deaf leading the non-blind drunk!
How about these app… potatoes?
From that day onwards, we would always make sure that we had an intern that could lip read and have them sitting in the reception area, just as companies came to see us for presentations.
We would then have them follow as they left for an internal debrief at the local cafe or pub.
Others would secretly record conversations when they were out of the room, by leaving a James Bond styled recording ‘pen’ on the table as they ‘nipped out’ to the bathroom.
We didn’t need to stoop that low.
So, never let a disability stop you from getting on with life and if you do happen to be deaf and get yourself embroiled in an insider trading court case, you can always shrug your shoulders and write down on a piece of paper that you didn’t hear a thing.
Now, I always eat with my hand over my mouth and I promise you that there will never be any wine left in my cellar when I go.
And if your doctor doesn’t agree with this sentiment… just change doctors!
PS. I discovered this week that if you like to par boil your potatoes before roasting them, add a dash of red wine and a dash of malt vinegar to the cold water before they start to boil. It will guarantee super crunchy Sunday roasties and will also help with the cellar clearance strategy.
The Secret Broker can be found on Twitter here @SecretBrokerAU or on email at thesecretbroker@stockhead.com.au.
Feel free to contact him with your best stock tips and ideas.