The chairman is cock-a-hoop about a Scam fund manager’s brilliant contrarian reading of the HP-Autonomy deal. So why isn’t everyone impressed?

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“What’s that strange noise wafting up from your fund management floor?” I asked the chairman of the implausibly-sized investment company Second Coming Asset Management after dropping by his office en route to enjoying a pint or two of Gobsmacker at The Sticky Question. “If I didn’t know better – and I know how ridiculous this sounds – I’d say it almost sounded like laughter and cheering.”

“Oh yes, very funny,” huffed the chairman. “I get it – Scam fund managers never have anything to be happy about so any sounds of jollity emanating from their general direction could only be down to something like a nervous breakdown or that time one of them actually got hired by another fund group.” “I’m only playing the percentages,” I shrugged.

“Well, this time you are wrong to do so,” crowed the chairman triumphantly. “I’ll have you know that joyous noise you can hear is nothing less than the sweet sound of a Scam fund manager enjoying his success.” “Wow,” I said. “That’s genuinely impressive. What was it – the National Lottery? A good day at Cheltenham?”

“Oh do grow up,” the chairman sighed. “The source of that laughter and the recipient of that cheering is the Scam fund manager who – and here I’ll pause for effect … did not like the cut of Autonomy’s jib in the months before it was bought by Hewlett Packard.” “Wow,” I said. “That’s genuinely impressive – and this time I’m not even being sarcastic.

“So he wasn’t convinced by Autonomy’s numbers but, realising there were not many in the market who shared his view, he held back from doing anything until the company was taken over? Then at that point he went short on Hewlett Packard in a way you would not believe and, now the group has made that huge write-off and the share price has subsequently fallen, he has reaped his just reward?”

“Pretty much,” laughed the chairman, enjoying his vicarious moment in the sun. “He wasn’t convinced by Autonomy’s numbers and, realising there were not many in the market who shared his view, he displayed those signature characteristics of the great contrarian investor – independence, strength of mind and trader testimonials – and went short on the company in a way you would not believe.”

“Hang on a minute,” I said. “So what you’re saying is he lost a bundle when Autonomy was taken over by Hewlett Packard?” “Well, ye-es,” said the chairman. “But you appear to be missing the point – his initial stance has been comprehensively vindicated by Hewlett Packard’s decision to write down billions on the back of the sort of allegations my lawyers don’t even let me repeat any more.”

“Well, ye-es,” I said. “But, then again, he did lose a bundle when Autonomy was taken over by Hewlett Packard.” “No, no,” said the chairman. “Please listen to the words I am saying – his decision to short the stock has ultimately proved to have been the correct view.” “You mean he would have got away with it if it hadn’t been for that pesky bid?” I smiled.

“I don’t get the reference,” the chairman said blankly. “I am just saying you might like to give credit where it is due – speaking of which, our chap was not the only investment professional to make this call. These happy few, these heroes – no, I don’t think that’s too strong a word – were bold enough to stand up and take a view. Other fund managers got lucky.”

“They also got richer,” I observed. “Meanwhile, at the risk of repeating myself, your man and those other glorious fund stewards lost a bundle when Autonomy was taken over by Hewlett Packard. On this one, I am with Napoleon on his preferred kind of general. Don’t get me wrong – I think it’s wonderful you’ve found a fund manager so adept at spotting corporate question marks.

“Clearly he is quite the catch. However, as a plan, shorting a company in the belief the market will be rational enough eventually to come round to your way of thinking would appear to carry one fairly glaring risk.” “He would have made money if only …” the chairman began. “Please don’t,” I interrupted. “That line diminishes us all.”