John McGrath; inside a trade, thing

This amused me today.

We’ve discussed the altruistic character that is John McGrath previously, and how his track record is very clearly to create wealth for people called John McGrath whilst absolutely destroying value for those who invest in his company or, indeed, listen to his advice on the trends in the real estate market.

In fact, without wishing to say, “I told you so”, I will have to say, “I told you so”. As I wrote just under 12 months ago in response to McGrath’s advice for property owners to hold their nerve and not sell as the market will definitely recover quickly:

If you really want to become a millionaire, take 6 million dollars and invest it in whatever John McGrath tells you to.
A cynic might suggest John would like you all to not flood the market with your firesales until he’s finished the conveyancing on his.

What a difference a year makes.

Bill’s Opinion

One can accuse John McGrath of many things; share market con artist, pathologically-addicted gambler on horse races, double-faced spruiker, etc., but he definitely knows more than most about the Australian property market.

Whether he needed to cash in his assets for reasons of expediency due to crippling gambling debts or not, we might never know, but there’s a big flashing sign for anyone who believes the personal stock trading of company directors is a good indication of whether or not to buy their shares.

In the meantime, this is yet another example of the delta between expressed and revealed preferences.

36 Replies to “John McGrath; inside a trade, thing”

    1. I can thoroughly recommend the Jolly Swagman interview with Mark Cohodes for an explanation of why short selling is for the brave and bold, not mere mortals like you and I.

      1. Apparently there was something like 15% of short position on Bellamy’s the Tassy Dairy firm that the Chinese have offered a $1.5b lifeline for. Hopefully it gets the FIRB green light, as for the shorter it couldn’t happen to a nicer set of low life scumbags.

        1. Again, I really can’t recommend that podcast enough

          I’ve nothing but respect and awe for professional short-sellers. One point struck me as fascinating; say you’ve spotted an absolute gold-plated fraud, no question, it’s fraudulent on every level and you take a short position. The stock might still rise 200% before collapsing to zero. Imagine being wiped out even though you are completely correct? Horrid!

          1. How could they sleep at night and I dont mean on the ethical point but on the trade going tits up point, I guess their computers must be saying yes more than no. Not something for me, I am far to nice and mild mannered for that type of approach to life and the taking of other human beings money under duress

            I would though sit down and have dinner with a short seller and kick it off with something like we both know that you are the biggest cunt under the sun, but all is fair in love and war.

          2. You’re wrong. You’re actually wrong in exactly the same way I was about Lance Armstrong until a couple of years ago.

            Rather than me try to explain and be imprecise, could you do me a favour and listen to these two podcasts and then let me have your thoughts, please? They both work fine content-wise at 1.5 x speed.

            https://podcasts.apple.com/au/podcast/the-jolly-swagman-podcast/id1236553683?i=1000443953331

            https://podcasts.apple.com/au/podcast/the-jolly-swagman-podcast/id1236553683?i=1000444190647

          3. Enjoying the podcast discussion, I know some of the stocks that he is talking about and when I was in Indonesia we got ripped off by Tommy Suharto as well.

            I can show you some stocks now on the ASX that are getting talked up on mineral contents that are about to be revealed, it seems to be the oldest trick in the book, yet it repeats.

            On the UK, BT Group is my big debt monster but they are too big to fail!

            Prudential on the other hand they practice thrift, they have reduced their debt level down from 93% to 79% in the last five years, plus they have the vision and got into and have cornered the the Asian market, Thomas Cook was a dinosaur with overwhelming and unsustainable debt.

            Megatrend, innit.

            Prudential CEO Wells on ‘Pulse’ Health App, Asia Strategy

            https://www.bloomberg.com/news/videos/2019-08-08/prudential-ceo-wells-on-pulse-health-app-asia-strategy-video

          4. So I listened to the Australian short seller John Hempton interview as I thought I would be able to relate to the local experience a bit easier. Worth the very long listen although a bit drawn out towards the end, he is obviously a very clever man a a great stock picker, with a nose for bs and not the type of guy you would want to make an enemy of.

            I can definitely relate to the dodgy gold mine scams, that is still going on right now on the ASX.

            Yes he has morals but I dont think that we can say that all short sellers share his morality.

            I absolutely think that he has called it 100% wrong with his short call of up to 85% down on Sydney house prices and was put off a bit that he mixed with Jonathon Tepper, who made a complete cock of himself the last time he was in Australia, most yanks that try and short the Aussie house market are actually trying to short the banks. There are tonnes of them and they always get it 100% wrong, strange cattle that they are.

            Got a bit worried towards the end when he says that one of his worst shorts was on a good Solar firm, I have an investment in a solar start up that is a bit of a dog. I let it go down past my stop loss, then when I got back from holiday a few months ago decided that i had lost that much on it I may as well hold on for any upside. Having heard about all of the fraudulent activity I just double checked that they are actually a real firm. I think they are but you never know, and you never know if the likes of Bronte Capital have been shorting it all along.

            Anyone looking for a solar bargain, give me a shout!

          5. Yes, Hempton is an entertaining listen. But, as you point out, he’s made some calls that I just don’t ever see paying off.

            It looks to me that he and Cohodes are driven by a morality that results in a big pay day once every couple of years. That must be mentally tough in the time between though.

            Do you agree I was correct in saying you were wrong about them being scumbags, now?

          6. “Do you agree I was correct in saying you were wrong about them being scumbags, now?”

            Like I said a few post up I dont think that he is and by all accounts the yank is either, but I doubt that they are representative of all short sellers and its not as if the scumbag type would be podcasting about their approach to investing.

            If you take the current financial crisis at Bellamy, where their stocks had a 15% short position, and lets for the sake of the discussion assume that there are no scum bags or con men running that firm, then its hard to label the shorter as anything else but scumbags. You get scumbags in any given bell curve, so being one may well be normal, just not my cup of tea. He did explain well why he went for shorts, I think it is a particular personal crusade like trait which in his case is quite acceptable, even I know that Eon Musk is a bullshit artist but I dont have the motivation to take it to the next level and find a way of shorting him.

            All these short trading bots, that continuously buy and sell on algorithms (apparently they dont even pay a brokerage fee), to such an extent that they force the big funds to exercise their automatic stop losses which tanks the stock price so that they can load up on them at a manufactured low price, they are scumbagish and it tends to be the retail investor like you and I that gets hurt by them.

            And if you are the type of person that will invest in Sino Forest or a legit Ali Baba, then it just goes to show that a fool and his money will always be parted, irrespective of a noble shorter fighting the good fight.

          7. Ok. We revert back to your usual idiom of trying to win on the internet.

            “Short sellers are scum”
            “Here’s two who aren’t”
            “I never said all short sellers are scum”

            Yawn.

          8. “I never said all short sellers are scum”

            If it makes it any easier for you I will stick to all short sellers are scumbags as a general statement.

            I will also put Mr Hempton in that category for what he admitted he did to the solar firm and for teaming up with the notorious Mr Tepper with a fake story, all the while with the undeclared objective of trying to short Australian bank. Who would that hurt the most, he may love the sound of his own voice but he only needs to hurt the good guys once to be a scumbag.

  1. I am sure he has a few mill stashed away somewhere.

    I have changed my market position and am now risk off for the foreseeable, sold my gold miner today as well.

    Also there are a number of high end sales completing on homes near me of late, looks like and at long last it’s our turn to get some decent growth on the prices of our gaffs.

    1. I’m sure he has. I’m not suggesting he’s under risk of bankruptcy at all. It seems one or both of two things are happening; selling up because he can’t see further significant capital growth (or worse) in the future and paying back a bunch of bad bets to William Hill.

      As for selling gold miners; brave. I’ve been doing the opposite for two years and intend to hold for at least the same duration again (reminder; I outsource my financial advice, I’m not an investment genius).

      1. Nothing wrong with gold, we should all have about 20% of our wealth in it at any stage of the cycle.

        As for my profitable trade today, the point is that you will never go bust in taking a profit, if Gold still goes to the moon good for you and I wouldn’t begrudge you the further gain, and best of luck with it. I still have a smaller holding in another gold miner so I havent completely washed my hands off it, I just thought it was time to take the big gain and follow the opportunity elsewhere. No regrets if I have left something on the table for the buyer of my stake.

        For mine I am still in metals but more so rare metals here in Australia, plus a new Australian fertilizer mine in Eritrea and Australian copper mine in Botswana. I have gone big locally on an underground long wall coal miner, a cyclic investment as the whole extraction sector has been neglected of late, huge backlog of getting coal out of the ground and to the wharf, not a coal price play, small and very basic Mackay based, low overhead no-frills player, no debt, huge earning growths, in a space that I used to work in and well below the radar of institutions, trading bots and short sellers.

        1. Gidday Bardon, it’s been a long time.

          Which are the dodgy ASX goldies you have seen lately?

          I have found it pot luck trying to guess which mining geologists are lying

          1. Yes its been a while mate, hope things are good for you. I will get some names for you if you promise not to buy into them.

            By the way I have Bathurst Resources a local Kiwi firm on my watchlist they are trading at 10c, strong business growth, captured market, massive return on equity, 17% debt level and a 14% dividend. Only issue is that they lost a major litigation case and are appealing it, if their appeal is successful its on for young and old, keep it to yourself!

            https://www.asx.com.au/asx/share-price-research/company/BRL

          2. (note from Billy; this was posted from the same IP address as Bardon’s previous comment. Quite Rainman-esque).

            Kiwi Bear,

            Bardon wouldn’t know fools gold from clay.

            Dont believe anything that the dirt doctors tell you from these guys:

            Golden State Mining (GSM),White Cliff Minerals (WCN) or White Rock Minerals (WRM).

            A good Aboriginal friend of mine says there is much more gold to be found here, and their dirt doctors report of last Friday are the good oil, plus they got that new rare earth minerals as well that we used to paint our boomerangs with, Trumpet man wants ScoMo to ship it direct to the US.

            Alkane Resources Limited SX ALK

            This one here could be white magic if they pull it off, everybody waiting on the results, why havent they released them?

            Hillgrove Resources Limited ASX HGO.

            Happy prospecting.

  2. William
    I commented on your piece 12 months ago. A year on there is more evidence we could be leaving the era of falling interest rates, and entering the era of rising interest rates. What would 20 years of rising borrowing costs do to property prices? Tough one.

    1. “What would 20 years of rising borrowing costs do to property prices?”

      I think one of my readers has just had to change their underwear.

  3. Is this ethical, or would you do this as your day job?

    …………………………………………………………………………………………………………………………….

    Thomas Cook Collapse Sets Up $250 Million Hedge Fund Windfall

    Payouts likely for funds that bet on the company defaulting
    Decision on triggering derivatives lies with panel of traders

    https://www.bloomberg.com/news/articles/2019-09-23/thomas-cook-collapse-sets-up-250-million-hedge-fund-windfall?utm_medium=social&utm_content=asia&cmpid%3D=socialflow-twitter-asia&utm_source=twitter&utm_campaign=socialflow-organic

    1. All I have to offer on the Thomas Cook debacle is, if even my aged relatives book their own flights and hotels these days, I’m unsure as to what the point of Thomas Cook was in 2019.

      Sounds to me like it may have been bust for quite some time.

  4. Judging by the truly Lazarus like experience of Ken Henry I wouldn’t be writing McGrath off to soon.

    Ken Henry has been reinstated to NAB, fuck the commission and welcome back. The banks are on a lending war as well, strap yourself in folks, this is the start of the big one. 90% LVR for interest only, lending buffers are down, come on in and sign up, we never had rates this low, we will match any rate that our competition has offered you. You can even break even on a crappy Sydney yield of 3.5% these days.

    Buy now pay later for everything is here, see how much the new fintech lenders rose today on a down market. See Z1P share price growth, I posted when I bought them on here a few months ago and have been topping up since.

    Welcome back Ken, who loves you baby.

    1. “Ken Henry has been reinstated to NAB”.

      No he hasn’t.

      Perhaps hold off pouring that first drink of the day until the sun has set, old chap?

      1. Meant to say the ASX, you just cant keep a good man down, your short seller mate will be well chuffed, they are good buddies.

        Happy days.

        1. “Meant to say the ASX”.

          Course you did, son. Hence the ranting about royal commissions and lending standards, presumably.

          As I say, maybe take a little water with the single malt.

          1. Not ranting, just staring at you in the face, if you are looking. You must be happy with these no brainier home loans.

            What royal commission?

            That justice ringing the bell of the bottom of the cycle is one to bookmark alright.

            The only thing that could top this off would be BoJo bringing the monarchy down.

            …………………………………………………………………………………………

            Westpac has made a fresh push for market share in mortgages by cutting its serviceability floor for the second time in ten weeks to 5.35 per cent, from 5.75 per cent in mid-July.

            The Commonwealth Bank, the nation’s biggest lender, slashed its fixed rates by up to 90 basis points across its mortgage range as the battle for market share among the major banks intensifies.

            Sydney auctions: Young couple nab Rozelle cottage for $1,501,000

            A hard-fought battle of small $1000 bid increases pushed the price of an inner west cottage more than $250,000 above reserve at a “ridiculous” auction. More than 60 bids were made for the two-bedroom Rozelle property, which was one of 543 homes taken to auction in Sydney on Saturday.

            There are at least three reasons why I prefer Zip Co Ltd (ASX: Z1P) shares to Afterpay Touch Group Ltd (ASX: APT) shares. Both businesses are seeing share price growth today, despite worries about the global share market. The Afterpay share price is up 11% at the time of writing and the Zip share price is up by almost 3%.

            But here are some reasons why I think Zip could be a better buy than Afterpay today. At this price you should be thinking about holding Afterpay shares for a long time to justify the price. But Zip is growing really fast too, its revenue grew by 138% in FY19 on the back of transaction volume growth of 108%.

          2. Obfuscation.

            You claimed he had returned to NAB and then told us it was a direct “fuck you” to the RC and the faucets would be opened to full.

            You know, we know and you know we know what you meant.

            I do like your comments on here but there’s an underlying autistic neediness that becomes apparent over time.

          3. If you dont think that Kenny boy, staying on at the ASX no less, is not a final fuck you to the RC and their naysayers, then you are camping out. I wouldn’t be surprised if he is offered the chairmanship.

            Lazarus I tell you.

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