Bankruptcy

Another Investor Loses Billions

By J. Michael McBride

“Renowned [Texas] investor Harold Simmons is no wimp when it comes to a fight.

He played a central role in the development of leveraged buyouts and corporate takeovers and once tried to gain control of Lockheed Martin (LMT, Fortune 500). He's funded Republican candidates and conservative attack-ad campaigns, including the current one linking Barack Obama to one-time domestic terrorist Bill Ayers.

But these days the Dallas-based billionaire isn't only delivering punches, he's taking them - his empire hit hard by the stock market's general decline and by cost and demand issues related to his companies' industrial products.”

Here is a link to an article in Fortune Magazine which discusses Mr. Simmons current financial status. Included in that analysis is a discussion about his recent purchases of one company in particular, Valhi, one of his holding companies and an implied suggestion as to why he made these purchases.

“After not buying a single share of Valhi last year, Simmons recently has become the biggest trader of the stock, with trusts he controls accounting for over 10.5% of its trading volume this year, according to SEC filings….Because Valhi is 95% owned by Simmons trusts and other insiders, any buying Simmons does of Valhi at a higher price can produce a gain, at least on paper. Simmons' aggressive open-market purchases of Valhi have had the effect of popping the price until recently (see chart), when Valhi's stock price dropped to under $10 from a 52-week high of $32.47. Ordinarily Simmons would run into regulatory issues buying as much stock as he has lately. But on September 19, the day the SEC suspended short sales on what would amount to over 1,000 stocks, it also suspended much of rule 10b-18, which governs the amount of stock companies and corporate insiders can purchase.”

Here is a link to the whole article:
http://money.cnn.com/2008/10/22/news/newsmakers/boyd_simmons.fortune/index.htm

Michael

Full post as published by Texas Lawyer Blog on October 23, 2008 (boomark / email).