Ireland, Seán Quinn’s Incredible Half a Million Punt on Anglo-Irish Bank’s Stock

August 26, 2011Andy 1 Comment »

Seán Quinn is no ordinary man. The tycoon, a small farmer’s son who built his empire on the back of a borrowed £100 and a small quarry on family farmland became Ireland’s biggest private company with a payroll of over 5,000.

He founded his business in 1973 which went on to become Ireland’s biggest private company with a payroll of over 5,000. The insurance business had been the cash cow of the operation. However, the ex-billionaire invested and lost heavily in Anglo-Irish Bank; €3 billion to be exact. Back in 2007, when stock brokers were urging their clients to sell Anglo, Quinn was snapping up shares via CFDs.

Sean Quinn

In fact it is thought that Sean bought over half a billion worth of shares in the failed bank on a single day, on two separate occasions. Documents filed with the High court, which have been released as part of the Quinn family’s action against the failed bank, provide a detailed snapshot of Quinn’s reckless gamble.

The papers further illustrate that the tycoon acquired in excess of €400 million worth of Anglo shares in a single day via CFDs on five occasions. In a number of these times he was rolling on his existing positions in the market, while in others he had been acquiring more shares.

The documentation show that in the initial 18 months of his Anglo investment fiasco, which started in October 2005, Sean was solidly in profits and could even have cashed in for a sizable gain. The documents in the proceedings include details how Quinn made a last desperate attempt to recover some of his losses by a massive €506 million renewal of his Anglo bet on July 4, 2008, just weeks before giving up and closing his CFD position. The Quinn family are now arguing that they were pressured to do so by Anglo-Irish Bank executives under the ‘false guise’ of property lending at one of their companies, Quinn Finance, but in actual fact the monies were utilised to clear up loans to meet margin calls on the Anglo contracts, they allege.

The July 4 purchase involved the entrepreneur acquiring €506 million in Anglo stock through CFDs at €5.45 per share. This, when a year earlier he had been buying the stock at €15.50 per share. A more detailed analysis of the logs show that Anglo Irish Bank stock’s price was temporarily supported while Quinn was buying the stock, funded by the bank itself. At the end of September Quinn had already spent some €750 million of his own money buying contracts for difference in Anglo stock, and the bank’s loan to Quinn to cover losses exceeded €2.3 billion.

However, the actual turning point started n June 2007 when Quinn had acquired contracts for difference at €17.22 per share, which turned out to be the highest price that he would pay for them. In his first month of buying – October 2005 – he invested €95 million. Three months later, Anglo-Irish bank’s share price started falling and it never recovered. The Quinn family kept mopping up the shares, and ended up owning a quarter of what was than Ireland’s third biggest bank. Towards the end the Quinn Group owed the former builders’ bank €2.8bn and €1.2bn to other lenders including bondholders and in March 2010 administrators were tasked to take control of Quinn Insurance, which had 1.3m customers.

Comments: Perhaps a warning on the dangers of chasing losses and a case of greed at its worst. I also think that Sean had some questionable advisers that made him think this was a great deal and then stabbed him in the back. It his own fault. He was a simple man made into a super rich man. It never ends up good when the vultures are always circling him.

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One response to this entry

  • Fionnuisce Says:

    Don’t be naive…..this simple man knew exactly what he was doing….and now he is trying every move he and his team can come up with to get out of this costly, greedy gamble!

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