Profile: Prophet of the plunge: Simon Cawkwell's passion for falling shares has shaken the markets, writes Chris Blackhurst

Chris Blackhurst@c_blackhurst
Saturday 18 July 1992 23:02

UNTIL recently, Philip Green, head of Amber Day, the retailer that owns the What Everyone Wants chain, had never heard of Simon Cawkwell. Today, mention of his name makes him wince.

Mr Green, once a stock market high-flyer, blames Mr Cawkwell for destroying the fortunes of Amber Day. From a high of 109p earlier this year, Amber Day shares have plunged to below 40p, wiping pounds 85m off the value of the company and costing Mr Green pounds 7.5m personally.

The reason for the disaster, claims Mr Green, is the activities of Mr Cawkwell, a north London accountant with a taste for mischief and a great capacity for playing the stock market.

In Green's Cockney-speak, Mr Cawkwell is no ordinary punter. Others speculate on the basis that shares will rise; Mr Cawkwell has a special interest in shares that fall. He contracts to sell shares he does not yet own - 'going short', in City parlance - in the hope their price will fall. When they do, he buys what he needs at the low price and sells at the agreed higher price.

Nothing wrong with that - commodity traders have been doing it for centuries. Mr Cawkwell is taking a risk, the same as anyone else. But with Amber Day, Mr Cawkwell, it is alleged, has gone a stage further. By telling the Press of his views about the company, he helped to ensure that its share price fell, thus reducing the element of risk. It is a charge that Mr Cawkwell, who is well known to some journalists, vehemently denies.

Mr Green is not alone. Other company chiefs have had cause to fear Mr Cawkwell. For he takes pride in his association with the most notorious figure to have emerged in the City these past few years: Evel Knievel, bear-raider extraordinaire.

Since the financial press cottoned on to the nickname, which first appeared on a critical analysis of Maxwell Communications Corporation (in which Mr Cawkwell had taken a substantial short position), any number of share price falls have been attributed to Evel. Among the companies said to have suffered at his hands are WPP, P&O, Ratners, ADT and Brent Walker.

Separating legend from fact, however, is not easy. Mr Cawkwell admits to only three recent major raids: Maxwell, Polly Peck and Amber Day.

Sitting in his office at home in St John's Wood, London, Simon Allerton Cawkwell cuts a humorous, larger-than-life figure. His girth testifies to frequent use of his club, the Travellers' in Pall Mall. Strewn across his desk are the tools of the serious gambler: a Timeform racing guide; the Racing Post; stock market directories, and a share price information screen.

Behind him on the wall are three framed prints. They represent the three sides of the man. First, the natural rebel: a cartoon of a man being shunned in the royal enclosure at Ascot. Second, the would-be economist: a pen portrait of John Maynard Keynes. Third, the bear-raider: a photocopy of an article from the Sun newspaper about Evel spreading evil in the City.

He wears an impossibly tight blue shirt, no tie and beige trousers. As he talks, loudly, in full, fruity vowels and lofty phrases, two female assistants work quietly in the background.

He is 45 years old. His father was an Oxford academic. He is married with two daughters. He went to Rugby School and then to Coopers & Lybrand as an articled clerk. He says he became interested in buying and selling shares at 14. He first sold short in 1973, in MFI, and has been doing it, on and off, ever since.

He ran his own accountancy firm in Jermyn Street, Mayfair, and acquired a string of directorships. In 1978, together with two former executives of Oyez Services, he founded Company Communications Centre, a rival business education company. Oyez sued, Mr Cawkwell resigned and CCC later went into liquidation. He was on the board of Virgin Atlantic Airways for a short period when it started up. In 1987 he took over as chairman of Winebank, a troubled wine trader, but was unable to save it from going under.

In 1990, he was disciplined by the Institute of Chartered Accountants for failing to pay pounds 14,000 in gambling debts.

All the time, he was dabbling in the market. Sometimes he did the normal thing and went long - but as a gambler, what interested him was going short.

The bull market of the mid-1980s was a tough time for bears, but the last two years, following the 1987 market crash and the growing vulnerability of over-extended companies, have been better. 'Recent years have been very good,' he says. 'Polly Peck and Maxwell were exceptional items, but in this climate, if you look for opportunities to short, you will normally succeed.'

He chooses his target, he says, 'by thinking seriously about it'. As a rule, it will not be a member of the FT-SE Index, but a smaller stock that is more volatile and less well researched.

He reads the financial press avidly. He spent 19 hours recently digesting an article pointing out the problems facing the travel industry. As a result, he targeted Airtours, last year's best stock market performer, and went short at 290p. The shares now stand at 203p.

There is, he claims, nothing wrong in what he does. 'Short-selling is very ethical, moral behaviour. After all, if someone is buying a share, someone else is selling,' he says, simply.

He acknowledges that heavy short-selling could 'cause a company to enter into credit-raising difficulties at a critical moment' but maintains that 'the crisis has arisen long before the fall in the company's share price'.

Take Amber Day. In January he thought Mr Green's company was 'grossly over-valued'. It had a net asset value of 20p when the shares were 109p. 'You could argue the premium was because he was an unusual retailer with unusual flair, but if he was not so good, and the profits were not there, the shares would fall.'

So he short-sold the shares. One report said he had made pounds 50,000 on the fall in Amber Day. Is that true? 'The total amount that I and people known to me have made on Amber Day vastly exceeds pounds 50,000. It is enormously more.'

He said his short position in the company was 'enormous in relation to its share capital'.

While he is prepared to talk generally about economics and the stock market, he will not disclose the exact extent of his activities nor the identities of his associates. But he warns that 'there are plenty of traps for the unwary - short- selling can be deadly dangerous'.

Asked how risk of failure can be minimised, he is not forthcoming. He has his 'trade secrets' which he is not prepared to divulge.

He is equally mysterious when asked to explain why his Amber Day shares were dealt in the name of a Paris-based businessman. 'I'm allowed to know people beyond the cliffs of Dover,' is all that he will say.

What he is happier to talk about are his jokes.

Some years ago, when Sir Ralph Halpern was making headlines in the tabloids, Mr Cawkwell wrote to Sir Robert Scholey, British Steel chairman, advocating that he should indulge in a scandalous love affair. The lady would sell her story to the tabloids for pounds 25,000 and share the proceeds with him. The exposure, said Mr Cawkwell, would win Sir Robert the admiration of his shareholders and add 10 per cent to the British Steel share price. Sir Robert's response is unrecorded.

Last week he was at it again, after hearing on Radio 4 that the Advertising Standards Authority had received complaints from people concerned that an advert showing a tortoise attempting to mate with a helmet was cruel to the tortoise. Mr Cawkwell wrote to the ASA, claiming to represent the world's helmets: 'Just because we've got screwholes at our backs (to hold the netting - my aunt says it's the netting that turns them on), the tortoises think we are ready and willing. Well we're not.'

Last February, following a newspaper article about share-trading in Amber Day, he wrote to the author 'on behalf of all public schoolboys bullying Philip Green', raised one or two serious points, thanked the author for 'presenting me with the opportunity to sell more shares' and signed himself 'E K (Egbert Know-All)' - coincidentally the same initials as Evel Knievel.

Mr Green, for one, is not laughing.

(Photograph omitted)

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