OT Hi NITT, I'll articulate the problem. Reportedly, Bush was a director in "Spectrum 7", a privately held oil company. He reportedly bought Spectrum stock just prior to Spectrum being bought out by Harken for an excessive amount of money (*) and most interestingly, just after Sr. Bush (who was President at the time) visited Harken. Industry people believed Sr. Bush influenced the deal. The perception in the oil industry was, money was essentially given to Bush (by way of Harken purchasing valueless Spectrum) in exchange for influential power (to grant Harken drilling rights.)
And sure enough, Harken got granted the drilling rights, after conducting a buyout of Spectrum, a valueless company, that yielded Bush's his first million.
Spectrum was known by industry analysts to have no value. Worse than a bleeding dotcom. It was running in the red, had no IP, no value, and yet, most interestingly, Harken paid a rather huge amount of money for this bleeding Spectrum. Bush's Spectrum stock was turned into Harken and he flipped it. The media is not focused on the buyout (which they should be - they should look at the buyout terms of Spectrum 7), but instead, the media is focused on how he flipped it after reading a report that indicated Harken wasn't expected to be profitable, while claiming that he wasn't aware of Harken's financials.
( I tend to concur with you that $4M isn't a huge loss, though, I also am equally aware of how only a 10% reduction in revenue, while still being profitable, that Intel reported in Sept 2000 resulted in a huge haircut on the stock. And Intel didn't have a small $4M loss, but instead was quite profitable. Most investors know that a change in expectations certainly can negatively impact the stock. )
Here's a post from one former oil analyst:
To:kapkan4u who wrote (135913)
From: GVTucker Wednesday, May 23, 2001 7:55 AM
Respond to of 168218
kapkan, RE: Your requested link from Amy
This goes back a decades. The company that purchased Bush's company was Harken Oil and Gas, now Harken Energy NYSE symbol HEC. The company purchased Bush's oil company even though most oil and gas people thought it worthless. Most people believed that the purchase was to gain influence in international drilling matters, and, indeed, soon after the purchase HEC got a contract to drill in Columbia, a highly unusual contract for a small company like HEC.
Bush sold all his stock in HEC some time later. Soon after selling the stock, HEC warned that its earnings would be far less than expected. The SEC investigated the matter but did not pursue it very far. To me, the circumstantial evidence that Bush traded on insider evidence is pretty damning (In May, Harken distributed a report from the company's investment banker discussing the company's deteriorating financial condition; Bush sold his stock in June. And even though he was required to disclose the sale the following July, Bush did not disclose the sale until the following March.)
All in all, I'd say that Amy was being kind to Bush. If you want a link, just type "George W Bush insider trading" or "George Bush Harken" in google. You'll get your fill.
siliconinvestor.com
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Regards,
Amy J (I agree with you, it doesn't help when people focus on the Party - it doesn't matter if he's a Rep or a Dem, so one should really avoid referencing a political party and focus on the issues above.)
(*) When Intel buys out a company, they are very careful to get a highly reputable 3rd party company to assess the deal independently from them, so they are never paying more for the deal than what it is worth. (In fact, Intel has a reputation of paying low-ball.) This prevents corruption of the type that reportedly happened with the buyout of Spectrum 7 by Harken, where Harken paid an excessive amount of money for what analysts deemed a valueless company, Spectrum 7. |
