Here's the article on the CEO of SFE -- Seduced by the Internet...
fortune.com
An interesting passage in the Fortune Cover Story...
<<...He got sucked in by watching technology stocks--including Safeguard's--defy the laws of nature. He bought blocks of Internet company stocks on margin, borrowing money from his brokerage firm to help pay for his purchases and using his Safeguard stock as collateral. When the unthinkable happened and Safeguard's stock slid from a split-adjusted high of $98 down to $19 that Sept. 27 (it eventually fell as low as $5), the value of his holdings came perilously close to the total of his debt, and his brokers demanded their money back. Musser won't divulge exactly how much debt he took on, but several sources familiar with the matter say it was close to $100 million. To help pay down that debt he had to sell 7.5 million of his nine million Safeguard shares. By the end of last year his $1 billion paper fortune had nearly evaporated.
Of course, Musser could have sold his Safeguard stock back when it was flying high and used the proceeds to buy stock in all those Internet companies, but his pride in Safeguard prevented him from doing that. "I'm fighting hard to put this behind me," he says during an interview on a cold, overcast afternoon in January, four months after receiving the fateful margin call. It's been a hard fight because Musser recognizes that he made big mistakes. He bought too many stocks, bought them with borrowed money, and ignored the extreme risk they contained. "I got seduced by the value of my holdings," says Musser, who has vowed never to buy stocks on margin again. "I didn't count on the market going off by 90% in six months. I wasn't ready for that. I got caught up in the exuberance of the moment."...>>
Best Regards,
Scott |
