The Pirates of Eagle St
“DEATH to the enemy” is not the most common slogan to adorn an investment fund’s prospectus. Neither is “Either Peace or War”.
But investment funds run by Brisbane businessman Stuart McAuliffe have never been orthodox.
Firstly, they are named after famous 17th century-18th century pirates. Secondly, they have posted millions in losses and been frozen from trading on the stockmarket for months. That comes after now-frustrated investors tipped in more than $50 million.
Thirdly, regulators have taken a keen eye on a series of deals and announcements. We can today also reveal differing accounts in McAuliffe’s resume and detail the breadth of deals between associated pirate-themed entities.
McAuliffe’s funds-management fleet is headquartered on the 9th floor of Brisbane’s Riverside Centre, 123 Eagle St, where the old ASX trading floor used to operate.
The dark-panelled office is renovated in his pirate theme: an old-world style map on a wall, skull-and-bones cushions on chairs. “The pirate theme derived from the fact that pi- rates were opportunists which has turned into our mandate,” one underling said last year.
McAuliffe, 48, nowadays is not answering our calls or emails. He was also not in the office when we visited. And no one answered at his home address listed in company documents, a brick house in a wealthy street of Brisbane’s western suburb of Chelmer.
It’s a reduced profile for a man who unsuccessfully bid for rugby league’s Gold Coast Titans last year.
McAuliffe made his splash in 2016 with the Henry Morgan fund, named after a privateer of the Caribbean.
On the prospectus cover was “Aut Pax Aut Bellum” (Either Peace or War), and inside a strategy about “imbalances in global market valuations” and investing in stockmarket indexes and currencies.
McAuliffe was managing director and also ran the fund’s investment manager, a company called John Bridgeman Ltd. McAuliffe was not a famous trader, but the prospectus said he ran a small fund with spectacular 99 per cent annualised returns over three years. Henry Morgan fund’s stock surged after year one. Shares issued for $1 in 2016 jumped to $2.05 by June 2017 amid strong profits and dividends. The fund’s accounts also showed many associated entity deals.
When it recorded a 1604 per cent rise in profits to $21 million in 2017, included were revaluations of investments in associated entities.
One was Bartholomew Roberts, an unlisted private equity fund that McAuliffe also ran. Its valuation went up by $10 million to $14 million. In the meantime, the Henry Morgan fund was paying millions in fees to the investment manager also headed by McAuliffe.
Our tally of accounts since 2016 shows more than $70 million in deals occurred between associated entities.
But by June 2017, Henry Morgan fund’s stock was suspended as the Australian Securities and Investments Commission drilled into concerns about a new prospectus.
The ASX also issued 11 queries to the fund in two years, extracting some surprising information.
That included the fund admitting it had invested in an unlisted company in August 2016, contravening prospectus investment guidelines. The fund argued its intention had been to not invest in unlisted securities, but a management services agreement had allowed such deals.
In October 2016, shareholders had approved removing the investment restriction, the fund added.
Meanwhile, 10 Foot Investor, an anonymous investment blogger, had posted that “the F***ery-O-Meter has been steadily creeping up in the background. Something doesn’t add up and I remain gravely concerned about the way that Henry Morgan and co are creating value for their shareholders,” the blogger wrote, according to a Federal Court judgment.
The judgement was because the Henry Morgan fund, Benjamin Hornigold – another stockmarket-listed fund run by McAuliffe – and their investment manager firm had sued an internet domain name service to try obtaining the blogger’s identity. The companies suggested the blogger had accused them of deceptive behaviour, which they maintained was untrue.
The court ordered the service to provide any documents identifying the blogger.
The Benjamin Hornigold fund, launched in 2017 has also been frozen from trading since last July after ASX questions about a deal with an associated entity. Now the investment management firm is bidding to take over both funds.
Brisbane businessman Stuart McAuliffe.