The Pi­rates of Ea­gle St

Weekend Gold Coast Bulletin - - NEWS - LIAM WALSH

“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.

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