Interesting Nugget In Time’s Article: Trump Regularly Defrauded The Market

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Trump both gained and lost tens of millions by flipping shares with loans.

According to The New York Times article revealing Trump’s monumental $1.17 billion in losses from 1985 to 1994, the now-president traded “his business-titan brand to present himself as a corporate raider.” Using loans, Trump would buy shares in a company before publicly contemplating acquiring enough to be a majority shareholder. Afterwards, he would privately sell shares when stock prices rose as a result of his announcement.

Trump was able to get away with the gimmick only for a brief period, as investors quickly realized that he would not act on his speculation, but not before Trump netted millions of dollars in gains. The documents also reveal that Trump eventually lost most of the gains in a “four-year trading spree.”

In 1987, The Times reported that Trump reportedly owned 4.9 percent of United Airlines’ shares and was “believed to have paid” roughly $50 per share. As investors speculated a Trump takeover, share prices skyrocketed, and he sold all of his investment in the company. The Journal alleged that the gimmick earned Trump $55 million.

But in actuality, Trump owned only 2.3 percent of the company’s shares and gained $11 million prior to interest and commission fees, according to New Jersey gaming regulators. He continued to make similar moves from 1986 to 1989, and he reported $67.3 million in gains from all of his speculation gambits.

In 1989, he tried doing the same with American Airlines, but this time, investors had wisened up. They called his bluff, and stock prices fell sharply. At the time, he reported suffering moderate losses. But the new financial documents reveal that Trump suffered losses of $34.9 million from the American Airlines move, wiping out a huge portion of his previous gains.

And lastly, according to The Times, Trump suffered his biggest loss from the acquisition speculation spree just shortly after:

“He appears to have held only one other significant chunk of stock by decade’s close: a 27 percent stake in the Alexander’s department store company.

Mr. Trump had bought those shares for $67.9 million and held on, hoping to gain control of the company’s real estate with a partner. After climbing on the possibility of a takeover, the stock price slid.

Mr. Trump ultimately agreed to turn over that stock and most of his other assets — including the yacht, the Trump Shuttle and his stake in the Grand Hyatt — to his lenders. On the day in 1992 when he gave up the stock, it was trading at about $9 a share — which would represent a loss of $55.5 million.”

Read the full story here.

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