The saga of Callidus Capital as a public company is winding down with a shareholder vote later this month on a take private offer at $0.75 per share. The original IPO price was $14. The offer is from Braslyn, an affiliate of the Tavistock Group. Tavistock is the investment vehicle of a Bahmas-based British billionaire, Joe Lewis, who is worth some USD 5.7 billion. He made most of his money as a forex trader. His most notable forex score was teaming up with George Soros to bet against the pound in 1992, the trade that "broke the Bank of England". Some say he made more money than Soros from it.
Tavistock is now a diversified holding company involved primarily in real estate, restaurants and resorts. By all appearances, they are very successful. But there's another notorious trade of Tavistock you might be interested to know.
In 2008, Joe Lewis lost a billion dollars in a single day, a third of his fortune. He began buying shares in Bear Stearns in 2007, believing the bank was cheap. He built a 10% stake worth $1.2 billion and was buying right up to the day Bear Stearns was forced to be saved by JP Morgan. His $1.2 billion stake fell to $22 million.
The Callidus experience follows the same Bear Stearns pattern. In April 2018, Braslyn made a non-binding expression of interest at $5.20. The price eventually got revised to $2.00 and finally, $0.75. Braslyn had been accumulating shares in Callidus as it fell and so this has not been a profitable endeavour so far.
James Avery, Senior Managing Director at Tavistock was the lead on this transaction. Send him all your favorite Canadian ideas. Tavistock says that its public market strategy is to invest in companies "which tend to be positioned where our worldwide connections, capital, and long-term views add value." Callidus honcho Newton Glassman apparently owns a home in an exclusive resort built by Joe Lewis in the Bahamas. That may explain how the "connection" happened.
I think a variant of a Buffett gem applies "With enough connections and a million dollars, you can go broke in a year."
Callidus shareholders have little choice but to accept the offer, because the company is likely unable to repay a debt of $421 million due next year. If only it had some connections in the Canadian distressed lending space.