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Home--News
Financeer Bets on Coke Stocks Falling
By Tim Castle
Reuters
November 25, 2004
LONDON - A former Wall Street stockbroker plans to launch a hedge
fund to short-sell shares in Coca-Cola Co. and give any profits to
people in countries he says the U.S. drinks company has exploited.
Max Keiser, 44, a self-styled "investment activist", has teamed up
with the son of the late entrepreneur Sir James Goldsmith with the
aim of halving Coke's share price to $22 (11.66 pounds) in 12 months
from its current value of around $40.
Profits from the fund would be distributed to the "victims of Coke"
in a process supported and audited by Zak Goldsmith's London-based
Ecologist magazine, which will decide where to donate any proceeds.
Keiser says Coca-Cola has poisoned land in India and trampled on human
rights in Colombia, charges the company has frequently and vigorously
denied.
"Coke's been down this year as sales dry up," Keiser told Reuters,
attributing part of the fall in the stock to anti-American sentiment
following the U.S.-led invasion of Iraq (news - web sites).
Earlier this month, Atlanta-based Coca-Cola, the world's largest soft
drinks company, lowered its long-term earnings and sales targets,
saying it expected demand for its products to remain weak in North
America, Germany and other key markets.
Keiser hopes a campaign to boycott Coca-Cola products will undermine
the company's share price, making money for his as yet unnamed hedge
fund, which will sell Coke shares with the aim of buying them back
more cheaply later.
"Our target for Coke is $22 as dissent is pushed back onto the balance
sheet," said Keiser, a New Yorker living in London who runs investment
activism website KarmabanQue.com.
Coca-Cola stock touched a year low of $38.30 in October, well down
from highs of over $85 they reached in the late 1990s. They closed
at $39.80 on Wednesday, before the Thanksgiving holiday, valuing the
company at more than $96 billion.
"BLATANT FALSEHOODS"
"This so-called campaign is based on blatant falsehoods," Coca-Cola
spokesman Ben Deutsch told Reuters by phone from Atlanta.
"It's unfortunate that anyone would attempt to hurt Coca-Cola shareholders
by waging such an effort without knowing and recognising the facts,"
Deutsch added.
Keiser worked with Wall Street stockbrokers PaineWebber and Alex Brown
in the 1980s before co-founding the Hollywood Stock Exchange website,
a virtual exchange trading celebrity values which is now owned by
broker Cantor Fitzgerald.
He plans to register his hedge fund by early next year, probably in
Britain, and to tap a number of rich private investors to raise up
to $100 million.
Iain Martin, editor of specialist London monthly Hedge Fund Manager,
said Keiser's investment strategy had several merits and that his
funding target was attainable.
"Hedge funds are attracting a lot of interest from high net worth
individuals and institutions," Martin said. "I think there's no reason
to think he won't achieve that total."
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