You Can’t Make This Up


Purchased 28 March, at $24.0299 14:42 CDST

Closed $23.66, down 10.62% for the day at 15:00 CDST

I need to be careful announcing that I’m done with purchases for the month as I did last week.  Inevitably I’m proved wrong.  Well, in the back of my mind, I was hoping for a better entry point to increase my holdings in PJT Partners.  Today, one arrived – packaged like an American Greed episode.

Early in 2015, Blackstone announced the spinoff of PJT.  The primary rationale was the loss of business with clients uneasy with Blackstone handling both sides of a deal.  So I thought “cool” and made an assumption that the spin ratio would be reasonable.  Wrong.  In the two accounts in which I had Blackstone, only one had enough to get an allocation at a 40:1 spin.  The other got cash.  Subsequently I retooled my accounts to ensure no duplication of companies between accounts.

PJT has proceeded on building their business, signing clients and reaching the point of declaring their first dividend (since paid).  This declaration was the impetus for my Feb 25th purchase, prior to ex-div.

Since then, more client announcements until today.  Shortly after noon, PJT cratered to $19.96 after opening at $26.45.  Turns out an employee was terminated for cause due to circumventing compliance procedures.

According to complaints filed today from the U.S Attorney’s office of the Southern District of New York and the Securities and Exchange Commission, Mr. xxxxx was charged with securities and wire fraud in connection with a scheme to defraud investors of more than $95 million. The complaints detail that Mr. xxxxx actually obtained one $25 million payment in November 2015 from an institutional investor by falsely representing that the investment would be secured and took control of the funds for his personal use, and later unsuccessfully solicited an additional $20 million from the first investor and $50 million from a second investor.

Here’s hoping the worst is past, the litigation trolls find no basis for class actions and the defrauded investor is made whole by insurance policies.  So just prior to market close and prior to the press release being issued, I made the decision to add to my position.  Barring more dirty laundry I suspect it’ll wind up being a profitable adventure.


2 thoughts on “You Can’t Make This Up

  1. Very true! However the market seems to digested the information the same way I did and has run the price up 4.6% today. So the short term answer appears to be no problem. The real issue will be known only if prospective clients bail (i.e., client growth hits the skids). With Taubman’s rep, I don’t see this as an issue. Thanks for the comment!


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