Thread by @walnutavevalue

Thread - examples of steep drops in wealth from not managing risks esp. in business with operating leverage

Reichmann wealth collapsed 90% due to the huge bet on Canary Wharf when real estate demand / pricing dropped and credit was hard to get /1

Next up: flashy salesguy Erik Bautista who lost 90%+ of his wealth in one year. His investors also lost it all because he lied about OGX offshore oil potential. Here's an article from 2013 that talks about it. /2

Perhaps the craziest saga is of Sean Quinn - who went from being the richest in Ireland to filing for bankruptcy. He used leveraged instrument to bet on 25% shares of Anglo Irish bank - the bank with really loose lending standards- prior to 2008 housing crisis. /3

Sean Quinn used a leveraged bet on a bank which already has a leveraged structure. How did he fund his bet? By taking money from his insurance company which also subsequently filed for bankruptcy. Turns out the insurance co. was also risky due to low insurance premiuums
/4

Vijay Mallya is the next fascinating example. He owned the biggest beer and spirits maker in India with high barrier to entry due to regulations, fast growth, and great brand.
BUT Mallya aspired to be Indian Richard Branson. He started an airline!

/5

Alcohool --> Airlines has got to be the worst capital recycling. Mallya's Kingfisher airline struggled from absorbing low cost loss maker, jet fuel price , jet fuel, and restrictions on foreign equity. He personally guaranteed airlines debt before the airlines shut down! /6

Continuing on: Aubrey McClendon of Chesapeake (h/t @BarbarianCap). His $2 Billion stake in Chesapeake Energy stock melted down to $30 million in 100 days due to margin
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