Meatlovers shorting Domino’s

Illustration: Rod Clement

It’s the $3.5 billion question: who is shorting Domino’s, the crusty, ASX-listed jewel in billionaire Jack Cowin’s investment portfolio? The much discussed fast-food stock fell below $40 yesterday — a number to which some have ascribed significance — to close at $39.39.

That hasn’t yet triggered any further disclosure from Domino’s evangelical CEO Don Meij.

But it did take Domino’s performance in the year-to-date to a grisly 15.6 per cent fall. Over the past 12 months, the stock is down a slice of thin crust below 30 per cent. Awful news for most shareholders, but now great for the ­almost 16 per cent that ASIC ­reports have a short position on Meij’s grease shop.

Jack Cowin

When asked by Margin Call yesterday, Domino’s professed to not know the identities of the short investors whose high-­conviction investment is profiting off the company’s misery.

Seems a subject Cowin and Meij might want to pursue. The snow-hating, Canadian-born Cowin owns 26 per cent of ­Domino’s, now worth just under $900 million, while Meij’s ­harassed stake is worth $72.6m.

The Australian Financial ­Review reported last August that Campbell Neal from K2 Asset Management, Chris Garrard from Cadence Asset Management and Ben McGarry from Totus Capital all had short ­positions on the business, which they argued was “ridiculously expensive”.

Margin Call doesn’t believe any of them were along at a ­results briefing with Meij and his Domino’s executive team, which was held in Richard Wagner’s Morgan Stanley tower in Sydney on February 14, over boxes of “Loaded Supreme” and “Cheesy Bacon Hawaiian” and — think of the clogging arteries! — “Mega Meatlovers”.

Morgan Stanley is currently running Domino’s share buyback (not the best fees, but good for industry scoreboard rankings). The Morgan Stanley analyst covering Domino’s on the other side of the integrated ­investment bank’s rigorous ­Chinese Wall, Thomas Kierath, who coincidentally has an ­ambitious $55 price target on the stock, was also along at the pizza lunch.

And so were VGI executive directors Robert Luciano and Doug Tynan, a team of Sydney-based investors who achieved local notoriety for their stonkingly successful short position on the now decimated listed law firm Slater and Gordon.

It’s a wonder Meij was able to digest his barely nibbled slice of deep pan.

Gordon’s lost $10m

Isn’t Bruce Gordon a generous billionaire?

Despite a messy episode last year with Anthony Miller’s Deutsche Bank, Margin Call can confirm that the Germans still have the media mogul Gordon’s account.

The episode — which has just hit local criminal courts — involves Brody Clarke, a 30-something man who until he was dismissed in September worked for corporate law firm Atanaskovic Hartnell Lawyers.

One of the firm’s founding partners, John Atanaskovic, is a long-time trusted adviser to Gordon, who is coming to the end of his annual Sydney pilgrimage and will shortly return to the pink sands of Bermuda.

Bruce Gordon. Picture: John Feder.

The allegations are that Clarke — previously an investment banker at Macquarie Bank, JPMorgan and Goldman Sachs — tricked Deutsche into transferring almost $10 million into his personal accounts.

The crack team at Miller’s Deutsche Bank apparently thought the young lawyer was borrowing money on the billionaire Gordon’s behalf. Instead, it is now alleged that gaming groups Sportsbet, Tabcorp and Betfair were the main beneficiaries.

Happily for Miller’s troops, the embarrassing episode doesn’t seem to have harmed their careers.

Ashley Seeto, who Margin Call understands was the bank’s main contact for Clarke, was promoted in December to head Deutsche’s equity capital markets team in Australia.

And Seeto’s boss Adrian Todd hasn’t been hampered by his cameo role in the bank’s apparent gullibility. Months after the alleged incident came to light, Todd was also promoted and is now the head of its global capital markets division.

Why BlackRock fled

Larry Fink’s BlackRock is the world’s largest asset manager and, up till a few weeks ago, was the second largest shareholder in Nick Falloon’s Fairfax Media.

That silver medal status changed after the abrupt departure of Anthony “The Cat” Catalano from the Fairfax-backed property listings business Domain.

Nick Falloon. Picture: Aaron Francis

On February 7, BlackRock sold more than 55 million of its 144 million shares in Fairfax.

That reduced BlackRock’s stake from 6.3 per cent to about 4 per cent, well below the ASX’s 5 per cent substantial shareholder threshold. Margin Call understands most of that selling was done by BlackRock’s Charlie Lanchester-led Concentrated Industrial Share Fund, which has about $650m under management.

The sell down was, we gather, triggered by racy reports in Fairfax’s Financial Review — including the one featuring pictures of Greg Hywood’s son Tom — that ran unattributed allegations about a sex-and-drugs culture rife at Fairfax’s Domain.

It seems Lanchester, like other investors including outspoken Thorney billionaire Alex Waislitz, was concerned about what Kellyanne Conway might call the “alternative facts” in the Fin’s reports.

As a rule, outfit’s managing $7.3 trillion internationally do not like to be in the dark about CEO departures or anything else.

Subsequent conversations with Falloon and Domain’s executives seem to have calmed institutional investors, who we understand are now of the view that The Fin was perhaps a bit excitable in its reporting.

Indeed, Margin Call hears BlackRock’s active holding in Fairfax (the media company owns 60 per cent of its Domain spin-off) has started creeping up and could again cross the 5 per cent substantial shareholder threshold.

That would be good news for both Falloon and, for different reasons, Catalano’s defamation lawyer Mark O’Brien.