In its analysis of nearly a decade of Donald Trump’s tax information obtained by the New York Times, the Gray Lady highlighted a surprising tactic the real estate magnate used to turn speculation over the future of hotel conglomerates and airline groups into a huge cash windfall by reportedly portraying himself as a Wall Street raider.
Tax information obtained by The New York Times has grabbed headlines primarily for the staggering financial losses property-developer-turned-politician Donald Trump reported between the years of 1985 and 1994. Lost in the news of billions of dollars in business losses is a fascinating account of a unique way the already at the time famous mogul earned millions of dollars by trading on rumors that he was prepared to launch hostile takeovers of companies, including United Airlines, American Airlines and Hilton Hotels.
These takeover bids, of course, never transpired, but the newspaper reports that Trump quietly sold his personal shares after rumors he would be attempting to seize controlling interest in the corporations substantially raised stock in the companies. According to media reports at the time of the rumored United Airlines takeover bid, divesting himself from the airline after it was believed he would attempt to buy the company led directly to a $55 million windfall for the famous dealmaker.
According to the investigative report, transactions following the same pattern netted the tycoon another $57 million after establishing himself a potential corporate raider at Hilton Hotels, Gillette and even Macy’s Department Stores before he suddenly dumped shares after stock prices soared. If Trump’s apparently make-believe scheme takeover of United Airlines provided the blueprint for what would become a lucrative investment tactic, however, it was his attempt to repeat the feat with another legacy carrier that put an end to the pattern once and for all.
By the time rumors begin to circulate that Donald Trump was preparing to initiate a takeover at American Airlines in 1989, investors reacted with a shrug. It seems Wall Street had heard this fish tale a few too many times. One airline analyst told the Associated Press at the time that he was “very skeptical of everything this man does.” Unfortunately for Trump, American Airlines stock price betrayed a similar skepticism among investors.
To put the events of nearly three decades ago into context, it is worth noting that the blockbuster movie “Wall Street,” which garnered a Best Actor Oscar for Michael Douglas, was released in 1987 with the memorable tagline “Greed is Good.” Much like the fictional Gordon Gekko, in the real world, corporate raiders were busily carving up legacy carriers such as Eastern Airlines for parts. Fortunes were being won and lost speculating on which carrier would become the next to be purchased with junk bonds.
Like most other moves made by the controversial political figure, the judgement over whether Trump’s 1980’s investment strategy is viewed as a brilliant businessman’s winning gambit to take advantage of the zeitgeist of the time or just another example of shady dealing by a common conman, will likely depend on the eye of the beholder – or in this case perhaps, the deeply political leanings of the reader.
[Image Source: Shutterstock]