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I've never liked the taste of Coca-Cola. To me, it's much-vaunted mysterious ingredient tasted a lot like dirty swimming-pool water with regurgitive overtones, as though your dog drank it first and hated it, too. Ever since I can remember, I have not been able to understand how anyone could possibly bear to swallow a second mouthful. I just learned that sales are off 16%, which is sufficient introduction to the article featured in the leading Geneva daily, which I've translated below the fold:

How to crash a listed Corporation

Finance: a former broker has created a hedge fund designed to crash Coca Cola's market value. And it's working.

Florence Noël
December 8, 2004

If one's heroes are George Soros and Mahatma Ghandi, its natural to want the financial world to serve human rights and the environment. In a nutshell, that's Max Keiser's philosophy. At 44, this former broker is as rich as Croesus.

A financial genius, he made his fortune in stocks and bonds on Wall Street during the Eighties and then moved to France just before the market crash to enjoy his retirement.

But Max Keiser can't bear to sit twiddling his thumbs. After having created a virtual market to fund big budget movies, the young retireee then worked full-time this last year on his grand passion: environmental protection. His target? Coca-Cola. He says the multinational exploits its Columbian employees, holds the most elementary ethical principles in contempt, pollutes Inidan farmlands and, above all, endangers consumers' health. No less.

The former stock broker, who today calls himself an "activist investor" has worn to break the American giant. How? Quite simply through the use of financial tools already available to the market.

Legal and Judicious
Here's where Max Keiser's genius comes into play. "It isn't enough to just boycott an enterprise or a product. Take Exxon, for example. Greenpeace has been boycotting them for years, but the group's still making money. On the other hand, if you take advanage  On the other hand, if you take advantage of the financial repercussions of a boycott on the enterprise, you can attain your objective", Max Keiser explains.

To achieve this, the American created a web-based virtual bank, KarmabanQue, which takes positions in a very real market. Its purpose is to enroll sufficient capital to bankroll a speculative fund to crash Coca-Cola shares.

The mechanism is judicious: via the web, individuals are encouraged to boycott Coca-Cola by not buying its products. As sales figures decline the boycott value increases on Karmabank. At this point Max Keiser moves onto the next step and approaches private investors willing to take a financial interest in profits produced through "short selling".

The rest is a wager: when the share dips, the hedge fund's positions increase in value very short term. If there is sufficient information widely available which indicates that the corporation's sales are in continued delcine, ordinary investors will unload their positions*, over time, locking in any gains. This will further accentuate the share's downward trend. Profits will be distributed to the food group's victims.

And it's working. Over the last several months, Coca-Cola sales are down and it's share price has lost 16%. Its difficult to know whether this situation is due to Max Keiser's sabotage.  Perfectly legal and above-board, his boycott method has been termed "pure genius" by the Stamford University. The virtual banker aims to collect $100 million [check exchange rate!] for his speculative fund. And to reduce the target share price by half in one year. Once this has been achieved, Max Keiser plans to attack McDonald's, Wal Mart, Microsoft or even the petroleum giant, Shell.

* Following the pattern set by Enron, it is at this point that the corporations' top executives pile into such a fund, while 401K holders are wilfully misled by their CEO. Do you know anyone with a small 401K loaded with Coke? They should be job-hunting.

Originally posted to Heteraetcaetera on Thu Dec 09, 2004 at 10:30 PM PST.

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Comment Preferences

  •  interesting (none)
    I'm aware of this technique from having invested in the stock market. Hedge funds do it all the time on a smaller scale. It's an interesting application, using it to try to right social wrongs. Kind of a high-tech Robin Hood.

    Hope he goes after Wal-Mart next, although they're the only place in this small town where I can get many of the things I need. But Shell? That was the one fuel company that an earlier diary said supported the Democratic Party this election, whereas most of the others supported the Republicans. Now where should I get my gas?

  •  Is this real or a scam? (none)
    What is this?

    Rageaholics are unfit for command. Rage as an addiction

    by Lucian on Thu Dec 09, 2004 at 11:41:35 PM PST

  •  Sounds kinda like (none)
    ...a refined and much more organized version of what progressives did to sinclair earlier this year.  I remember a lot of people were shorting Sinclair stock and giving the profits to progressive causes...  It was perhaps the crowning success of the election season, where blogs and progressive groups almost brought a corporation to its knees.

    It's a good idea.  Corporate America only listens when you hit them in the wallet.  Multinationals should be targeted, I think, to make a point about outsourcing.  Like... we buy your crap, you abandon us for slave labor in China, you pay.

    "The future will not belong to the cynics. The future will not belong to those who stand on the sidelines"-Paul Wellstone

    by Sauceman on Thu Dec 09, 2004 at 11:44:10 PM PST

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