John Devaney is Totally Wiped Out

by StockJockey

Thursday, July 10, 2008 - 12:58 am

John Devaney went from starting his business out of a 3-bedroom house in Florida to running the fastest growing broker dealer in the country. His accounts included hedge funds, mutual funds and insurance companies. He was cocksure of himself:

“I only buy at a price where I would be happy to buy it with my own money” John Devaney

But now he has sold his boat, his helicopter, his Renoir painting, and shuttered his business:

Mr. Devaney, who made and then lost a fortune trading mortgage investments, finally called it quits. He shut his hedge fund, and told his investors that all their money was gone too.

“I’m devastated, I’m totally devastated,” Mr. Devaney said by telephone from Aspen, Colo. “I feel horrible that I’ve lost my own money and that so many people who saw the skills I have and trusted in us have now been hurt.”

It is a stunning downfall for Mr. Devaney, whose brash bets in the markets — and equally brash public pronouncements on the perils and promises of subprime mortgages — made him something of a Wall Street celebrity. NYT

Of course, if that is not bad enough, Devaney is predicting more doom and gloom:

Mr. Devaney thinks the mortgage crisis is nowhere near its end and expects regional banks and insurance companies to face big losses on mortgage bonds.

On June 26, as his hedge fund slipped away, Mr. Devaney sat down and wrote a letter to customers of his brokerage business, warning of the pain to come. For all his troubles, Mr. Devaney was unbowed Wednesday.

“Do I pack up everything and quit?” he said. “Do I retire? No!”

I would bet we have not heard the last of John Devaney. But if he rises, Phoenix-like, I hope he brings a risk officer along, and wears only one hat at a time:

Jim Kelsoe, high-yield portfolio manager at Morgan Keegan Asset Management, says, “I have found John Devaney to be very aggressive in his ability to find interesting trading ideas. Devaney is an analyst, salesman and trader in one, which is a much more efficient use of my time.

Sure Jim, whatever you say.
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Stand by your man...

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Hedge Fund Manager Describes Rock Bottom
New York Times

Morgan Keegan and Fund Manager James C. Kelsoe Named In $2 Million FINRA Arbitration...
Reuters
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Comments:

Wow, crazy, good of u to stay up late and break the news!

Posted by Timothy Sykes on 07/10/2008 at 01:42 AM

So has the babe dumped him yet?

Posted by on 07/10/2008 at 11:08 AM

What a moron! At least he claims to have been as happy as his clients with respect to the securities he bought and the price he paid. Nothing like hayseed gullibility doing a guy in!

Posted by on 07/11/2008 at 12:02 AM

It wasn’t gullability that did this POS in...it was arrogance and flaunting the criminally outrageous profits from his trading in toxic waste finacial products.
His life was all about: “Hey, everybody...look at me, look at me!!...look at how rich, clever, and important I am....you don’t mind if I show off like a total selfish azzhole, do you??”
Guy believed his own press...aka “Pride cometh before the fall”....he and his investors got what they deserved.
LMAO at these idiots.

Posted by on 07/11/2008 at 02:24 AM

George,

By calling Devaney gullible, I meant that he was the biggest dupe of all—he believed his own baloney about having what it takes to beat the market. My view is based on his statement of having his own money at risk.

If he were the every-day arrogant huckster so often found among the self-professed geniuses of money management, he would have gambled with clients’ money exclusively and kept his own dough out of harm’s way. Of course he could be lying about his own exposure to the market.

Posted by on 07/11/2008 at 07:53 AM