As reported today by Investment News, GPB Capital Holdings has admitted to substantial losses in its various funds:
In a blow to investors, GPB Capital on Friday reported significant losses in the value of its investment funds, which are in the form of private partnerships that invest primarily in auto dealerships and waste management businesses.
The two largest, GPB Holdings II and GPB Automotive Portfolio, have seen declines in value, respectively, of 25.4% and 39%…
GPB’s five other smaller funds reported declines in estimated value of 25% to 73%, according to GPB.
GPB Capital Holdings released its valuation report late on Friday afternoon. The news comes on the heels of an announcement last week by Fidelity Investments that it would be removing GPB Capital Holdings from its platform. GPB had raised ~$1.2 billion for its two largest funds: GPB Holdings II and GPB Automotive Portfolio. With a combined average loss at 32% of value, the two funds are down ~$384 million. Add to this the 9% average commission GPB’s broker dealers were paid to sell these funds and one could argue the real average loss in the value of these two funds stands at about 41%.
Owned by Scientologist David Gentile, GPB Capital Holdings makes the argument that L. Ron Hubbard’s business management principles have no relevance whatsoever to selecting or managing investments. Hubbard’s so-called “management tech” does no better at running the Church of Scientology itself. Indeed, Scientology leader David Miscavige this week was sued by Jane Doe, a former member of the Church. The causes of action include human trafficking and defamation.
GPB Capital still has yet to issue its SEC-required financials and remains under investigation by the FBI, the SEC, FINRA, and the BIC.
We note in passing that the timeline of James Stunt’s problems and those of GPB Capital Holdings closely match. This coincidence is interesting in light of Mr. Stunt’s recent YouTube defense of David Miscavige. Does Mr. Stunt speak plainly or he is cryptically telegraphing a message to Mr. Miscavige? We ask as Mr. Stunt is clever and is quite the player.
Mr. Frank Pena is the Director, Finance and Valuations at GPB Capital Holdings. He spoke this past April at GAIM Ops, a private equity conference held in the Grand Cayman. His topic was Level 3 asset valuation practices. Investopedia defines Level 3 assets as follows:
Level 3 assets are financial assets and liabilities considered to be the most illiquid and hardest to value. They are not traded frequently, so it is difficult to give them a reliable and accurate market price. A fair value for these assets cannot be determined by using readily observable inputs or measures, such as market prices or models. Instead, they are calculated using estimates or risk-adjusted value ranges, methods open to interpretation.
Given that Level 3 assets are intrinsically difficult to value, one wonders about the exact metrics, models, and assumptions Mr. Pena and his colleagues at GPB Capital used to issue their valuation which showed significant declines in the value of all GPB funds.
The basic question is this: Where did all the money go? For example, if the GPB Automotive Portfolio raised $600 million and is now down by 39% then the lost fund value is a staggering $234 million. How could GPB Automotive lose so much money owning and operating premium automotive dealerships in New York and New Jersey in a booming US economy and stock market? GPB began by acquiring dealerships and claimed automotive as a core strength backed by a deep bench of highly experienced automotive executives.
Did GPB Capital Holdings borrow against its assets when it had to stop raising new capital last year? So many questions with no answers.
Numerous securities law firms have been following the saga of GPB Capital online.
Google “GPB Capital” and one can see that the light at the end of the tunnel is likely a Venutian freight locomotive headed straight for GPB.
Categories: The Scientology Money Project