Douglas Millett, Who Helped Chanos Bet Against Enron, Dies at 49Laurence Arnold
Douglas Millett, a portfolio manager who shorted stocks with James Chanos at Kynikos Associates Ltd. and helped expose the hollow underpinnings of Enron Corp. before its collapse, has died. He was 49.
He died on Sept. 21 at Calvary Hospital Hospice in the Bronx, New York, according to his brother, Mike Millett. The cause was adenoid cystic carcinoma, a cancer of the salivary glands, which was diagnosed in May 2012. He lived in Armonk, New York, with his wife and two sons.
A graduate of Yale University in New Haven, Connecticut, Millett worked from 2010 to 2012 as co-portfolio manager and director of research for the Perella Weinberg Partners Sustainable Resources funds, focusing on alternative energy, water, agriculture and other investments prone to scarcity. His last professional affiliation was with First New York Securities LLC., a brokerage firm.
His 10 years at Kynikos, the New York-based investment company, immersed him in short-selling, or betting that shares of a given company will fall. Chanos is regarded among the best in that field, in part because of his early and accurate public doubts about Enron, a Houston-based energy company, before its fraudulent accounting was exposed and it plunged into bankruptcy in December 2001.
As head of research, Millett was part of Kynikos’s Enron team, along with Chanos and Charles Hobbs, Chanos said yesterday in an e-mail. Chanos credited Millett with originating the oft-quoted description of Enron as “a hedge fund sitting on top of a pipeline.”
Millett and Chanos worked with journalist Bethany McLean on what became her March 2001 article for Fortune magazine that questioned the fundamentals beneath Enron’s soaring share value.
In “The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron” (2003), co-written with Peter Elkind, McLean recalled Millett asking her, “Would you put your money in a hedge fund earning a 7 percent return?” She said Chanos added, “Read the 10-K and see if you can figure out how they’re making money.”
Also during his time at Kynikos, Millett led an expansion that quadrupled the firm’s research staff and acted as the liaison to the firm’s biggest client, New York-based Ziff Brothers Investments LLC.
“I am sorry to inform you that one our best friends, and ex-partner, Doug Millett, lost his battle with cancer,” Chanos wrote in an e-mail to colleagues. “There is no one who ever met Doug who was not impressed with his rock-solid integrity, towering intellect, and unmistakable sense of humor. He in all ways embodied the qualities we hold dear, but more importantly, was simply a good person. We will miss him terribly.”
Douglas Tyler Millett was born on May 20, 1964, in Columbus, Ohio, the son of Allan R. Millett, a longtime professor of history at Ohio State University who is now director of the Eisenhower Center for American Studies at the University of New Orleans, and the former Sarah Tyler.
He played football at Upper Arlington High School in Ohio and then at Yale, where he received a bachelor’s degree in economics in 1986.
His first job was as a stock broker at Robinson-Humphrey Co. in Atlanta. He worked from 1988 to 1991 as a proprietary trader at the Gelber Group, a Chicago-based firm specializing in algorithmic trading.
He was an analyst at Kynikos from 1991 to 1993, left to join the now-defunct investment bank Robertson Stephens & Co. in San Francisco, then returned to Kynikos in 1995, rising to partner and chief operating officer.
In 2004, with backing from Kynikos, he left to form Currahee Capital Management, a fund manager that lasted only a year. According to an article in the New York Sun, Millett said the 11-employee firm, with $30 million in startup funding, struggled with the costs of Securities and Exchange Commission rules, accountants and third-party research.
“We simply could not run the fund well with that capital base, given the structure that regulators and investors demand,” Millett said, according to the newspaper.
Millett spent a year as head of short selling research at Select Equity Group, then nine months as a managing director at J.P. Morgan Securities, before joining Perella Weinberg Partners, all in New York.
Big deals weren’t the only things he liked to land. On his LinkedIn Corp. profile page, Millett added a photo of himself holding an enormous striped bass, with the Manhattan skyline incongruously behind him. His brother said Millett, who got into fishing because of his sons, caught the fish in the East River near the United Nations.
In addition to his parents and brother, survivors include his wife, Joanne McElligott, and their sons, John, 13, and Daniel, 8.