The Constitution Club

Lenny Dykstra filed for Chapter 11 Bankruptcy today.

A little more than a year ago Dykstra was being profiled in the New Yorker, sharing his stock-picking wizardry with Jim Cramer’s acolytes and generally being regarded as a financial whiz whose business acumen was hidden behind a tobacco-chewing exterior. But just as our economic system wasn’t as healthy as it appeared in the best of times, Dykstra’s finances weren’t quite as good as they appeared on the outside.

For Con Club readers, it has actually been 2 years since I first discussed Mr. Dykstra’s burgeoning “empire”.    Of course, what sounds to good to be true, probably is.

The 46-year-old Dykstra, a former World Series champ with the Mets and spark plug with the Phillies, faces upward of 20 suits from creditors coast to coast, most related to The Players Club, a problem-plagued magazine he launched last year.

Among those claiming they were stiffed by the player known as “Nails” are a pair of private jet rental companies, his brother, aLas Vegasprinting business, a former lawyer and several former employees.

Dykstra’s wife is also suing him for divorce, and his $18 million California mansion is in foreclosure.

Lenny is known for his risk taking both on and off the field.  Although all the financial details have not been released, some have speculated that his penchant for “deep in the money” calls may have helped lead him to this point.

Lenny made it look easy when things were going up.  I don’t necessarily disagree with his strategy, it has a time and place for some people, but he touted it as nearly fool proof.  He twisted the risk into “only the amount you paid for the call” which is 100% accurate.  However, the amount you pay for a DITM option is quite a lot. True, it is less than the stock itself, but it’s highly unlikely that you’re going to lose 100% of your money in a stock.  It is far more likely that you’d lose 100% of your capital in a DITM option.

Who knows?  Maybe he is just following in Donald Trump’s footsteps.

In Lenny’s own words, to those who question where the world according to Lenny is going next, “Fuck them.  We will see who is laughing, yeah, when you want a loan.”

Lenny, you may want to rethink that statement.