Enron Over Price Question

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When you see terrible returns on invested capital and you see no free cash flow showing up ever, that's probably when there's fraud. Short sellers pay a lot of attention to companies that have all of those metrics trending in exactly those directions. And the big cognitive dissonance, I think, is the reported profits versus the cash flow. The first part behind multiple is Enron over price question.

The FTX fraud has dominated headlines now for weeks, during which we’ve debated if and how Acquired could uniquely add to the conversation. Then we realized there was an angle so perfect that we had to drop everything and enter Acquired research overdrive: Enron. Travel back with us to the granddaddy fraud of them all, 2001’s then-largest bankruptcy in US history and the impetus for the famous Sarbanes-Oxley Act. So much of Enron’s history parallels FTX that the uncanniness is almost unbelievable — right down to the same CEO running the two bankruptcies. Sit back and enjoy this crazy tale of villainy, greed, and the nature of humans and money. Maybe just don’t take notes on this one…

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