Hedgeye Podcasts

Ep.123 Real Conversations: Steve Clapham, Founder, Behind the Balance Sheet → How to Spot the Next Big Fraud

Mar 28, 2025
Steve Clapham, a forensic accounting expert with over 30 years of experience, shares insights on identifying financial fraud. He discusses the alarming rise in earnings manipulation and the challenges of short selling in a deceptive market. Clapham emphasizes the importance of deep financial analysis over quick speculation and critiques the limitations of traditional training for analysts. He also explores high-profile fraud cases like Greensill and highlights the disconnect between reported figures and actual performance, urging investors to prioritize thorough research.
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ANECDOTE

Ageism in Finance

  • Steve Clapham applied to 47 finance jobs in London but got zero interviews, likely due to his age.
  • This led him to start his own successful training business, teaching forensic accounting.
INSIGHT

Short Selling Frauds

  • Short selling frauds is difficult, as fraudsters are often credible and persuasive.
  • Wait for market cracks and external shocks before shorting, as timing is crucial.
ADVICE

Read the 10K

  • Prioritize reading the 10K yourself.
  • Don't solely rely on sell-side research or summaries.
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