Build It. They'll Come. Bronte Capital co-founder & Investment Officer John Hempton on why he follows corporate fraudsters & short sells shares; and why he was right about Europe’s big stock fraud, Wirecard, but HOW he still lost money on it.
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Aug 2, 2020 John Hempton, co-founder and Chief Investment Officer at Bronte Capital, is known for his unconventional approach to investing. In this discussion, he dives into the art of short selling and his fascination with tracking corporate fraudsters. Hempton shares insights on the infamous Wirecard scandal, revealing the shocking failures that allowed €1.9 billion to disappear. He also examines the risks of short selling, the moral dilemmas it presents, and the urgent need for regulatory reform to prevent corporate deceit.
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Wirecard Loss
- Bronte Capital shorted Wirecard, correctly identifying it as a fraud, but still lost money due to its price surge.
- Wirecard's scandal, involving missing funds and organized crime, has implications for market regulation globally.
Astara Trio and Wirecard
- John Hempton exposed the Astara Trio fraud in Australia by writing a letter to ASIC via Ken Henry.
- The German regulator, unlike ASIC, was captured by Wirecard and prosecuted journalists for reporting the truth.
Wirecard's Business
- Wirecard started as a high-risk merchant acquirer, dealing with online casinos and pornography.
- High-risk merchant acquiring involves higher fees due to increased risks like fraud and regulatory issues.