Chat With Traders 175: Jonathan Shapiro – Investigating and Exposing the Crafty Schemes of Public Companies
May 30, 2019
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Blue Sky's Downfall
- Blue Sky Alternative Investments, an Australian fund manager, collapsed after a short-seller report.
- Several hedge funds had shorted Blue Sky long before the report, enduring significant losses as the stock price doubled against their position.
Blue Sky's Business Model
- Blue Sky's business model focused on alternative assets like startups, property, and agriculture, attracting wealthy investors seeking diversification.
- They created numerous funds and allegedly inflated asset valuations to book performance fees, driving up profits despite not realizing actual returns.
Early Short-Sellers of Blue Sky
- Hedge funds began shorting Blue Sky around $4-$5 per share after the founder sold a large portion of his shares and left the board.
- This raised concerns among short-sellers who suspected the founder was strategically reducing his holdings before a potential downturn.