John Hempton on Spotting Potential Frauds to Short

One of my favorite bloggers who I probably don’t link to often enough is John Hempton of the blog (and fund) Bronte Capital.  John has an excellent post up tonight in which he explains short-selling and nailing frauds for his hedge fund to his young son…

The easiest scammer to find is a repeat offender. We actively seek out people who promote dodgy stocks and who who are repeatedly involved in dodgy companies. The slogan is “once a scumbag, always a scumbag”. That slogan is probably not strictly accurate –  but we only need to be right 90 percent of the time to be fantastic at this business – and the recidivism amongst scammers is surprisingly high.

In that sense long sentences for people like Bernie Ebbers are not in my interest. I would prefer slime-bags to be back-in-business rather than in prison. More opportunities for me.

I totally agree with John, I know a few scumbags from back in the day who are still running around raising money for shady enterprises – without knowing anything about these deals, I can guarantee that the buyers will be completely fucked in the end.

Anyway, read Hempton’s whole post or miss out on a serious knowledge bomb.

Source:

Daddy You Are More Evil Than I Thought (Bronte Capital)