Activist investor Fraser Perring can appear as opaque as the companies he takes aim at.
He says that 2020 was an excellent year for his firm, Viceroy Research—“it has been better than every single year combined”—but he won’t offer a ballpark amount of the money the hedge fund made.
He eschews inviting reporters to his home office; Barron’s interviewed him on a bench in a square in Peterborough, a town about an hour and a half from Perring’s home office in central England.
Perring’s wariness comes amid concerns that he has had for his own safety after his biggest victory as an activist investor unspooling one of modern Europe’s largest corporate blowups—last summer’s spectacular collapse of German payments processing company Wirecard (ticker: WCAGY).
The company’s demise came after Perring and other short sellers, who take bearish bets on stock prices in anticipation they will fall, faced considerable blowback for years from Wirecard and from German regulators who began an investigation into the doubting investors at the prodding of the company, according to news reports.
He was ultimately vindicated on Wirecard after it filed for insolvency in June 2020, making a name for Perring that he feeds off today.
Even in the best of times for short sellers, when stock returns are lackluster, the job of betting against companies is arduous work, sparking slugfests between investors and the companies they target.
But the relentless bull market in stocks has turned short selling into a Mount Everest-like challenge that is even harder to scale in Europe.
Yet short selling is drawing renewed attention. A Goldman Sachs index of the most-shorted stocks has risen roughly 140% since the Wirecard announcement.
Perring says he is now working on an alleged fraud in Germany that is 3½ times as large as Wirecard, which at its peak was a $28 billion company, but refuses to divulge details. He says he hopes to unveil the target this fall.
His playbook is similar to other short sellers, but differs in some important ways.
Perring likes to focus on target companies whose practices or accounting have not been questioned. He says he also stays clear of stocks that have high levels of short interest, which reflects the numbers of shares that have been sold short. Short sellers are always at risk of getting whipsawed when investors cover their short positions by buying stocks.
“With low short interest, you don’t have a herd wanting to cover,” Perring explains.
He scours the globe for telltale signs of fraud—“there always has to be an element of too good to be true”—and a widespread perception in the market that the company is a highflier.
Germany remains a favorite hunting ground for Perring. “They are the only place in the world where they keep very good records even if they are a fraud,” he says.
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Read More: The Short Seller Who Took On Wirecard Is Aiming for a Bigger Target