If you were told that abnormally low interest rates and quantitative easing would provide huge tailwinds for higher equity prices, then it isn’t obvious you would choose to run a fund whose activity was entirely focused on short-selling.
If you were told that abnormally low interest rates and quantitative easing would provide huge tailwinds for higher equity prices, then it isn’t obvious you would choose to run a fund whose activity was entirely focused on short-selling.
However in today’s episode, Carson Block, founder of Muddy Waters Research describes his early exposure to fraudulent listed companies in the US, before intrigue and Law took him to Asia.
There he started on a path to discover and unmask some extraordinarily high profile corporate frauds. Detailed research, site-visits, scepticism about management claims and forensic analysis all featured on his journey which lead to some collapsing stock prices and humiliated investors.8 of the companies he has exposed as frauds have been delisted from stock exchanges. Two others settled charges with regulator. Carson describes his approach to identifying potential malpractice, the invest process involved, and explains his willingness to take on large corporations.
He shows why he clearly isn’t interested in winning popularity contestsHe describes his investment approach, the paramount importance of risk management, his motivations, dealing with the criticisms and hostility he has faced, his firm and ambitions and the characteristics needed to succeed in this space. Finally he comments on Spacs, the challenges of shorting in a world of negative real rates and why he believes China will lose out to countries like Vietnam where he prefers to make his long bets.
Carson Block is Founder of Muddy Waters Research and CIO of Muddy Waters Capital. Muddy Waters Research specialises in delivering enhanced scrutiny of firms, via forensic accounting, in-depth investigation and valuation analysis. They seek to expose business fraud, accounting fraud and structural problems in target companies, often which are based in emerging markets (especially China). Carson set-up the research firm in 2010 after revealing potential fraud at Orient Paper, before releasing another damning report on Sino-Forest in 2011. He set up Muddy Waters Capital in 2015 off the back of his research success.
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