Editors note: We like Hempton a lot and know personally he is WICKEDLY smart; many smart value investors thought FFH was involved in bad stuff a while ago. Were posting this bc its interesting not as attack on Hempton.
Taibbi’s new book The Divide: American Injustice in the Age of the Wealth Gap, has a section on the Fairfax Financial Holdings Ltd (OTCMKTS:FRFHF) (TSE:FHF) saga and the interesting thing was that many of the shorts (according to the book’s writing) seemed to genuine turn when FFH started the big lawsuit. They didn’t seem to turn because they were afraid of Fairfax’s accusations against the shorts, but they turned because Fairfax started disclosing details during the lawsuit about European subs and supposedly shady dealings as part of the lawsuit. At that time, it seemed that many shorts realized that what they thought was a fraud was not (you don’t disclose where the bodies are buried in a lawsuit asking for discovery right???).
I haven’t read the whole Taibbi piece, but this make intuitive sense to me. Fairfax Financial Holdings Ltd (OTCMKTS:FRFHF) (TSE:FHF) cleary had some seriously bad actors working against it, but I’ve always believe that many / most of them must have genuinely felt they were a fraud or destined to fail…. you just don’t attack a company you believe is viable to make a buck on the short side (unless you are doing a short term trade)… it’s just not rational.
I’ll be reading through these, but I think John Hempton believing they were a fraud was my expectation. The guy was wrong, probably overly aggressive, and way too lose with words and probably shady in some actions, but I think he truly thought he was right.
John Hempton Fairfax Financial V SAC Unsealed Emails & Communications
These are only John Hempton documents discovered by Rocker and Morgan Keegan