Whitney Tilson’s email to investors discussing a student offer for his conference on short selling; a nice article about Seth Klarman; Cannabis bubble; 3 scams including Abraaj Group.
1) I’m looking for four students who want to attend our conference on short selling in NYC on Monday, Dec. 3. We’ll comp you if you help us the evening before and during the day of the conference. Email me if you’re interested.
Please use “VW10” for a discount
Q3 hedge fund letters, conference, scoops etc
2) A nice article about Seth Klarman and his classic book, Margin of Safety, which was one of the first investing books I ever read: Meet the Billionaire Investing Guru Whose 27-Year-Old Book Is Now Selling for $3,000. Excerpt:
The author of Margin of Safety is well-known in investing circles for, among other things, not being particularly well known by the masses. He obviously isn’t anywhere near as famous as billionaire investor and philanthropist Warren Buffett, the so-called “Oracle of Omaha.” But as far back as 2012, the Economist referred to Seth Klarman as the “Oracle of Boston” (where Klarman’s Baupost Group is based), noting both his investing prowess and his ability to fly very much under the radar.
“Klarman keeps a low profile and rarely speaks at industry shindigs,” the Economist reported. “He is probably the most successful long-term performer in the hedge-fund industry who has managed to stay out of the spotlight.”
Likewise, the New York Times wrote in 2017 that while “Klarman has long kept a low public profile, he is considered a giant within investment circles.”
3) Cannbis stocks are already in bear market territory – but still have much further to fall. When silly bubbles burst, the declines are 20%, but at least 80% (often 90%, even 99%). Cannabis Stocks Aren’t Just Plunging, They’ve Already Fallen Into Bear Market Territory. Excerpt:
Some of the heaviest declines came in cannabis stocks that were favored by speculators. Tilray, the first weed company to list on the Nasdaq, fell as much as 21% at one point Monday afternoon before rebounding slightly to $122.60 at the market’s close, which marked a 16% decline on the day. OTC shares of Aurora Cannabis, which officially trades in Toronto and is planning an IPO on a U.S. exchange, fell as much as 20% before closing down 13% at $8.69 a share.
Tilray’s stock has lost 31% of its value in the past five trading days, while Aurora is down 29%.
4) Speaking of scams, I’m really enjoying this new book, The Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World. Excerpt:
In 2009, with the dust yet to settle on the financial crisis, a mild-mannered Wharton grad set in motion a fraud of unprecedented gall and magnitude–one that would come to symbolize the next great threat to the global financial system. The scandal is known as 1MDB, and the man behind it, Jho Low, is a figure so preposterous he might seem made up.
5) Kudos to the WSJ for its front-page story in today’s paper on this scam. How One Stubborn Banker Exposed a $200 Billion Russian Money-Laundering Scandal. Excerpt:
It took a £1 payment to uncover one of the world’s biggest money-laundering scandals.
Howard Wilkinson, a British trader at a Danish bank’s branch in Estonia, noticed that a London business, which moved more than $1 million through the branch almost daily, had filed a report with the U.K. government claiming it had no income or assets. Downloading the report cost Mr. Wilkinson one pound.
The discrepancy didn’t immediately strike him as malicious. Later, he began tugging on the thread. And five years after Mr. Wilkinson raised the alarm, his old employer, Danske Bank , DNKEY -1.76% last month announced that more than $230 billion had flowed from Russia and other former Soviet states through its tiny branch in Estonia.
6) More kudos to the WSJ for its coverage of this scam: Private-Equity Firm Abraaj Raised Billions Pledging to Do Good—Then It Fell Apart. Excerpt:
In January, the Abraaj Group had $14 billion of assets under management and was trying to raise $6 billion for what would be the world’s largest emerging-markets private-equity fund.
It’s now the world’s largest insolvent private-equity firm. In June, it filed for provisional liquidation.
During its rise, the Dubai-based firm attracted many Western investors. Its founder, Arif Naqvi, promised to make money by doing good in poorer countries, including with a fund that would invest in hospitals serving African and Asian cities.
Abraaj’s fall stands as a warning to those misled in their enthusiasm for the idea behind the firm. One former employee described Abraaj’s work as “inspirational capitalism at its most enlightened.” Signs of trouble went overlooked, with one investor receiving an anonymous email alleging problems at Abraaj.
