Grizzly On Equity Short Sellers And EU Regulations

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The following is an excerpt from ValueWalk’s interview with the CEO of Grizzly Research, a top activist short selling firm. In this part of the interview, the CEO discusses which countries have done the best job battling coronavirus, changes in the industries caused by the crisis, the public opinion of short sellers, and short selling in Continental Europe and in Germany. The CEO whose identity is still anonymous will be revealing it shortly exclusively to ValueWalk. Please stay tuned for the full video interview with transcript or hear his top idea it our upcoming conference.

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In which countries did you do you think did the best job so far?

Siggy: Well, I think Israel was a country that has done a tremendous job  battling the Coronavirus so far. Germany has also like from everything I hear from my family and my people back home has done a decent job. There's some hotspots there but by and large, you know, people are okay and kind of wondering why we're not ready to go back to work. I mean, i  want to be very careful but it seems right now, as if that situation seems to be under control.

In Germany What do you think they've done that can be used here to to help control it or help do a better job ?

Siggy: That is very difficult to say because it's different countries with different circumstances and you can't just take the same rules and apply them and hope that it works. I think what people in Germany might have done I think earliest when they told them like that, you know, the quarantine starts now and they're going to stay home and they actually all stayed home or like a bigger percentage of them. But there were still a few gatherings in the USA where they didn't take it as serious as they should have yet, I think overall, the Like installing the mask as mandatory thing to wear in public things, it seems to be a good thing.

You know, the countries that wear masks, for example, Japan have done fairly well during the COVID crisis as compared to countries where wearing masks is not common. So I think that's a that's a simple and smart thing to adopt here in the US, and I'm glad we did it.

Alright, any industries that will completely change as a result of this crisis?

I think, I think depends on your definition of completely. But yeah, industries will change, I think naturally because I think consumer behaviour has changed and will continue to stay different than pre COVID-19 .For example, cruise lines are a very obvious example, I think it will take years until people are really interested in filling up a cruise ships again. I think office spaces for example also changes, a lot of people have realized during the crisis that it's actually okay and they can be maybe more productive working from home.

So, I think this might ,might change this industry area as well. I, I think all these changes that should come about are little bit held back by government intervention, where capitalism was not allowed to work properly, and people should get punished, punished here and maybe weeded out are just allowed to to keep going with bad behavior. And that is, you know, I think why we're seeing maybe less changes in business behavior than we should .

Yeah, remember a podcast with Bill Ackman on Shane Parrish's podcast. Ackman mentioned that he would like to see more of the SEC regulators listening to short sellers or to take them more seriously and but yet with the government bailing out these bad behaviours and short sellers being I guess not having,.... people are always against them. What do you see as because you're in the business of short selling, what do you see as your future and will it become more accepted?

Yeah, I think the public opinion of short sellers isn't that bad maybe as it's made out to be sometimes so I think generally regulators and other investors accept them. as being, you know, useful, because they, you know, spend time and effort on uncovering information that, you know, bad companies might want to hide. I don't think that the SEC, should engage every short seller, and, you know, they should maybe listen to them more.

But I don't think that you should give short sellers here. more credibility than they deserve. I think, you know, you should listen to them read what they write, and then what the SEC deems to be actionable, they should move on. Yeah, as you know, see in the US here, USA, short sellers are a more accepted group than anywhere else in the world. You know, I'm also looking into it a little bit from this perspective in Germany or in continental Europe. You know, you have an even tougher time as you have in the US. So it's not that bad for you here.

Would you like to see the other countries adopting, or yeah, taking in more short sellers or making it not as challenging for them?

Yeah, especially Continental Europe and in Germany are very interesting. For myself a high priority, priority target. But if you want to do this, right, you have to do a lot of work beforehand in terms of legal preparation, lobbying, talking with the right people. So, you know, if you want to do it, right, you got to prepare. Well, I think it's very worthwhile. And, you know, we're looking at options.

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