"The current Canadian property market bubble is no less than the US subprime mortgage crisis."
It’s not someone else who said this, it’s Wall Street’s famous short-selling legend: Marc Cohodes.
The former ace of the past, who has been on Wall Street for more than 20 years, has now converted the battlefield and raised chickens in a secluded countryside. But he is still staring at the "bull" on the market, self-proclaimed as the chief "Matador" in the chicken farm.
Wall Street in the 1990s once had such rumors that when Ke Hoddes stared at which company, the company’s shareholders would have to hurry to run the money.
The Belgian speech recognition software company Lernout & Hauspie, which he was eyeing, plunged from $65 to 25 cents and declared bankruptcy in 2001.
On the eve of the financial crisis, he revealed that the US subprime mortgage company NovaStar's profit has been inflated into the classic case of Harvard Business School;
Business management software provider AremisSoft was blamed for his inflated income and declared bankruptcy in 2002;
The pharmaceutical company AaiPharma, which he stared at, admitted fraud in 2005 and eventually delisted...
The subsequent financial crisis was supposed to be a once-in-a-lifetime opportunity for a big short such as Kojodes, but he was defeated in the storm. Implicated in the Lehman bankruptcy incident, and in the forced liquidation dispute with Goldman Sachs, his managed short-selling hedge fund, Copper River Partners, eventually went bankrupt.
Since then, Ke Huo Desi of Yixing has retired from the farm, but he has not given up shorting while he is raising chickens. The 56-year-old Linkedin title is the chief "Matador" of the Alder Lane Farm.
In the past two years, he warned against the risks and called for shorts when the Canadian property market was hot. Not long ago, Home Capital Group, a Canadian non-bank mortgage provider that had been short-selling, became the storm of the Canadian version of the “subprime mortgage crisis.†The stock price plummeted 65% in one day and was on the verge of bankruptcy.
The secret of Kohodes' shorting is to bet on the jockey instead of the horse (Bet the jockey, not the horse).
Sincerely short
Kehodes has a deep obsession with shorting.
He has a keen sense of financial fraud, and once he discovers that a company has an abnormality, he slams his sniper, digs a clue to find a wrongful act, shows his opponent the most violent side on Twitter, and even ran into fire. Through Las Vegas, confirm whether a new office claimed by a company is real.
As Keholds himself said: "Legal companies don't know who I am, but for the bad guys, they know, and they care very much."
Kehodes's short career began in Chicago. After graduating from Babson College in Massachusetts, he earned a position at the Northern Trust in Chicago in 1982. He also met Paul Landini, who led him to the short road.
Ke Hodges and Landini often go to the local video game hall after work, watching people frantically stuff one coin after another into the game console, a thought came out: under the pressure of the video game machine The pinball machine should be down.
So the two men summed up and decided to short the Bally Manufacturing, a large pinball company. Sure enough, the company's share price has been declining since the beginning of 1983. By the end of 1984, its market value had evaporated by about half, and they also made a profit from Zhongda.
Since then, Kehodes has been fascinated by the short.
The idealist on the Wall Street
Just like a crocodile biting a prey is not a slap in the face, once a company is identified as having problems, Kojodes will hold on, which is his consistent style.
In 1985, Kehodes moved to New York to join David Rocker's newly established short-selling fund company Rocker Partners as a partner, creating a series of brilliant "records."
His attack on Belgian speech recognition software company Lernout & Hauspie sensationalized Wall Street and established his reputation as a short-selling world.
It is a coincidence that Kehodes will stare at L&H. In 1998, in order to help his son with cerebral palsy to improve communication skills, he intended to purchase L&H's speech recognition software, but he soon found the company unusual.
After seeing L&H's product demo, he felt very untrustworthy and went deep into the company's financial statements and concluded that the company had been inflating revenue through connected transactions. Rocker Partners immediately shorted L&H.
But things didn't go well at first. The company, which was optimistic about the incorporation of shares by Microsoft and Intel at the time, continued to rise in stock prices. In the first three months of 2000, the stock price even quadrupled, resulting in a sharp decline in the net value of Rocker Partners funds, and many investors chose to redeem.
Ke Hodges did not give up, he continued to dig deep into the company's financial statements, and soon found that L&H's overseas sales were awkward, and the sales in South Korea were incredible. Kehodes and other short positions jointly disclosed L&H sales in South Korea to mainstream media such as The Wall Street Journal.
Finally ushered in the peaks and turns. The company, which had a market capitalization of $9.3 billion at the peak, plunged its share price from $65 to 25 cents and declared bankruptcy in 2001. Company founders Jo Lernout and Pol Hauspie were arrested and sentenced to imprisonment for fraud and manipulation of stock prices, the biggest fraud in Europe at the time.
PwC’s subsequent audit of the company showed that about 70% of South Korean sales never existed. Lernout reported nearly $300 million in revenue between 1998 and 2000, accounting for one-third of its total sales.
On the eve of the financial crisis, Ke Hodges revealed that the US subprime mortgage company NovaStar's profit has been inflated into the classic case of Harvard Business School; business management software provider AremisSoft was squandered by him and declared bankruptcy in 2002; he stared at it. Pharmaceutical company AaiPharma admitted fraud in 2005 and eventually withdrew.
Kohodes, who smells "smell", often exposes the world to the world in an extremely angerous way. American financial writer Jim Grant described Kojodes as follows: "He gives the impression of a roaring bear, but it is an idealist's heart that beats under this appearance."
Bet on the jockey
Short selling has always been a game for the brave, with limited profit, but the loss is bottomless. For Kehodes, short selling is an innate ability.
“Stanford, Harvard, or Yale can't teach you how to be a short-seller,†Kehodes said in an interview with Swiss media Finanz und Wirtschaft. “Excellent short-sellers are born with genes that are skeptical and reasoning. ."
The secret of Kohodes' shorting is to bet on the jockey instead of the horse (Bet the jockey, not the horse).
He is eyeing company executives who have poor execution and bad records. These people always like to talk about some facts that are not in line with the facts, their turnover is usually high, and they always get from their former subordinates or customers. There was some breaking news there.
He believes that "these signals do not guarantee that you can make a big short list, but at least it means that the companies they manage are worthy of digging."
"We keep this market honest"
It is not easy to do shorts. In addition to the huge risk of loss, they usually have to go against the general trend, confront large foreign funds, stand on the opposite side of investors and company executives, and even challenge the rules to become the suppression targets of the regulatory authorities.
In the financial market, the match between the bears and the bulls is like an ant to an elephant. Worldwide, the ratio of short-selling funds to long-term funds is about 1:15,000,000; in the United States, the world's largest market, short-selling funds are only $5 billion.
Ke Hodges's obsession with hollowing out is to recognize the cruel truth of this industry. "Short is full of challenges, it will send you to the peak, and let you go through the trough, it can inspire your best."
In the years of confrontation with L&H, Kehodes was under tremendous pressure. L&H executives accused him of being a conspiracy leader. Investors attacked him on the Internet, even swearing at him, and even Russian gangs threatened to kill him. At the time, Kojodes had to raise two 130-pound Rhodesian hounds to protect his family.
The short-sellers are usually riddled with lawsuits. According to Kohodes's own words, if you have not been sued several times, you are not a short seller. "Some people like to spend money on public relations personnel, and I spend all my money on lawyers. ""
In addition, some malicious short-selling events made the short-sellers notorious, making them the target of public criticism. Investors complained that short-selling stock prices caused losses, and listed company executives accused them of being malicious, and employees hated them for causing bankruptcy and causing unemployment. During the financial crisis, the US Securities and Exchange Commission even ordered a ban on naked short selling.
But Kojodes is proud of his identity as a short-seller. He firmly believes that short positions are an integral part of the market, and short positions protect vulnerable groups in the market, especially individual investors.
In an interview with the media, he said, “There is only a long position in the United States that has the right to freedom of speech, but I believe in the free market. This means that buyers and sellers should be allowed to exist, the market needs price discovery, and people like me are needed. Provide information to warn investors of upcoming problems."
Kehodes believes that regulators should welcome short-sellers. "We expose conspiracy and fraud, and we keep this market honest."
Big shorts in the financial crisis
Kehodes, who was supposed to have risen in the financial crisis, unexpectedly lost.
In 2007, Kehodes took over Rocker Partners after his retirement, and changed his name to Copper River Partners, when the company's asset management scale reached $1.5 billion.
The subsequent financial crisis was supposed to be a once-in-a-lifetime opportunity for a bear like Kojodes. However, his fund suffered a series of "black swan" incidents, especially implicated in Lehman’s bankruptcy. Goldman Supreme forced the liquidation, and eventually, the Copper River closed down.
On the eve of the financial crisis, Kehodes predicted that the stock market will usher in an adjustment as the US overheated real estate market cools. He started to lay short early. By the beginning of September 2008, the stock market began to fall in the realm of Freddie Mac and Fannie Mae. Kehodes thought at the time that he had made a steady profit.
But the series of events that followed were completely out of his control.
Lehman Brothers was the counterparty to Copper River's derivatives deal. When the Lehman problem began to appear, Copper River lifted the deal, but as Lehman filed for bankruptcy protection on September 15, 2008, Copper River mortgaged the mine. Man’s approximately $100 million in mortgage funds was also frozen.
To make matters worse, a few days later, the US Securities and Exchange Commission issued a naked short-selling ban and banned short selling of financial companies, which led to a surge in stocks of a number of previously short stocks. Copper River's short-selling fund lost 55% in just two weeks.
Subsequently, Gold River, the main broker of Copper River, gave it a punch. As the stock price rose, Goldman Sachs issued a margin call and eventually imposed a forced liquidation on Copper River.
Goldman’s approach seems to be reasonable, but Kojodes has always insisted that Goldman’s actions are the fatal cause of the failure of Copper River.
As a broker, Goldman Sachs is supposed to borrow a short position from the market before Copper River performs a short sale, but Keholds suspects that Goldman has never borrowed his short stock, so Goldman Supreme rejected him when something went wrong. Transfer the account requirements and rush to close the position to avoid regulatory compliance checks. Goldman Sachs has always denied Kehodes's speculation.
Ke Hoddes once accused Goldman Sachs of cold-blooded, ignoring the law, in order to "make a penny" can ignore the consequences. When asked why he did not sue Goldman Sachs, Koholds said he was not willing to get involved in a protracted lawsuit.
"Copper River's collapse is out of control, but I am the captain, the ship is sinking, I am willing to take responsibility," he said in an interview with the media.
The Copper River closed at the end of September 2008, and its short stocks plummeted in the near future.
"sniping" the Canadian property market in chicken farms
Since then, Ke Huo Desi of Yixing has retired to the farm in Ald Lane, Northern California, and has lived the days of raising chickens and horses.
Here, Kojodes retains a Bally pinball machine, a Porsche 911, with the nameplate Gowex, the name of the Spanish telecommunications company he had shorted. He named a 6-year-old Holstein horse named Concordia, the same name as a drug dealer who had previously sued him. He also named his more than 300 chickens in the names of friends and opponents.
However, Kojodes did not intend to give up shorting. After a short break, he picked up his old business.
Recently, he turned his attention to Canada, staring at the hot Canadian real estate market, and short-selling Canada's non-bank mortgage provider Home Capital Group.
Ke Hoddes believes that Canada's property market bubble is no less than the US subprime mortgage crisis. He said that the crazy state of the property market in Vancouver is a mixture of money laundering, speculation and low interest rates. The house originally used to live in people has become a holy land for money laundering. For more than two years, Kehodes has been promoting this view in the media and on Twitter.
Last month, Home Capital Group announced that it would borrow $2 billion as an emergency liquidity loan because its High-Interest Savings Account deposits fell sharply from $30 million to $59 million from March 28 to April 24. At present, there are only 1.4 billion US dollars left and will continue to be lost. Home Capital Group's share price plummeted 65% on the day of the news, the biggest one-day drop in the company's history.
Being on this farm away from Wall Street does not prevent Kojodes from continuing his legendary short-seller career.
(Source: Wall Street knowledge Author: Ye Zhen)
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