Short Seller Glaucus Takes Aim at Australian Stocks
Two stocks are in its sights as it hunts down Down Under companies that over-promise and under-deliver. DANIEL SHANE
Feb. 16, 2017 8:14 p.m. ET
extract of interview......
On first glance Australia doesn’t seem fertile ground. The country has got a strong legal framework and corporate governance is pretty good, making it harder for companies to scam shareholders. “That doesn’t mean that there aren’t a few rotten apples,” says Aandahl, reminding us how Enron hood-winked U.S. investors for years. Besides, he thinks the fact that Australian investors care about corporate governance is a good sign. “If you highlight a big red flag and no-one cares, that’s another problem in itself,” he says.
Glaucus’s breed of short-selling is a novelty in the Australian market. Unlike others in the game, Glaucus posts most of its research online, for free. Aandahl says that fills a vacuum: There’s a “need for independent voices to hold people accountable. All of the voices in the market here are pushing stocks to go higher.”He’s scornful of equity analysts, whose research he calls “skewed” and “sycophantic.” Indeed, Australia’s analysts are an optimistic bunch: More than 80% of all calls on stocks are either buy or hold. Investment banks make their big bucks underwriting deals and through M&A, and they need a foot in the door with management for that. “You don’t get that if your analyst on the other side of the building is saying ‘I think this stock should be a sell because there’s accounting red flags and the CFO just quit,’” Aandahl says.
