Since writing my piece this morning, I have read a long explanation from Barry Norris of Argonaut Fund Managers as to why he has been shorting Wirecard stock, having spotted the potential fraud 2 years ago. I can’t offer a link to the article in the trade newspaper as you would need a registration as a finance professional, but the main elements will make their way into the public domain.
Here is a short extract:
“We have been amazed how the Wirecard share price has been so impervious for so long to cumulative substantiated accusations of wrongdoing which waved more red flags than you might witness at a communist rally. “
I have never met Barry Norris, although I once went to London with that intention. He skipped the meeting and sent his deputy who was great. I would have been offended but as the excuse was that he was going to his son’s birthday party, I took a liking to his attitude – clearly an honest man not afraid of his stating his priorities.
I have read his market output and seen his teleconferences on many occasions and he is one of those managers whose stock analysis is forensic.
I recommended his European Growth fund in my IFA days but it underperformed after he misjudged the Brexit vote outcome. After that we have had periods where momentum has been king and the Jupiter European fund, a long term large holder of Wirecard (in fact so large I looked up the company myself when reviewing the Jupiter fund), did far better, amongst others. Apparently the well known ex-Jupiter manager, Alexander Darwell has kept holding the stock in the investment trust he runs until this week, which slightly tarnishes his reputation.
The main Argonaut fund has fallen down the performance tables because you can select stocks for all the right analytical reasons and still find everyone else is not buying them.
It is perhaps a just boost for Mr Norris’ credibility and a reward to investors in his other, absolute return fund that he had been shorting Wirecard to the maximum, making him very unpopular with some colleagues. But proved right.
Some comfort to me too, as I really don’t like the current market when fantasy profit expectations (eg Nikola) are rewarded by incredible (that is exactly the right word) share price valuations.
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