Kynikos Associates, founded by well-known investor Jim Chanos, bet on Wirecard (WDI:DE) – the once prominent German Fintech that is now in the midst of insolvency proceedings. Chanos did not buy shares in Wirecard, he sold them, and the short bet paid off apparently as Chanos is said to have booked $100 million on the trade.
According to the FT, Chanos placed the bet last year – well before the collapse of Wirecard. The report quotes Chanos:
“If you’re a fundamental short seller, the Wirecard story was a classic. The buzzwords, the numbers that didn’t make sense, the business model that seemingly didn’t make sense.”
In a separate report by the FT, Chanos is quoted as claiming we are in a “golden age of fraud.” Another top short that was a good pick was Hertz, a company Chanos felt would not survive the next recession. It did not, due to COVID, and it is now in bankruptcy.
Of note, is the fact that the FT was first to scrape the veneer away from Wirecard in a scathing series of articles that pointed a finger of allegations pertaining to inflated numbers.
Meanwhile, shares in Wirecard continue to bounce around €1 to €2 a share. If you were a long buyer in Wirecard before the company imploded you are not very happy as shares recently traded at over €100/share. The Fintech’s market cap has gone from billions to a couple hundred million. Even at that price, it may be expensive.