The only things more amazing than the spectacular fall of Steinhoff are the reasons given by the affected fund managers on why they did not see the demise coming. Is it possible that analysts suffer from a certain degree of groupthink? They claim that they form their opinions about companies by doing detailed, fundamental "bottom-up" research. The analysts, most of whom are highly qualified, meet with the management teams and test their business cases and then come up with reasons why we should buy, hold or sell shares. So why did no analyst rate Steinhoff a "sell"? Most rated the company a "buy". And that was pretty much the same in the case of Abil, shortly before it collapsed. One of the reasons the fund managers gave in their apology e-mails is that they are only able to act on public information, which is fair enough. But how then is it possible that a small research outfit in the US (Viceroy) manages to compile a very bearish research report detailing all the failings of Stein...
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