Hedge funds: the short answer
Latest incidents raise questions about how hedge funds are run and the role they play, writes Johann Barnard
Hedge funds, and the benefits they can derive when shorting a stock, hit the headlines again in the past year. Many investors feel hard done by concerning two incidents in particular: research outfit Viceroy claimed misdeeds at Steinhoff and misstatement of defaults at Capitec. The Steinhoff report was probably less decisive in the company’s share price collapsing as Markus Jooste had already resigned, pointing to a serious crisis. The Capitec report, however, is still vigorously disputed by the lender and has come under criticism for apparent opportunistic motives. Even though Viceroy itself is not a hedge fund, it is believed to be working with funds that had been short on these stocks. The commotion has done little to foster positive sentiment toward hedge funds, especially their most potent weapon: shorting. This issue was also the topic of a heated exchange between hedge fund manager 36One Asset Management and management of Resilient Property Group. The company’s shares have su...
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