#294: Viceroy charges Capitec

Viceroy charges into Capitec*

I think we're missing a point with this latest Viceroy report on Capitec. Sure we're proud of the business and if you're a shareholder you've made amazing returns. But we seem to be circling the wagons and shooting the messenger rather then actually discussing the merits of the report.

Two important thoughts to ponder.

What if Viceroy had published their Steinhoff report before Steinhoff admitted to their fraud, would we have believed them? Simple answer is no and we would have looked stupid when the company admitted the fraud.

A fund manager does their research in a company, decides it's a great sock. They buy it and then they go out into the world promoting the stock - talking it up in the media and notes to clients. How is this different from what Viceroy is doing (aside from Viceroy shorting rather then buying)?

Here are some others who have been asking questions about Capitec.

• Benguela Fund Managers wrote to Capitec on 19 January 2018 asking questions.
• Summit Financial Partners has court action on-going against Capitec.
• Moyagabo Maake and Rob Rose wrote on the same issues on 19 May 2016.
• Former FNB CEO Michael Jordaan commented that "It is too early to draw any conclusions". 

*I sold half my Capitec shares at R911.00 yesterday.

A last point is that with Capitec exposed as the Viceroy target suddenly the other contenders (Resilient stable, Aspen, etc) are now all forgiven. But hold on, when we were unsure who was next the market sold these stocks off aggressively - this tells us something important. It tells us the market is not confident about these stocks and we should take that warning seriously.

Here's a Periscope video I did just after the news broke.

Here's the Hebalife video.