i like the packers

In 2016, I shared an elevator with the CFO of Wirecard in NY post a group meeting MS hosted with a room full of rabid short sellers post some high profile fraud allegations. We were short the stock - in size - because we thought they were probably a fraud and that they would at risk of losing their audit (we were right, just 4 years too early). Because of EU filing requirements, and one glance at my name tag - he knew I was short too. He looked at me and said “oh you work at xyz fund, you are short xxx million shares of our stock - why?” This part is my wife’s favorite part of the story. Apparently, she thinks most people would politely weasel their way out of the conversation - but not me - I guess, I’m a bit of a pit bull. So I told him - “I think you are a fraud, and the business you all just bought is not real”. At the time I was actually not that sure, but I wasn’t going to miss the chance to push him with external conviction that maybe didn’t match what I felt internally (less certain). You see, this German “innovator” had just spent E300mm on a business (equivalent to all of their annual “FCF”) in India that we strongly believed was not real. We thought Wirecard not only knew this, but we thought it was likely part of an elaborate decade long BS plugging and/or round tripping operation which existed to hide the fact that they were completely cooking their books (I haven’t ever seen a full post mortem accounting but @John_Hempton curious if you have any idea what the final verdict was). We spent a month with a team of consultants on the ground in India turning over every stone - interviewing “employee”, pulling local filings, visiting local offices - and we definitively concluded every single thing about the company they “bought” was fake. It was basically a former small and loss making travel tour operator dressed up as an “industry leading payments processor” - which was funny because we also happened to have some private investments in the space in India that had also never heard of them. Anyway, I told the CFO ALL of this - in the elevator (it was a long ride). This of course made him nervous. Most people when you tell them the company they bought is fake, get concerned! Or curious! Ask you some questions. Did they miss something?! Not him. He just sweated. Visibly. And assured me they did the deepest due diligence and that all was ok. He opened Pandora’s box with me though and the dog that I am had found a bone. So I walked him to his car and kept grilling him, as he stuttered, sweated, and struggled to answer any of my questions. As he got in the car, and watched him drive away, I couldn’t believe what had just happened. My internal conviction had flipped. Almost shaking, I rushed back to our office and immediately recounted the whole story to my boss with the energy of a kid on Christmas. We had the nuts. I knew it. I’ve never been so confident of anything. We were right and they were in on it. But alas - shorting is hard. They got their audit. The stock ended up 5x’ing on us. I quit shorting and moved to a LO fund and vowed to never short again. A couple years later, it went to zero.