This fund manager whose biggest short was Wirecard says he’s most bullish on stocks since 2009
Concerns about German payroll processor Wirecard WDI,
didn’t grow overnight, or even after the October Financial Times claimed that affiliates were inflating profits and sales.
“We’ve shorted Wirecard, off and on, for years,” said FP Argonaut Absolute Return fund manager Barry Norris, who told MarketWatch the stock was its largest short position before Thursday’s revelation that 1.9 billion euros in cash were missing. “What amazed me was how resilient the business has been over the past few years.”
As to why Ernst & Young didn’t recover the missing money sooner, Norris said auditors often take the word of subsidiary auditors. “I think that’s probably why it took so long. These Wirecard subsidiaries were not only the entities generating the bulk of the profits, but they were also the subsidiaries where the cash balances were primarily held. Wirecard chief executive Markus Braun resigned on Friday.
Norris hasn’t let the Wirecard experience deter him from buying stocks more generally. He stressed that the coronavirus mainly affects the elderly and not the general population. “When we realize that the nature of the virus was not another Spanish flu, then the rationale for lockdown forever, or until we find a vaccine, is completely gone, and then we should resume normal economic activity. “, did he declare. With his view of the virus, it’s “almost impossible” to be bearish, he said.
“The last time I felt this bullish was in 2009 when you had similar opportunities once a decade,” he said.
Norris said he is now considering salvage games, having invested in companies like Amazon AMZN,
and Zoom Video Communications ZM,
in the first trimester. “I’m just looking at them now and I think if we’re going to be locked in forever they might be good investments, but I just think I’m having a hard time seeing where the additional buyer of those stocks is going to come from. short term.
He likes British home builders, semiconductor manufacturers – Micron Technology MU,
was its largest long position in May – and recently bought aircraft maker Airbus AIR,
for the first time in four years. “While people don’t really like commuting or going to the office, they do like going on vacation,” he said. “I think aerospace is an industry that will come back strong when the truth about the virus is revealed.”
He also likes reinsurance stocks, including Swiss Re SREN,
and Reinsurance Group of America RGA,
according to expectations, they will raise prices after suffering a drop in short-term profits. “Historically, the only time you buy reinsurance is when the stock price halves because they’re going to take a hit, but they always recover when prices go up.”
Peloton PTON exercise bike company,
is the one it was small before lockdown, went long after, and is now small again. “Almost every fitness trend has been a fad. Going back to hula hoop, Jane Fonda videos, it never lasted,” he said. The lockdown has been great for Peloton, but its business model relies on users to keep their subscriptions for 10 years, he said.”The market capitalization is now absurd compared to the long-term profit potential,” he said.
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