Viceroy takes aim at Capitec

Vrotappel said:
I guess these guys are targeting SA firms because we are easy targets. they know that the risk factor associated with SA is very high and that foreigners dump their shares at the slightest hint of bad news. So shorting SA firm, make bad news, $profit$.

So they are looking for the SA to good to be true stories nod target them. I wonder who will be their next target?
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They try their luck with US companies as well.

MiMedx are suing them.
In this case Viceroy it looks like Viceroy were getting inside info and putting a spin on it.

http://www.businessinsider.com/mimedx-ceo-pete-petit-suing-short-sellers-negative-reports-2017-11
 
n its note, S&P Global Ratings said that its ratings on South Africa-based Capitec Bank Ltd (BB/Stable/B) are not affected by the report or by the market’s reaction to the report.

“In the report, Viceroy Research requests that the South African Reserve Bank place Capitec under immediate curatorship and alleges that the value of Capitec’s loan book is massively overstated.

“The market’s reaction was significant, with the bank’s share price losing over 20% before recovering after the South African Reserve Bank released a statement defending the soundness of the bank’s capitalization and liquidity. To date, the bank has experienced only mild funding outflows and its liquidity remains sound.

“Our ratings on the bank continue to reflect those on South Africa (foreign currency BB/Stable/B), as well as the bank’s strong capitalization and conservative reserving, which is appropriate for high normalized credit losses. We also factor in the bank’s good earnings stability for a monoline unsecured consumer lender,” S&P said.
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https://businesstech.co.za/news/banking/222459/capitec-gets-sp-backing/

So who do we believe? A shady group of people or S&P?
 
All banks lend money with many different types of loans. I still fail to see the problem with Capitec and quite frankly this whole thing is a giant storm in a tiny tea cup.

Viceroy can say what they want. They can do an impressive sing and dance and put on one hell of a performance but until I actually see some proof of Capitec doing anything illegal or doing anything that all the other banks are not doing, I will continue to bank with them.
 
Vrotappel said:
I wonder who will be their next target?
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Companies in general are not the beacons of ethical or moral conduct.

How many sectors have already been investigated for collusion for example, and that would speak to unethical behaviour on an industry level

Its just a matter of how long they can go undetected, which seems to be a common theme.
 
konfab said:
Or because they were cheap :)
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They aren't really cheap compared to the other banks. (P/E and div yield) so to buy capitec as a long term investment you need to believe they are still going to grow significantly and haven't matured as a business yet.
 
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Capitec analysts defy Viceroy's 'predatory' attack on shares

Johannesburg - Short-seller Viceroy Research’s damning report on Capitec Bank may have been the talk of South Africa’s markets, but its devastating impact on the firm’s shares is already waning.

Several analysts have increased their ratings on Capitec since Viceroy issued a report questioning the state of the company’s finances January 30. The report hastened a drop in the firm’s shares, which plunged 25% in the four days through Wednesday. The stock rose for a second day on Friday in its biggest two-day gain since 2004, retracing more than half its losses.

The rebound came after Capitec said customers are sticking with the bank and the National Treasury called for a probe into the “reckless” way in which Viceroy criticized the company’s lending practices, only to profit from bets against the stock.

A roundup of the analyst calls:

UBS Group’s Stephan Potgieter changed his sell rating, in place for two years, to neutral on February 2. He kept his R920, 12-month target price (versus a closing price of R924).
Arqaam Capital Ltd. analyst Jaap Meijer kept his buy rating, while upping his target price to R1 074.
Elan Levy at Morgan Stanley held his equal-weight/in-line recommendation and price target of R875.
JPMorgan Chase & Co.’s John Storey stuck to his overweight rating with a R950 target.
Avior Capital Markets analyst Harry Botha maintained his underperform rating, while saying the decline is a buying opportunity. His target price is R1 008.62.
Some analysts were scathing about Viceroy’s motives in publishing the report.

“Viceroy is not an independent and credible research firm,” said Iraj Abedian, head of Pan-African Investments and Research Services, an associate of New York-based Global Source Partners Inc., who has advised the South African government on economic policy.

“Short-selling is not illegal, but pretending to be a research house while they’re a hedge-fund operator, making money in a predatory style, is breaching the codes of ethics.”
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EXCLUSIVE: Viceroy founder defends report into Capitec

Fraser Perring, the founder of Viceroy Research, has defended his company's report into Capitec Bank during an exclusive interview with eNCA.com.

Last week the organisation released a scathing report, describing Capitec as a loan shark.

But the report has received wide criticism from the financial sector.

Perring, speaking to eNCA correspondent Will Denselow, expressed surprise at the South African Reserve Bank's support for Capitec Bank and said that criticism of Viceroy's report is premature.

"We didn’t expect the response, we expected an investigation but they have put the cart before the horse," said Perring.

“Similar companies that were promoting Steinhoff, similar analysts that were upgrading Steinhoff and now are coming out strangely with Capitec…the reality is most of the former employees that we’ve used, no other analyst has contacted us. If you're going to do research, know the company.”

Perring wasn't surprised at analysts attempting to protect Capitec, but he said the research group has evidence to support its report on Capitec Bank.

"We've had current employees sending us information and showing and validating our thesis. They say the rescheduling helps them and their client - that's factually fine, to reschedule a loan is prudent when someone is in distress, maybe it works - but there's one phrase that sticks out in Capitec that was very similar to African Bank, which is a rolling loan gathers no loss'" he said.

"And then all of a sudden you look at the impairments, even allowing for their provisions, (it) isn't on any wavelength.

"They're operating in the same demographic, in the same townships with the same employers. The only unique thing is they offer an account, where the wages are paid in.
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More at: https://www.enca.com/money/exclusive-viceroy-founder-defends-report-into-capitec
 
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