Research in the Era of Fake News

Posted in: Press Releases, Reports on July 12, 2018

12 July 2018

Intellidex today released an in-depth study into short selling, with a particular focus on Viceroy Research. Viceroy has been prominent in the South African market, having produced reports on Steinhoff and Capitec, but has also produced reports on companies in Australia, Germany and the United States.

The full Intellidex report can be downloaded here.

Some of the findings of Intellidex’s research are:
• Prior to Viceroy’s research report on Steinhoff, its research received little media attention internationally. The Steinhoff report, however, received significant coverage and thereafter there was extensive mention of Viceroy in the media. In the aftermath of shock revelations of accounting irregularities at Steinhoff, there was a desperate need for information, which Viceroy was able to fulfil.
 After the Steinhoff report, rumours of Viceroy research targets alone would move share prices, while actual releases had a dramatic impact on share prices, with Capitec being the clearest example.
 However, based on our analysis discussed in our main report, we find that Viceroy’s Steinhoff report was substantially plagiarised from a report produced by hedge fund Portsea Asset Management six months earlier. Viceroy’s contribution of original content to the report appears to be negligible. While the Steinhoff report and related media coverage gave Viceroy considerable influence, in our view this was misplaced given that, according to our research, the Steinhoff report was substantially not its own work. On the contrary, Viceroy’s influence benefited from little more than timing, with its report published just two days after the Steinhoff saga hit the news, when the market was extremely eager for any insight on what had gone wrong at Steinhoff.
 Viceroy’s quality of research, which was already patchy, appears to us to have deteriorated after the Steinhoff report, particularly in the case of Capitec and Advanced Micro Devices (AMD), and to some extent ProSieben. We provide our analysis of the quality of these reports in our main report. Nevertheless, these reports had a significant impact on share prices, particularly Capitec and ProSieben. Our view is that this impact resulted from the influence Viceroy had gained from the widely circulated and cited Steinhoff report, rather than from the content of those reports.

For more details, please contact us.

RELATED ARTICLES

PETER ATTARD MONTALTO: Where action is at odds with rhetoric

October 7, 2019

This column was first published in Business Day Some deep questions are raised by the ANC’s national executive committee statement last week and rotate on […] read more

STUART THEOBALD: Old Mutual clings to its principles, but a Moyo payout may have cost less

September 30, 2019

It takes a rather pigheaded commitment to principle to tide it out, and shareholders can rightfully ask why they’re being forced to pay the cost. Manuel and the rest of the board have a task ahead... read more

STUART THEOBALD: Business needs help in renewing its faith in the future

September 16, 2019

Our problem is the implementation. So far there are no implemented and reliable policies that business decisionmakers can see that will shift their return/risk expectations positively. read more