Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Are short-sellers evil? Or do they keep companies honest?

Outlook

Jim Armitage
Friday 30 October 2015 02:21 GMT
Comments
Globo's chief executive Costis Papadimitrakopoulos quit after admitting to “the falsification of data and the misrepresentation of the company’s financial situation”
Globo's chief executive Costis Papadimitrakopoulos quit after admitting to “the falsification of data and the misrepresentation of the company’s financial situation”

Your support helps us to tell the story

From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.

At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.

The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.

Your support makes all the difference.

As we approach the final months of the year, I can’t help but feel that the likely collapse of Globo will be seen as one of the key points of 2015. The software company may be small but its dramatic demise tells a story that highlights how short-sellers are not the destructive devils they are often made out to be.

The hedge fund QCM spent serious time and money investigating Globo and the customers it purported to have. This involved painstaking trawls through its accounts and some good, old-fashioned detective work, knocking on doors of supposed big clients.

Its discoveries? That many of Globo’s customers don’t appear to exist.

QCM have revealed that its fund would jump 12 per cent if Globo’s shares fell to zero. But does that make it evil – profiting on the back of losses sustained by innocent shareholders? Far from it. Given the sheer volume of companies on the AIM market, you can’t expect regulators to spot every rotten apple. Short-sellers like QCM, which are out there spotting wrongdoing, will go a long way to keeping other companies honest. If only all our pension fund managers did such diligent research before investing.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in