Viceroy Research is a ‘hit squad’

Viceroy Research, a short-seller that has targeted two South African companies this year, is profiting unethically from its reports and has escaped sanctions from local regulators because it is domiciled elsewhere, the nation’s central bank governor said.

Viceroy rose to prominence just over a year ago when it published research on Steinhoff International soon after the global retailer reported accounting irregularities that triggered a share-price collapse.

That report detailed a number of third-party transactions that were used to inflate asset values – deals that are under investigation by auditors at PwC.

It then issued a report on Capitec Bank in January, causing the lender’s shares to fall as much as 25%, although the stock has since recovered all its losses.

On Wednesday, it took aim at property firm Nepi Rockastle, prompting a one-day drop of 14%, some of which has been regained. Both Capitec and Nepi refuted the Viceroy’s reports as misleading, while regulators described Viceroy as “reckless” with the Capitec release.

“They generate a report and their disclaimer says that this is an educational report,” Kganyago said at a lunch with editors in Johannesburg on Thursday.

“So you go and take a position on a stock and then you ‘educate’ people about the stock and you can get away with it. They are a hit squad.”

Fraser Perring of Viceroy, who is based in London and New York, didn’t immediately respond to a request for comment.

Viceroy is the subject of a market-manipulation investigation in Germany after its report on ProSiebenSat.1 Media SE caused a more than 8% decline in the stock.

A study released in July by Intellidex, London and Boston, accused Viceroy of copying an analysis done on Steinhoff six months earlier by a money manager. – Bloomberg