Beware that you are not Viceroyed in 2018
It is still early days, but 2018 could turn out to be the year when Viceroy becomes a verb — as in “to Viceroy” someone or, more appropriately, some listed company.
For the benefit of those who spent the past month in a farflung place without Wi-Fi, Viceroy Research is the research/investment company that in December published a report on Steinhoff’s controversial accounting policies.
The publication of the report, which coincided with news that Deloitte did not want to sign off on Steinhoff’s 2017 accounts, was considered to be a major factor in the collapse of the Steinhoff share price. Not only did it help to ensure the share price would fall sharply, it is also thought to have played a role in ensuring that any significant recovery was short lived.
The fellows at Viceroy have made no secret of the fact they scored a hefty profit from shorting Steinhoff, but have also made the very important point that their report relied on information that was in the public domain and available to everyone. The key issue was the willingness and ability to put months of hard work into making sense of the dense information that was available.
For many, Viceroy is playing a role that is critical to keeping markets efficient; for as many more, it is little short of being an unscrupulous greenmailer.
This week, expectations of a Viceroy report on Aspen are believed to be behind a sharp drop in that company’s share price. In the past week, a 10% drop in the share price took Aspen to levels not seen since 2013. Assurances from CEO Stephen Saad that all is well and full-year earnings are “completely clear” appear not to have comforted investors.
There probably is no Aspen report, but the fact that the company has had no contact with Viceroy should be of no comfort. Viceroy has proved its ability to get to the heart of a company without the cosy — and often compromising — access provided to most analysts.
What a year 2017 was. Jacob Zuma remains president after Bell Pottinger bit the dust and KPMG got tarred and feathered over the Guptas. One can only hope that his day in court is still coming.
The Independent Regulatory Board for Auditors launched an investigation into Deloitte SA over Steinhoff’s withheld financials. Ditto, a day of reckoning is looming for all involved.
For good measure, investigate the antics of people now in charge of the Treasury in respect of the Guptas and the Passenger Rail Agency of SA. Also those who left Eskom teetering amid reports that its severely bloated workforce earns average salaries well above private sector rates, heavily skewed, no doubt, by fat cats including newly reinstated Matshela Koko and disgraced former CEO Brian Molefe. Ditto for Denel, after it announced it would pay December salaries and 13th cheques after a week of “intense engagements” with the Department of Public Enterprises and the Treasury over its “severe liquidity challenges”.
The Treasury, meanwhile, is reviewing “details of the government’s higher education proposals, as well as possible financing options”. This comes as Business Unity SA says business is ready to work in partnership with the newly elected leadership of the ANC in creating sustainable and inclusive economic growth in the context of “consistent, ethical and accountable leadership, acting in the best interests of the country”. Happy 2018!