Viceroy hits back over BLSA’s ‘smear piece’ on it

VICEROY Research yesterday hit out at the research commissioned by Business Leadership South Africa (BLSA) into short-selling activities and conducted by Intellidex, describing it as a “smear piece”.

The hard-hitting report accused Viceroy of producing reports with the sole intention of moving share prices of companies it reports on for financial gain.

Stuart Theobald, the chairperson of Intellidex and one of the authors of the report, said Viceroy’s reports failed to meet professional research standards.

“Viceroy has used the status it gained from its Steinhoff report, which benefited from the fact that it was published at a point when there was major demand for information about accounting failures in Steinhoff, to publish spurious and weak reports that have the effect of damaging share prices,” Theobald said.

The Intellidex report found that the quality of Viceroy’s research has deteriorated after the Steinhoff report, particularly in the case of Capitec and Advanced Micro Devices (AMD).

“Our analysis indicates several problems with Viceroy’s Capitec report, including unsupported exaggerations, poor reasoning, misunderstandings of the South African credit market and the history of the sector,” read the report.

Viceroy earlier this year rattled Capitec after it issued a report claiming that the bank was uninvestable and should be placed under curatorship.

Capitec’s share price fell 25 percent on the day of the release of the report, before staging a recovery, closing the day 3 percent down.

The SA Reserve Bank (Sarb) and National Treasury both backed Capitec.

The Sarb in its latest Financial Stability Report hit at the short-selling strategy of Viceroy Research, saying it had the potential to create financial instability.

The central bank said the common traits of a short selling strategy included influencing market participants’ perceptions by extensive use of social media platforms, sensationalist language and an ongoing campaign against the targeted entity.

Viceroy in a statement said the Intellidex report was compromised by BLSA’s involvement.

“The quality of our research is like any other, subjective, but our content is thoroughly back-tested. Intellidex’s report does not disprove any of our published work.”

BLSA represents chief executives of the largest companies in South Africa, including Capitec. However, the organisation said the report was not meant to smear Viceroy and shield Capitec, but was meant to draw out the facts and equip the public to separate good from bad practices.