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I wanted to post this first in the Tesla thread, but then again thought this company deserves its own thread  :)

 

I think this is a good article on the company, the "German Enron": https://valueandopportunity.com/2020/06/19/wirecard-the-german-enron-a-very-personal-history-2008-2020/

 

Why I wanted to post this in the Tesla thread:

- this guy already "knew" in 2008 Wirecard was a fraud, which only really started unravelling yesterday - frauds can go on much longer than you can imagine

- Ark Invest was a shareholder of Wirecard. They sold everything yesterday after the fraud was exposed in plain sight.

 

Would be interested to hear from people like Gregmal if he still believes Cathy Wood is such a genius. As a retail investor I only followed Wirecard from a distance, but wouldn't have touched it with a ten foot pole.

 

Here is a good interview with Roddy Boyd, who has also been pounding the fraud drum on Wirecard for years, that aired about 2 weeks ago: https://podcasts.apple.com/us/podcast/episode-28-roddy-boyd/id1491394342?i=1000476500204

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Yeah, I'm from Belgium, so I know L&H (was only 14 years old back then, but my parents lost money on it ::)).

 

I would consider the founders of L&H "Muskian": their technology really had its merit, but they fiddled with the accounting to present the financial results better than they actually were.

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Carl Icahn just sold Hertz at $0.70. Lee Cooperman has ended up owning more bankrupt companies than any billionaire Ive ever followed. Warren Buffett just chased his tail with the airlines, sold what he did at the bottom, not only did he miss the rally, but he continues to be unable to find anything to invest in. Theres plenty of examples of great investors making mistakes, and also examples of shitty investors making mistakes. "So and so owned XYZ" is essentially a stupid argument. Go find the overall returns and that will give you a better idea, because thats all the matters. Well, to most at least. Some have shown they'd rather not make money if the investment doesnt fit some stupid mold of whatever a value investment is supposedly supposed to be, but who cares what those people have to say. A dollar is a dollar.

 

If I was forced to chose between putting money into an Ark fund, or say, Greenlight Capital, it wouldn't take very long to make a decision.

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What is the extent of the fraud? Is there a real company beneath all of this?

 

There is most likely a real business, but it is far less profitable than the current numbers suggest.

 

This scandal is a big embarrassment for the regulators, but it doesn’t exactly moved to the top headlines either.

 

It is kind of surprising that Mr Market still values this at 3B Euros.

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What is the extent of the fraud? Is there a real company beneath all of this?

 

There is most likely a real business, but it is far less profitable than the current numbers suggest.

 

This scandal is a big embarrassment for the regulators, but it doesn’t exactly moved to the top headlines either.

 

It is kind of surprising that Mr Market still values this at 3B Euros.

 

The 0.5% bond due 2024 at ~35 is a "fire and forget" situation in my opinion

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New Management Board statement. The company first claimed that the missing 1,9 billion was held in the Philippine financial system, but they couldn't continue that claim when the central bank of the Philippines said yesterday that the money never entered their system.

 

Company again down 40% today.

 

https://ir.wirecard.com/websites/wirecard/English/5110/news-detail.html?newsID=1985593&fromID=1000

 

The Management Board of Wirecard assesses on the basis of further examination that there is a prevailing likelihood that the bank trust account balances in the amount of 1.9 billion EUR do not exist. The company previously assumed that these trust accounts have been established for the benefit of the company in connection with the so called Third Party Acquiring business and has reported them as an asset in its financial accounts. The foregoing also causes the company to question the previous assumptions regarding the reliability of the trustee relationships.

 

The Management Board further assesses that previous descriptions of the so called Third Party Acquiring business by the company are not correct. The Company continues to examine, whether, in which manner and to what extent such business has actually been conducted for the benefit of the company.

 

 

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Why would anyone keep their savings in the Philippines?

 

Yeah, it doesn’t pass the smell test to begin with. This is also very embarrassing:

https://www.marketwatch.com/story/german-finance-minister-on-wirecard-oversight-the-supervisory-institutions-did-their-job-2020-06-22?siteid=yhoof2&yptr=yahoo

 

BaFin has a history of going after short sellers harder than going after fraudsters.

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Just getting up to speed on this and not intimately familiar with the payments processing industry, so apologies if my questions come across as naiive!

 

Is there a possibility of systemic risk, at least in the markets/ industries where Wirecard has a presence? For instance, I know they recently penned a partnership with Grab. If the funds are not on Wirecard's balance sheet, could this affect the working capital of some of the mom and pop merchants that transact on Grab's platform, and/or force Grab to absorb the shortfall with their own balance sheet? (this question applies to all the other partnerships Wirecard has as well)

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Why would anyone keep their savings in the Philippines?

 

Yeah, it doesn’t pass the smell test to begin with. This is also very embarrassing:

https://www.marketwatch.com/story/german-finance-minister-on-wirecard-oversight-the-supervisory-institutions-did-their-job-2020-06-22?siteid=yhoof2&yptr=yahoo

 

BaFin has a history of going after short sellers harder than going after fraudsters.

 

Yeah, that's really sad and screwed up about BaFin.

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I've been looking into this today and I think it's a big fat zero.

 

Now they're saying that it looks like nobody walked out the door with 1.9 billion euro. If that's true then it means that Wirecard was loosing money, used customer deposits to cover losses and then cooked the books to hide it.

 

Given the situation I don't see a lot of people lining up to buy their pre-paid cards. On the payment processing side, there's lots of payment processors out there, why would you go with one that engaged in massive fraud?

 

So how much is a financial business worth that:

1. Engaged in massive fraud

2. Wasn't making money to start with

3. Is about to see a huge amount of business disappear

 

I don't think that's a multiple choice question.

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Yeah, that's really sad and screwed up about BaFin.

 

This blogger (https://valueandopportunity.com/2020/06/19/wirecard-the-german-enron-a-very-personal-history-2008-2020/#more-37291) thought something was fishy in 2008, but was interviewed by police and Wirecard wanted to sue him. He ended up not having a position. Shows how hard shorting is (and how complicit regulators are!).

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Yeah, that's really sad and screwed up about BaFin.

 

This blogger (https://valueandopportunity.com/2020/06/19/wirecard-the-german-enron-a-very-personal-history-2008-2020/#more-37291) thought something was fishy in 2008, but was interviewed by police and Wirecard wanted to sue him. He ended up not having a position. Shows how hard shorting is (and how complicit regulators are!).

 

Wow, good read. Thanks for sharing.

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I didn’t know SoftBank invested in Wirecard. You almost have to try to invest in that many massive failures.

 

they promptly had CS offload it to some other investors ... so they (Softbank) are money good (though didn't make any money from their equity option).

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