Block says that contrary to his peers’ observations, he is not seeing any short targets in Canada at the moment
Famed short seller Carson Block, who single-handedly took down Sino-Forest a few years ago, isn’t uniting with his colleagues who are looking at the Canadian housing segment.
In a recent interview with BNN, Carson—who founded the investment think-tank Muddy Waters Research—stated that contrary to his peers’ observations, he is not seeing any short targets in Canada at the moment.
“Obviously there are a lot of people who are short sellers who think that there is a bubble in Canadian housing,” he said, noting that Muddy Waters doesn't engage in fundamental shorts as it is primarily focused on rooting out corporate “wrongdoing or misleading”.
“Some of the business development companies and banks are occasionally mentioned to me; nothing that we found to be something that is really interesting to us,” he added.
“I've talked with people who are short it once they've been very public about it. Obviously, a short seller who lives in the Bay Area named Marc Cohodes has been very vocal over the years on it. But it's not something that we ever got interested in.”
However, Block pointed out a structural weakness that is making Canada highly exposed to risk.
"With Canada, one of the things that could be contributing to short sellers’ increased interest, if that is in fact the case, is the provincial regulatory system. ... I think the Ontario Securities Commission did a fantastic job with Sino-Forest. But I do think it's challenging for provincial regulators. It's more challenging when you have several different regulators, as opposed to one single well-funded regulator that looks after the entire market,” he explained.
“I think that's something that is conducive to more bad behaviour on the part of public companies.”
In mid-2011, Block forwarded his allegations of fraud against Sino-Forest, which ultimately led to the company filing for protection from creditors after a dramatic downward spiral in its stock.
Related Stories:
GTA low-rise average price grows by more than $100K
Financial advisor warns against pinning one's hopes on housing
In a recent interview with BNN, Carson—who founded the investment think-tank Muddy Waters Research—stated that contrary to his peers’ observations, he is not seeing any short targets in Canada at the moment.
“Obviously there are a lot of people who are short sellers who think that there is a bubble in Canadian housing,” he said, noting that Muddy Waters doesn't engage in fundamental shorts as it is primarily focused on rooting out corporate “wrongdoing or misleading”.
“Some of the business development companies and banks are occasionally mentioned to me; nothing that we found to be something that is really interesting to us,” he added.
“I've talked with people who are short it once they've been very public about it. Obviously, a short seller who lives in the Bay Area named Marc Cohodes has been very vocal over the years on it. But it's not something that we ever got interested in.”
However, Block pointed out a structural weakness that is making Canada highly exposed to risk.
"With Canada, one of the things that could be contributing to short sellers’ increased interest, if that is in fact the case, is the provincial regulatory system. ... I think the Ontario Securities Commission did a fantastic job with Sino-Forest. But I do think it's challenging for provincial regulators. It's more challenging when you have several different regulators, as opposed to one single well-funded regulator that looks after the entire market,” he explained.
“I think that's something that is conducive to more bad behaviour on the part of public companies.”
In mid-2011, Block forwarded his allegations of fraud against Sino-Forest, which ultimately led to the company filing for protection from creditors after a dramatic downward spiral in its stock.
Related Stories:
GTA low-rise average price grows by more than $100K
Financial advisor warns against pinning one's hopes on housing
