'The Assassin' Fahmi Quadir on How to Survive as a Short-Seller

SPEAKER_2 (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

Tracy Alloway (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:22)

And I'm Joe Weisenthal.

Tracy Alloway (0:23)

Joe, I have a soft spot for short sellers. I think what they do is sort of sometimes similar to journalism, right? You're trying to root out a particular story about a specific company and bring it to light, I guess. And I always wanted to talk to this particular short seller. She's kind of famous in the space. I think she's one of the few short sellers maybe who's been in a Netflix documentary, more than one, I think, at this point.

Joe Weisenthal (0:50)

Yeah. I totally agree with you about short sellers. I mean, I think when you look at the broad history of markets, or particularly US markets over the last several decades, they basically go up and there's a lot of money to be made by just like betting on the line go up. So I think you have to have a sort of distinct personality type to think, oh, maybe there is some other interesting way to make money in this market, besides betting on stocks, going up. But it's an important service, because one, as they will say, and I think there's probably something to it, shorting helps provide price discovery, you can't just have everyone long. But then there's another layer that I think is very important, and this is maybe connection to journalism. They often do a lot of work, right? They often have to do a lot of what in a very slightly adjacent field, what might be considered investigative journalism.

Tracy Alloway (1:41)

Sometimes they get a lot of pushback as well, which if you go out and Google this particular guest, when it comes to a company like Wirecard, famously she was being attacked on the streets of Manhattan and things like that. So just an incredible story, and we're very lucky to have her on stage with us live at our show in London.

Joe Weisenthal (2:00)

Yeah, that's right. In addition to talking about the life of a short seller, what it's like being a short seller, we also learn some new news, which is that she is getting interested in the Korean market.

Tracy Alloway (2:13)

She's actually going long for the first time ever, and she's chosen Korea, which is a very hot market at the moment to do that. So our guest is Fahmi Quadir. She is the founder and CIO of Safkhet Capital. She also has a cool nickname, the Assassin. Really the perfect person to speak to. Go ahead and take a listen.

In that introduction, I didn't actually even say one of the coolest things about you because there are a lot, but you are famous for going up against Valeant and Wirecard and shorting those successfully. You are also known as the Assassin, which as someone who has always yearned for a cool nickname, I'm very jealous of.

Fahmi Quadir (2:54)

Yeah. I guess ever since I got the nickname, so let you in on a little secret.

SPEAKER_2 (2:59)

Sure.

Fahmi Quadir (3:00)

I got that nickname before anyone knew who I was. It was a way to basically assign my research, my product as it was being sent out to other short sellers and investors because I was an unknown entity.

So another short seller who knew who I was just said, let's call her the assassin. So it was genderless, ageless, but it stuck.

Joe Weisenthal (3:21)

Tell us how would you describe Safkhet Capital? We'll get into the details, but big picture, what is your firm?

Fahmi Quadir (3:28)

Yeah. So we launched in 2018 and we traditionally focused on high conviction shorting.

So our fund exclusively shorts, and I really mean that we're only holding short positions. We're not allowed by fund mandate to go directionally long in any way, not hedge in any way. So we need to be really damn right on every position we take.

Tracy Alloway (3:52)

So what's client demand actually like at the moment? Because we were talking about short sellers becoming a dying breed. If you think about someone like Jim Chainos, who we've had on the show a number of times, he basically closed his fund, converted it into a family office because he said no one was interested in shorting the market anymore.

Fahmi Quadir (4:12)

It's wild. I've been in this business as a short seller now for about 11 years.

And I've seen multiple cycles of short sellers coming and going. And I have to say it's never been an easy time. I think the institutional allocator community was interested in shorting short back after the GFC. So that was the point where you had the rise of larger short bias funds. But years of underperformance meant that these allocators lost interest. So by the time I was launching in 2018, there was really limited interest in funding shorts. Investors believed in short alpha.