Credit Suisse has been a lender to two major blow-ups in recent months, Greensill and Archegos. Hedge fund manager and short seller John Hempton explains his Credit Suisse short position on a podcast. And shares why investors could see more Archegos-style implosions. See more stories on Insider’s business page.
Until the blow-up of London-based Greensill Capital, asset manager John Hempton wasn’t having a good few months.
“I short nonsense stocks and shorting nonsense stocks gave me the worst three or four months of my career in the lead up over the Christmas period, and then has suddenly become exceedingly nice,” Hempton told Bloomberg’s “Odd Lots” podcast on April 19.
The Australian hedge fund manager, whose firm has around $644 million assets under management, sat down with Bloomberg editors Tracy Alloway and Joe Weisenthal on the podcast to discuss his shorting of Credit Suisse based on its financing to Greensill and the current bull market.
“We’re making money on both sides of the book at the moment, we’re making money on longs, because we’re long ordinary stocks in the markets making new highs and we’re making money on shorts cause the nonsense stocks have been blazing,” Hempton said on the podcast. “And I don’t know how long this will last, but it’s extremely pleasant, having been extremely unpleasant.”
Shorting Credit Suisse
One of Hempton’s big bets was shorting Swiss bank Credit Suisse over its role in lending to Greensill Capital, a supply chain financier that was domiciled in Australia, but operated in London.
Short selling is when an investor borrows a security that they then sell with the expectation that the price will drop and they will be able to buy it back later more cheaply and pocket the difference.
Hempton recognized supply-chain financing was a shrinking business. Yet, Greensill was still securing significant amounts of money from big name players in loans, such as Credit Suisse and Softbank.
Greensill ended up becoming a lender of last-resort to many sketchy creditors,