The Joe Walker Podcast - The Legendary, Fraud-Sniffing Short Seller - Marc Cohodes

Episode Date: May 24, 2018

For thirty-seven years, Marc Cohodes has bet big money against bad companies. Due to his success, he is...See omnystudio.com/listener for privacy information.

From Swagman Media, this is the Jolly Swagman Podcast. Here are your hosts, Angus and Joe. Hello there, ladies and gentlemen. Welcome back to the Jolly Swagman Podcast. Welcome home. I am Joe Walker, and this week my guest is the legendary Mark Cohodes, one of the most famous short sellers in the world. But before I introduce Mark, I realized this morning that this episode represents one year of the Jolly Swagman podcast. And my co-host Angus and I are hosting a one-year anniversary party in Sydney in late June. So stay tuned for more details about the specific time and location of that. But I thought I'd just take a moment to talk about what it is that we're doing, what we're hoping to achieve with the podcast, because you may have noticed that we do jump

around a lot in terms of the guests we have on and the topics we cover. And I think it's fair to say that both Angus and I are very intellectually curious young men. So I wanted to give a defense of generalism, of why you too should be a dilettante, a polymath, of how you can be a jack of all trades and a master of many. So firstly, is it even possible to be a successful generalist? And I think it is entirely possible. I think the reason for this is that it's possible to very quickly learn a lot about a particular topic area or new skill, whether that's learning a new language or learning to program or paint or learning about economics or psychology, whatever it is, you can very quickly master

80 to 90% of the field. And if you think of this as a classic S-curve with knowledge on the Y-axis and time on the X-axis, it can take a while to get started, but very quickly you learn 80 to 90% of what there is to know. And then that last 10 to 20%, that can take years of practice and mastery. Tim Ferriss has a great podcast on this. I think it's called The Top Five Reasons to Be a Jack of All Trades. And he discusses some of the empirical evidence for how quickly you can learn a new field. But I think the more important question is, is it even desirable to be a generalist? Is it beneficial? And I believe the answer is yes. And I'll give you two reasons and then two caveats. So the first reason is one of the key ways to be original in this world is to connect

knowledge from seemingly disparate fields to conjoin different concepts. And in Silicon Valley, this is called being an innovation broker. And of course, the classic example of this is Stephen Jobs, who himself was nothing less than a generalist. And while he was at Stanford, he studied a calligraphy class, and then he was able to tie calligraphy to computing when he produced the typography in the first Mac, and that was revolutionary for personal computing. The point being that if you are able to connect ideas from different fields, you can create new knowledge. But beyond that, I think it's just fun to be a generalist. I think it is true that humans are the focal points at which the universe has become conscious of itself.

And no other animals on our planet, and as far as we can see, no other life in the universe, has the ability to think deeply about the future or intelligently about the past in the way that we can. And one of the privileges of being alive in the brief time that we have is that we have the ability to comprehend our own existence and think about this universe that we call home. So that's why I think it's great to be a generalist, but two caveats. The first is that if you want to be a generalist, you have to be very careful to limit yourself to the best sources of information when you're trying to learn new fields. And I first encountered this idea back in 2016 when

I had, I guess, a year of self-development. I went a little bit psycho and one of the many things I tried to do was I challenged myself to read one non-fiction book per week. And very early on, I decided that I only wanted to read the highest quality books or what I called source books. So what do I mean by source books? Well, if I was interested in evolution, then I would only read Charles Darwin's The Origin of the Species or Richard Dawkins' The Extended Phenotype. If I was interested in economics, I would pick up Adam Smith, John Maynard Keynes, Friedrich Hayek, Hyman Minsky, and stop there. If I wanted to learn about startup entrepreneurship,

I would read Peter Thiel's Zero to One, Ben Horowitz's The Hard Thing About Hard Things, and maybe Eric Ries' The Lean Startup. Now, I contrast these source books with the sort of more journalistic books that you might see on newsagent stands at airport news agencies. And the reason it's so important to read these source books as opposed to other books like that is that the more knowledge you absorb, eventually it cancels to zero. And you start to become confused about a certain topic area and you start to encounter paradoxes and it's not that those paradoxes can't be resolved they can be but it takes years of mastery to finally see the nuances in a particular discipline and remember we're not necessarily interested in mastery we're interested in proficiency in many different

fields so you have to be really careful to limit the noise to signal ratio if you're trying to learn that 80 to 90 percent on the s curve as quickly as possible that's the first caveat the second caveat is i'm not saying that there's nothing to be said for mastery. I think a good way to think about this is that you should, to use the metaphor that Brian Balfour, the former VP of growth at HubSpot uses, aim to shape yourself like a capital T with a broad generalist knowledge and then hone in on a particular skill or a few skills.

So I'm not saying you should be like a perennial butterfly floating from topic to topic, but don't be afraid to be a generalist. Don't be afraid to be Isaiah Berlin's fox rather than the hedgehog. Now to circle this back to podcasting, what are we doing here at the Jolly Swagman podcast? Well, there are many podcasts and I listen to these podcasts and I enjoy them, but podcasts which focus on a particular topic area. So say, I don't know, fitness. And if you have a podcast that's devoted to fitness and you try and put out a weekly show, after a few years, eventually you're going to be expanding the amount of noise that you're delivering to your audience. In contrast, what we're aiming to do here at Swagman Media HQ is go out and find the

best people we can find in the fields that we're interested in and you're interested in and sit them down for an in-depth conversation to bring you as much signal as possible in an area before we move on. So to give you an example of what I'm talking about, the last few podcasts have been conversations I recorded in America. And the first of those was with Ryan Holiday. So I was very interested in the Peter Thiel Gawker case and what the implications of that were for legal activism and freedom of speech in the United States. And Ryan literally wrote the book on that story. So I spoke with him. I'm deeply fascinated by statistics and

probability. And I sat down with Harry Crane, a brilliant young professor of statistics at Rutgers University. And I also have major physics envy. I'm obsessed with physics. So I spoke with Leonard Susskind at Stanford University, one of the preeminent theoretical physicists in the world. So that's why we do what we do. I just want you to understand that there is reason to our madness. But that's the end of my sermon. God bless you. Thank you for listening. And now to introduce this week's guest, who is another expert in his field. This week, I am speaking with Mark Cohodes, who on Twitter is at Alder Lane Eggs, Alder A-L-D-E-R. And Mark is a legendary short seller. Now, for those of you who don't know much about investing

or haven't read Michael Lewis's The Big Short or seen the movie. Short selling is betting big money against bad companies in the hopes that their share prices will go down. So it's the opposite of long side investing. And Mark has been short selling professionally for the last 37 years and many of his shorts have attained legendary status. The New York Times described him as the most prominent short seller on Wall Street. Harvard Business Review wrote a case study of his famous short against the company Novastar Financial. And he was general partner at Copper River, formerly Rocker Partners, a $2 billion plus hedge fund until 2008 when the fund came undone, largely at the hands of Goldman Sachs. But you can listen to the podcast for the details of that particular financial tragedy. Needless to say, it's still

clearly quite painful for Mark. Mark is one of my favorite people. I think I describe him as a cross between Steve Eisman and Harrison Ford, but that's just me. And I met him at his farm about an hour outside of San Francisco in what I guess was his office, a large room replete with pinball tables and lava lamps and a huge pink futon on which we recorded the podcast. Mark was very generous with sharing with me some of his homemade rum punch, which had an excellent rum to punch ratio, much like our noise to signal ratio. So I apologize if some of my questions get a little bit long winded by the end of this podcast.

But needless to say, this conversation was just out of this world exceptional. We speak about everything from Mark's theory on short selling. We talk about why he doesn't like to quote, wrestle jaguars out of trees, end quote. We talk about how he got into the shorting business in the first place, what it takes to succeed and countless war stories from shorts that he put on, including his famous learn out and house be short. Now this was a company which was eventually responsible for possibly the largest securities fraud in European history. Mark successfully shorted it and was kind enough to give me some exclusive, never before discussed on the record information about that story.

We talk all the way through right up to shorts that Mark is putting on today at this minute, including MyMedix. MyMedix is a biopharmaceuticals company listed on the NASDAQ market cap of about $900 million. And Mark and a few other short sellers are engaged in a furious battle against MyMedix currently. They regard it as a fraudulent company. And we go into detail about MyMedix at the end of the podcast, but Mark does reference it a few times in the first half. So if you're wondering what that's about, that is that. So I know this episode is very long, but just pause it and come back to it or do whatever you have to do. And also, if you're a non-finance person, I encourage you to listen anyway, because firstly,

Mark is incredibly entertaining. He's a great storyteller, but also we do our best to define a lot of the preliminary concepts and make them understandable. For example, I think I actually asked Mark for his definition of shorting. So yes, that does mean that I went to the house of one of the greatest short sellers in the world and asked him to define shorting. So I feel like you're now somewhat obliged to listen through if you're a non-finance person. But I hope you enjoy this conversation as much as I did. And I encourage you to get your best headphones or your best speakers, light some candles, pour some whiskey or whatever it is you like to drink and

settle into a couch and enjoy this conversation with the great Mark Cohodes. Boom, we're on. Mark Cohodes, thanks for the rum punch. Thanks for flying 6,000 miles to see me. Of course, it's great to be here. I'm very excited to meet you for a number of reasons, but chief among them is most of the investors that I associate with are all long-side investors. And you're the first proper short-side investor I've ever met and no less one of the most prominent in the world. Well, there's very few left. There is.

So they're almost extinct. Yeah, it very much feels like a dying art. Yeah, it is. That's sort of a shame i think there's some hopefully there's some revitalization coming up through the ranks but it's uh you have to be deranged to want to do it and you have to be deranged to try to do it longer term but uh it's something i'm addicted to it and there's something clearly wrong with me. Yeah, I think we're going to talk about some of that derangement a bit later and, you know, the temperament that you need to succeed in this game. But before we get to that and before we get to some of your war stories from famous shorts you put on, let's just, you know, introduce you

to the audience. I guess, firstly, where were you born in America and what was your family like growing up? Let's see. I'm 58 right now. I'll be 58 in June. And I'm from Chicago. I went to a decent school but I was never really good at school

my father he sold water coolers my mom was a mom those two split up when I was about 8 or 9 something like that I sort of always

did my own thing I sort of look at myself as raised by my grandfather, who I really looked up to. And he's been gone, I think, 20 years, but he'd kind of get a kick out of what I'm doing now. Went to a college called Babson College. Worked a little bit through school. My grades were never good. But I was always interested in the market. Zillion years ago, I used to be a runner on the Midwest Options Exchange, which was a lot of fun back when things were there was no automation everything

was done with paper and pencil and analog phones didn't even have push button phones so i've always been into it into the market from i think when i was like 14 15 or 16 in high school. Do you remember the moment you first kind of got hooked on that? Well, I was sort of a, God, when I first got hooked. When I first got hooked, it was sort of like 1976. I was 16. I took this class in school that talked a little bit about stocks.

And I remember I was involved in something called Northwest Industries and Houston Oil and Gas. Gold started taking off a little bit somewhere around there. And I made a shit pot full of money. I didn't have much money, but I made a shit pot full of money on gold options at the time. Cause I, again, I was screwing around with this Midwest option exchange. And I remember when I was shit,

17, 18, 19 years old, 17, 18 years old, I turned like a thousand bucks into 20 grand. And back then that was a shit pot full of money. That was a lot of money. And I said, Hey, this isn't bad. I can sort of do this. So I liked, and I've always been interested in it. It's all I've ever wanted to do is, is invest. And thank God, cause I probably couldn't hold a legitimate job ever

well it's it's funny how you know path dependent all our lives are and sometimes that bit of beginner's luck is enough to get you hooked at the start whereas maybe if you'd if you'd lost that thousand dollars you might have been doing something else well the crazy thing is what sort of got me going on the shorts was oh hell i mean i turned the 20 grand into like 60 grand when i was in college and i came across a situation that i thought was really good. It was called Data Access Systems. And I owned a ton of it. I must have had half my money in it. So you were long on this company? I was long on this Data Access Systems, yeah, and it was based in New Jersey. And hell, I went down to visit them and the whole thing, I thought I really had it figured out.

And it turned out to be a complete fucking fraud. So I not only lost half my money, but all my pals lost, people I knew lost. It was bad. It was a bad, bad feeling. Worst feeling in the world. It's bad enough to lose your own money. That's awful. But to lose someone else's money off your say-so,so to me is the worst feeling in the world,

absolute worst feeling in the world. So after I got blown up on this fraud data access systems, I said to myself, I said, self, if you're going to do this professionally or you want to have a career of this, you better hone your skills because this is not good. So that's when I said, instead of being in this casually, I better do my own work. And I better make sure I don't get hit by a fraud like something like this again. Because, man, I got, you know, again, I toasted myself, but good. But toasting friends, I don't mind toasting my family. But toasting friends and people who count on me

is just the absolute worst. Nothing's worse in my life than that. Why is it such a bad feeling? I don't know. I mean, I'm just wired a different way that if I give out a point of view or feel strongly of something and people do it, I feel responsible,

which is why always on twitter i say anything i say is not a recommendation especially with shorts and don't try this at home because it it's a high level of risk and i don't want to feel bad i mean i have some really close friends and they always ask me what they should do stock wise or business wise or this that and the other and i never tell them anything i mean i'm so jittery with stuff like this i won't even invest for my wife right because she like watches all this stuff like a hawk and she says why is this doing this and why is this doing this i said i don't know she says how about if you do something with my money? I said, no chance, no way, no how. Because I don't want to answer to it. It's bad enough.

So back when you were at college, you and your friends lose money on these data access systems. Yeah, it was terrible. They've invested on your recommendation. How do you handle a conversation with someone when they've lost money? Well, you just say, you know, I'm sorry. I got it wrong. There's no one who lost more on this thing than me, and I feel bad. And hopefully over time I'll make it up to you with something that's better than that.

That's all you can really say. I mean, no one's 100%. You're going to miss. And I'm a conviction based guy and i'm not a diversified guy i don't believe in really in that and i think there's really only at any given time four to twelve ideas out there that are really good anyway that you know i can sleep well at night with even though i'm short so that's kind of how i play it but you know i'm not 100 i make i make

plenty of mistakes but i kind of own my mistakes and i own my as i'd say i own my own shit so that's sort of way it is or was but i learned back then that this is no good and and you have to be ready aim fire rather than shoot ready aim a lot of people these days are just shoot ready aim they just shoot from the hip so i figure if i'm gonna cock and i'm gonna throw it and if i believe in it i better have it figured out so that's what i try to do and so that was the moment you officially turned to the dark side i suppose yeah that's that's the time i said you know this is fucked up i mean i better i better have this far more figured out than i did i I mean, I didn't really start shorting shorting stocks until I was at the Northern Trust, which was really a long-only place.

I mean, there I was so bullish I couldn't see straight, and they used to get down on me in 82 and 83 because I was so bullish. I mean, banks are the most fucked-up places, knowing a man. Yeah, that sort of institutions of group think. Exactly. And that's where I met my buddy Paul Landini, who I'm pals with to this day. That's my longest running investment pal, Paul Landini.

I met him in 82. So that's fucking, what, 36 years ago? That's a long time. You're not 36, are you? No. No. So I've known him for 36 years and at the time i was single so we used to go out at nights to the arcades and we used to check coin drop and these various pinball machines and it was when video games were first coming out and coin drop was going down because these machines were being used less and less. And people were playing video games.

And literally video games or pinball machines literally sort of went the way of pay phones. And it just essentially stopped for a while. There used to be like arcades of pinball machines. And it just stopped. Like you would never know something like that. I've only heard the stories. Right. But you would never also know like a pay phones. Do you remember pay phones? A little bit. Yeah. Do you remember a world before cell phones? Yeah. Yeah, I do. But barely. I scraped in. Well, do you remember the OJ chase scene? No.

Okay, so... Can you explain? Well, I date people. I view how you are in a generation by OJ Simpson, who killed his wife and his wife's boyfriend. There was this huge chase scene that had everyone in the United States mesmerized on TV. O.J. was being driven around by his buddy, and the cops were chasing him. I don't know if it was 20 or 25 years ago. So I always date people on, do you remember the O.J. chase scene? And if they say, yeah, you're of age, and if they say yeah you're of age and if they say no you're not of age yeah before ij after ij yeah exactly yeah yeah so so i view it like that so

certain certain the coin op game and pinball machine guys essentially went out of business i mean all essentially except one but the publicly traded one bally's regardless of the market because the market was going straight up i think the stock went from 25 to two or three so that was my first really big short with my buddy landini and chanos was a young guy at the time i mean him and i are only about two years apart but i remember when he first started guilford securities in chicago out of yale and he's a he's a smart motherfucker and he's he's made some great calls you know i i said on real vision i thought his baldwin united call was the best of them all but people didn't really know him back then at all i mean they know him more now for enron and that but his baldwin united call was better than his enron call yeah and that's how i kind of remember him

so data access systems kind of get you thinking you know fraud's a problem and then coin drop you start thinking i can make a real career out of this yeah coin drop i said this is kind of a lot of fun and and you know it kicked me into some fatty stuff you know i was faddy not fatty fatty and i then shorted you know when i got together with david rocker we shorted wine cooler which was a fast-growing gimmicky thing in the states and that was canandaigua wine and that thing blew up and then we ended up going along the thing and it's now constellation brands yeah and at the time you know i think the stock was 30 before all the splits we covered the thing at nine went long at five and loaded the boat at three. And I think I hit up a chart from 85 or 86 to now.

I think the stock's up like 15,000%. So if we would have stuck with Constellation Brands, I probably would own the state of California, Nevada, and Utah. But I think we made 15 times our money and sold and still sold it way, way, way, way, way too early. But my son was born in 87. And I'm so out of my mind. I think I put 80% of his money. I gave him $10,000.

I think I put $8,000 in it. I gave him $10,000. I think I put $8,000 in it. I gave him $10,000 when he was born. I put $8,000 in Canada wine and it worked out quite well for him. So that was the biggest long winter I ever had, we ever had. And it was from a short. So sometimes I've been known to be short something and turn around and go along it. Because I think I know it pretty well as a short. And if something changes.

Yeah. And I think, I mean, this is a good point to take a step back now. Because I think that's a very interesting aspect of your style. Is that you're not one who's prone to thesis creep. You're totally open to changing your view. In fact, even completely reversing your view. Exactly. But we'll come back to the stories of some of your famous shorts in a moment.

I just want to talk about your theory on shorting, kind of in principle now. And let's just begin with a few kind of definitional concepts, I guess. So I know this is quite basic for you. Thanks so long in the game, but not everyone will be familiar. I figure if you've flown 15,000 miles to see me, I might as well go over whatever you want to go over. I'm going to ask all the questions. So firstly, tell us what shorting is.

Whenever someone asks that question, I always break it down to the basics. I use my cow analogy. Let's say you're in the cow business and you think the price of cows are too high. You don't own any cows, but you go to your neighbor who does own cows. You say, can I borrow your cows? Sure, you can borrow my cows and I'll pay you some interest to borrow your cows.

No worries. And since cows are generic, I go and sell your cows with the promise to give them back to you in the open market. And I sell the cows for $100 a piece. You don't really give a fuck because I'm paying the interest on your cows and you don't need cows around. Because I think the price of cows are going to go down. So let's say the price of cows go down to $50. And I think that's enough. I'll then go buy back the cows at $50,

return you your cows that I borrowed and the cows I sold at $100 and I bought back at $50, I make $50. Let's say I'm wrong and the price of cows goes up or goes to $150, I buy your cows back, buy cows back at $150, return to your cows, and I lose $50. Or the cows do nothing and I just get tired and bored, I buy them back at $100, don't make or lose, and still return your cows. So you're basically borrowing something that's not yours,

selling it in the market in hopes that you can buy it back cheaper. And if you can't buy it back cheaper or you're wrong, you buy it back higher and you lose. But if you're right, you make the difference. But it's all about borrowing collateral to sell something that's not yours and eventually buying it back and returning the collateral. There you have the... And that's called covering?

Mm-hmm. When you buy, you cover. Mm-hmm. When you sell, you sell short. Yep. So, once most people buy and then sell, I tend to sell and turn around and buy. And if I'm really, really, really, really, really good, I sell and never buy. So... Perfect.

That in a perfect world is perfect, but that doesn't happen that much. Yeah, as we'll see, it rarely plays out as neatly as that. But moving to the real world then, what are some of the typical instruments that short sellers would use to bet against companies? So, for example, a lot of people are familiar with the CDOs that Michael Barra used to short the subprime mortgage market in the US. But what are some of the more typical instruments? Those are more complex. I mean, to me, either short stocks or in some cases you buy puts. For anyone listening to this, I wouldn't advise doing anything more convoluted or complicated than that

because then there's various degrees of risk and liquidity and price of the instrument. It gets crazier. So I predominantly short stocks. I don't really plan options that much, but at least in the United States, I don't know about Australia, there's a pretty active option market. And you buy calls if you think something's going to go up, and you buy puts if you think it's going to go down. And there's various strategies. But again, I try not to be in the recommendation business.

So I just stick to shorting stocks now of the many dangers that short sellers have to confront when they are betting against companies one of them is the so-called short squeeze can you just briefly explain the dynamics of that how does that work well that's a short squeeze is a varying term it can cover a lot of things just like brain damage okay i mean brain damage of which i am you know it can cover all types of mental illness right a short squeeze i tend to say you know squeeze the stock higher, meaning people buy it just to think they can push the stock higher to the point where the shorts pain is so extreme they say, uncle, and cover the stock. Sometimes scoundrels or crooks resort to pulling their collateral, which forces you to cover. In my first explanation of it, I said in the cow business,

you borrow someone's cows, generic cows, to sell them and then wait and buy them back. Some squeezes require or involve people demanding return of the cows. If using the cow vernacular, you'd say, Mark, I know I loaned you my cows, but I'm selling my cows, or I want my cows back because I heard you were trying to screw up with the market. So give me my cows back now. And if I say, go fuck yourself, you'll say, no, fuck you.

I'll go buy the cows in the open market and close you out. That sometimes happens. There's a lot of danger and risk to getting squeezed. People always say it's true, but it's not really true. They say your loss on a short is unlimited. If you short a stock at five it could theoretically go to affinity or go to a thousand so most people most people in general don't have the stomach for something that goes against them to that degree

me i'm so goofy i don't you know i i hate it and I hate to lose, but I assume that when you go on a cattle drive from Brisbane to Adelaide, you're going to get some arrows in your ass. You just got to make sure you don't get them in your back. Got it. Brisbane and Adelaide close? Not at all. Oh, really? So how far would the cows have to go? Most of them would probably die.

That would be bad. If I go on a kangaroo drive from Brisbane to Adelaide, would the kangaroos make it? Yeah, I'd dare say. Oh, okay. So we'll go on a kangaroo drive then. That's what we're doing. So as opposed to investing long on a stock, what kind of downside versus upside could a short seller expect? I mean, you've kind of already alluded to it by talking about how a stock in theory could go up infinitely.

But just kind of give us a comparison. Well, I don't get involved in anything that I can't explain in probably a paragraph to a 10th grader. So I don't get into biotech. I don't get into technology, really. I don't get into open-ended. I don't get into dreamy. I don't get into pie in the sky. I look for shitty companies.

I look for frauds. I look for criminals. I look for shitty companies, look for frauds, I look for criminals, I look for bad actors, I look for something that's really stupid. And I won't even look at something unless I think I can make 60 to 90% return. It's not worth it. I don't do anything for a quarter,

I don't do anything really for a trade. Sometimes I do, but mostly when I do that, I tend to lose. I try to look for things that are so structurally flawed or their balance sheet's so bad or the management is so crooked, corrupt, or incompetent that I try to find many ways I can win. So this is a crucial point because what you do that's different to what long sellers do is you almost manage out a lot of that uncertainty by going after companies that you know are overwhelmingly likely to be frauds. So it becomes a totally different question. Yeah, fraud is a wide-ranging and often used term. The way I would look at it, the way I do it is I want many ways to win.

I want to win because management can be hauled away in handcuffs. I want to win because there's too much leverage. I want to win because they're breaking the law. I want to win because legitimate competitors can put them out. I want to win because they're screwing or cheating the system. I want to win because they're criminals. I want to win because they're career failures. I mean, I tend to like jockeys who, in 20 races, finish 9th, 10th, 11th, 8th, did not finish. You know, the best they've ever done is 7th. I look for career fuck-ups, screw-ups, misfits. So I always say that, you know,

I've never been short a legitimate company. I've never been short Amazon, I've never been short a legitimate company. I've never been short Amazon. I've never been short Netflix. I've never been short Facebook. I've never been short Apple. I've never been short Google. Shit, I've never been short RIM. I don't short anything that I view as legit.

I don't short anything, you know, an acid test would be, if this company went out of business tomorrow, would anyone miss them? Well, they'd miss Disney. They'd miss Starbucks. They'd miss Microsoft. They'd miss Google. They'd miss a lot of companies people would miss. They'd miss McDonald's. They would. They wouldn't necessarily miss the Habit Burger, but they'd miss McDonald's, right? People would miss Dunkin' Donuts. I mean, that kind of thing. They'd miss Starbucks.

You know, they'd miss, would they miss General Motors? I don't know. You know, probably. But it's things like that. They'd miss their iphone yeah right so that so that tends to be an acid test and and i never short branded companies like you know harley davidson may or may not be a short and it's been a short over the years but i've never been ever ever ever been sure to share harley davidson because it's a Americana thing. And I always think one day

Warren Buffett or an outfit like that would want to buy them. And people miss that kind of stuff. So I short garbage, junk, charlatans, bums, frauds, people who... I mean, most people or legitimate companies should have a business and they use a stock to help finance their business. They raise money through shares to help grow the business. I like guys, I like shorting guys who try to create a stock and then try to figure out what business to trick fuck people with the stock. Right. The other way around. The stock is the gimmick.

The stock is the gimmick to some fake-o business rather than a legitimate business that has a stock. And they're just looking to enrich themselves. Exactly right. I mean, like, if I was a real guy, I mean, I am a real guy, but if I was to, like, run a company, I would never want to have a publicly traded company because there's just too many ways you can try to skin things around. I mean, I'd be, I would really be good at perpetrating a fraud. I'd really be good because I know all the tricks. Also proves, I guess, why you'd be a great fit for the sec yeah because you've got to get in the mind of those guys oh yeah i mean if i don't know every trick in the book i know every trick minus one i mean i'd love to run the sec just for a short period of time just to clean up all the shit that's out there. It would sort of be a great legacy.

I'd say this is what you do. This is how you stop these guys. You'd lynch a couple guys and hang a couple guys, and it would set up a tremendous deterrent that if you want to cheat the system, this is what happens to you. And good things do well, and bad things, bad guys get in a lot of trouble. So there needs to be a deterrence somewhere along the line, and I think I'd be good at it, but I'm starting to get older here, so I think my days of becoming the head of the SEC are sort of numbered, and I think they want lawyers too, and I'm not a lawyer, and I wasn't

very good at school, so I don't know if I'd but i'll tell you i would be i'd be good at it for a couple of years i'd be great well i studied law at college so maybe i could i could uh put my hand up and then you could just tell me what to do exactly well we'd do something fun i want to flesh out a couple more ideas in your kind of brand of shorting before we move on. And, you know, Rocket Partners, which was the hedge fund that you had a lot of success at, I think they ended up managing over $2 billion. They had a motto, which was frauds, fads, and failures. You know, you've spoken about the frauds part, but what are the fad and the failure elements? Well, back when it was a whole lot easier than this, such fads, we were short cabbage Dolls, which was a Coleco deal.

That was a toy company. We were short Pound Puppies. That was a Tonka deal. That was a toy thing. That was a lot of fun. We were short that This Can't Be Yogurt, which was a yogurt franchisee, which for a long time we got absolutely destroyed in, and then we made a bundle. Wine Cooler was great, and then when they got,

Cannondale got destroyed in wine cooler, we turned around and went along the thing. We were short. I mean, the easiest thing ever was when they first invented cell phones. There was a payphone franchisee company. I'll never fucking forget it. It was called International Telecharge. I think the symbol was I-T-I-L. It actually traded. It was a cheap stock. Cheap stock meaning maybe six, seven, eight times earnings. And I looked at this thing and I said, if cell phones ever become anything,

this company will be out of business so fast it's not even funny. So I shorted the stock, shorted a lot of it. It was like 15. And the stupid broker gave up our name that we were shorting it. This was like, I don't know when it was. It was either the very late 80s or early 90s. And like three hours after we were shorting this thing, the CEO calls us up and says, I'm going to be in New York tomorrow.

Can I come by and see you? And I said, like, how the fuck did A, you get our name, and B, why do you want to see us? And they said, well, there's a story that you're shorting our stock. I'm like thinking, God, that fucking broker who we gave the order to must have given out our name. So I said, fine, come by and see us. This is when we were officing in Rockefeller Center.

I'll never forget this. It's like 10 in the morning in the summer, and in walks like four guys, you know, wig, jewelry, hot chicks with them, you know, the whole bit. And he goes, I don't know why you're short our stock, but here's why we're going to grow.

You know, we can expand here. We can expand there. It's a franchisee. It's a 56% return on capital proposition and you know if the local indian guy at the 7-eleven isn't credit worthy enough to get a bell pay phone he can get in the franchise business and get one of ours and it's like the worst idea and i said to him do you him, are you ever concerned about this thing called a cell phone? If cell phones become a thing, who's ever going to use a pay phone again? And he goes, do you know how much cell phones cost? I said, yeah, they're like $1,000 or $1,500, and it's expensive.

And I get it, but I said, prices will come down. So he didn't have a good answer for that one at all. So I don't know. After he left, we shorted like two times more because I said, this guy's full of more shit than a Christmas turkey. The thing collapsed, went to zero. If it was still trading, it would probably trade at a negative number. That's an example of a failure.

I mean, that's a failure of catastrophic proportion. But at the time, he was trying to pitch the thing as kind of a growth vehicle and be something that technology would never change. But there's been a lot of failures since. There used to be modem companies and soundboard companies before they'd put sound on a chip or even sound in software. I mean, there's all sorts of stuff. And I try to always find things that can work regardless of what the market's going to do. Because I mean, I assume the market's always going to go up. If it ever goes down, it's kind

of like a blessing. I assume it's always going to go up. So you sort of need to find something. Again, it gets back to the horrible business, horrible operators, criminal, corrupt, crooked, breaking laws. Bad balance sheet's a huge plus if they have a bad balance sheet. And guys, if they got wiped off the planet, no one would miss them. Yeah.

I mean, I'll ask you about some of those red flags in a moment. So frauds, fads, and failures. It sounds like your sweet spot is frauds, but ideally you'd take a combination of the three or two of the three, for example. Yeah, ideally. I mean, the problem with frauds is they're just a fuck of a lot of work. Right. It just takes a tremendous amount of effort. And if someone tells you otherwise, they're lying to you or they're not really that good at it.

But it's kind of, this is really true. What I'm going to say is that the people who are committed to perpetrating the fraud literally have to work as hard at it as I am at exposing fraud. Fraud and it literally becomes at some point a test of will where I will outwork you, out hustle you, out fight you and expose you versus them trying to cover it up, threaten, beat up, make up, lie, and manipulate. So their tools are lying, manipulating, threatening, threatening in lawsuits. Cocksucker, my medic sent the FBI over here to try to shut me up, which failed miserably. Death threats numerous times, lawsuits numerous times, make a bullshit stories to move the stock which creates a squeeze more times than i can even count or like to remember

at this point everyone is listening to this podcast would say what the fuck is wrong with him why would he even why would he even remotely... Why is he doing this to himself? Yeah, why is he doing this? Well, clearly I'm a troubled soul. I mean, clearly I have voices in my head where I'm not a restful thinker. Clearly it's just nothing but a grind.

No, but as we'll see, we need these troubled souls to keep the bastards honest. Well, that's exactly right. But it is an inordinate amount of work on these frauds. And it's much easier to find something that you think will fail. And I've had a ton of those. Those are the best ones because you can kind of develop a mosaic, figure it out, and kind of, you know, you have the wind in the right direction. And you set your sails properly and you can just ride it.

And the work you do is a lot of maintenance. But it's basically businesses that are set to fail. And I like to find them that are run by dopes or people who wear wigs or people who don't realize things are changing and they're not going to change. And in some of this business, if you're in a competitive world and you don't change, you can go under and you can go under quick, especially if you have leverage. So there's another aspect to your brand of short selling which we should talk about, which I guess plays into the timing question, and that is this. I've heard you say that you're not interested in climbing a tree and wrestling down a jaguar.

Explain what you mean by that. It's a a visual image well some people think that a good short is a stock that's high or expensive or has moved up a lot i don't really care i don't care if something's high low moved hasn't moved. But unless the story breaks, and I mean breaks, meaning it's exposed for something that's wrong, and they show visible flaws to what's going on, I'm not really interested in doing it. I'd much rather wait till there's a clear flaw or a break in the chain and then i get involved

but then i'll get involved i'll carve the fucking thing up really fast really hard and really sharp so for example everyone and their brother, mother, cousin, whoever, who short stocks, everyone is short Tesla. Now, I'm not short Tesla. I repeat, I am not short Tesla. Not that I think Tesla is not a good short one day but i will wait till there are huge cracks in the facade before i'll get involved now to be fair i do periscopes and i'm very active on twitter i'm at alder lane eggs on twitter i'm very robust, and Twitter works well for me because I get a lot of scoop back from people who have ideas.

And I said on my Periscope, I think on Friday, that I said that Elon Musk conference call on Tesla is a sign. And I said he completely went off the rails. He showed tremendous disrespect toward the sell side. He acted completely irrational. And in all my years, that's probably one of the top, in the top 10 conference calls of something that's a precursor to something that's terribly wrong. So now I have my eyes on Tesla. I'm like warming up in the bullpen with my eye on the Jaguar in the tree.

In my mind, Tesla hasn't fallen out of the tree because he's playing all sorts of games, but there's definitely something up with the Jaguar that bears watching, and a lot of mistakes that people make, and believe me, I make plenty of them. We can have 17 podcasts of the mistakes I've made. And I still keep making them, but I try to make less, and I try to learn from my mistakes. But one day this Tesla is going to be a tremendous short and i don't know and it may be it

let's say the stock's at 300 it may be at 220 yeah and it may be and it may be at 140 um so tesla tesla will be an example of a fad slash failure yeah tesla tesla is an example of a fad slash failure because the the one thing that he has going for him is he's a cult-like figure and he has a lot of fans and he has a lot of detractors and i know what that's about i have a lot of fans i have a lot of detractors but people tend to like his products and they tend to like his car what the world looks like blank years from now with his electric or autonomous or whatever the fuck cars he has or others do, who knows? very off the rails on that conference call and that bears watching because all of a sudden people shouldn't act like that unless there's some built-in stressor or something kicking around that's bothersome and unclear to the human eye. I just get a sense that something has changed there

but I can't exactly say what it is because i don't know but i'm but i'm not in a hurry to get involved in it and i'm a very very very patient man but the guy's behavior uh bears watching yeah and and i just commented about it to the people who care what i have to say that, that it was a, uh, it was an interesting call. One of the things that distinguishes short selling from long selling is it's a completely different mental game. And when you're long on a stock, you're getting that constant positive feedback, the little dopamine hits of seeing the stock price go up. But shorting is so different because there are long bouts of

time where you feel like you could be wrong, the whole world's against you, and the big payoffs are sort of few and far between. But when they come, they're big, but you wait such a long time without that kind of positive feedback. So how do you, I'm curious, what is your internal monologue like when you're waiting for a short to play out and you've got the whole world against you? How do you keep confident in your thesis? That's a good question. You know, I think about this all the time, but that, you know. What's wrong with you? You raised, you bring up, you know, wonderful, wonderful, wonderful, wonderful questions. So here's the deal. I used to say this when I had the hedge fund.

98 plus percent of the time, you go home feeling like an idiot. The negative reinforcement, everyone's against you. Companies against you. Stock market trends higher, so you get no help there. Holders are against you. They hate you. Sell-side stooges who tout the stock, they're against you.

They hate you. But there's something about being the underdog or being the hunted or being in the minority when you're right. It's like the greatest feeling in the world. So the lows, the lows of this are so low it's beyond it's beyond description but

the highs are so high it justifies and makes the lows acceptable and I think that's why those football coaches come back for more. That as horrible, horrible, horrible as it is, spending all your time preparing your team to win the Super Bowl and having a 4-12 season, the guys who've won the Super Bowl become the highs and the addiction to

winning is so great. It justifies the shit that you go through. And you have to have an inordinate amount of confidence in yourself. Your ability to figure it out when others don't. And you have to be focused, driven. You have to have earplugs in to not listen to the haters and the negative feedback loop. It's like a true struggle. But I always say, you know, the people who do this, the handful of people who do it,

and the fistful of people who do this who are worth a shit. If you have the short-selling gene and you can endure this, you know, it's really something. And if you don't, you just get wiped off the face of the earth and you become a, you know, asterisk in history having,

you know, tried it and failed it. But, you know, I love it. I really enjoy it and I pick my spots. And I love it. I really enjoy it. And I pick my spots. I mean, the good thing now is I only answer to myself, me, myself, and me. So if I do bad, I only have myself to blame. And no one's harder on me than me. No one's on my ass more than me.

And I love not managing anyone else's money because, A, when you do bad, I feel horrible. It's the worst, letting people down and losing people money. It's terrible. So if I lose for myself now, well, then I'm just dumb like a dumb fuck and I lost. But if I made, I did okay and that's good. So there's a lot to it. And there's a lot of, I mean, you cannot be normal. I mean, something is clearly wrong with the people who've done this

over a period of time and and the other thing is there's no good longs and short sellers I mean you have to have a mindset to do this I mean shorts can have good longs every now and then but but it's very, very, very, very hard to do both and focus on both. Because the crazy thing is I sleep really well at night. When I have shorts, the only time I lose sleep is when I'm long something. Then I get all jittery and shaky and nervous and start sweating and my teeth start shaking and my eyes twirl and the whole, the whole bit. So I'm more nervous on longs than I am in shorts. And the problem with me and longs is I was just long something called a nada

and a pal of mine told me I should buy the stock at 24 and had 18 in cash. It was a great story. And I said, where do you think the stock could go? He says it could go to 50. I said, okay. So it does nothing, does nothing, does nothing. They come out with some good news. The stock starts going up.

Gets to around 50. Gets to 50 in December. And I go long- term in the thing, which means instead of paying 50% tax, I pay 20% tax. So I sell it. I sell it 50 in December. It's what, May about 6th or 7th right now.

I hit the thing up the other day. I sold this past Decembercember december 17 at 48 bucks it's now a hundred and four and i'm like thinking god mark you know you go a whole year and you make you money, which is totally fine, right? And you sell it, totally fine. And then in five months, the thing goes up 50 points and you're just sitting there, focusing on your shorts. And that's how fucking deranged I am. The average person would just sit there and say, this ENTA is a winner.

Goes up, great chart, good business great chart good business this that the other i sit there and double my money go long term and say i've had enough get out but fuck a short could go 20 30 40 percent against me and i just say holly fa la la la la right the average person a short goes against them five six seven ten percent they're jittery than a whore in church but but that's again that's part of the calculus you know yeah that's why shorts and longs don't mix too well tell me some of the red flags and the tails that you look for in the companies that you short. You've already mentioned some of them, and I don't need you to go into detail because I think we'll flesh some of them out when we talk about some actual examples. But give me a sort of shopping list.

You mentioned the wig indicator. I assume you don't mean barristers. No, the wig indicator is guys guys who wear hair pieces i think i've won 15 out of 16 of those guys guys who wear wigs or hair pieces tend to not like themselves and if they don't like themselves that translates over to business so if i can find a company that i think suspect and the main guy wears a wig that's something and you mean completely serious yeah i'm as serious as a fucking heart attack i mean i mean i i used to have fun with this tempur-pedic and i think the

top two guys before they got thrown out used to wear wigs. And I think I made money six times in a row shorting that thing. You know, blows up and then goes up again. Then they lie and it blows up again. I think so. That Tempur-Pedic was great. Are you now at the point where you'll actively research whether management wears wigs? No, I try to eyeball, you know, when I see something. I mean, I have enough of a following on Twitter that enough people wear it up.

But, you know, the wig thing also now goes into it can also translate i mean the wigs wigs were big in the 80s and 90s but circa 2018 it would also be i think hair plugs or whatever you know people who who play that game or or injections yeah you know that would include plastic surgery you know fake pecs or fake calves or whatever you mentioned the coin drop guy was wearing a hairpiece yeah the coin drop guy was yeah the coin drop guy for sure was wearing a hairpiece and uh i think the my medics guy may be wearing a hairpiece. This Tempur-Pedic guy on the mattresses was wearing a hairpiece. The most guys in Canada. Canada guys wear wigs, I think, partly because they're insecure, partly because they want to keep themselves warm.

That's so good. Okay, so what are some other red flags and tells? Well, I always say, you know, I tend to bet the jockey, not the horse. It's all about management. Yeah. I mean, at the end of the day, it's management. And, you know, I know I have some friends who are really good operators. And they run some really big companies. and they're pretty good at it, and they manage a lot of people.

And the one thing they always say that managing business is hard. It is not easy, especially when things either get a little off the track or get harder. It's hard. It's hard to retain people. It's hard to stay focused. It's hard to stay focused. It's hard to turn things around. So I tend to look at people's track records. And under stress and things like that, guys tend to, you know, bad guys tend to fail.

So I look for guys that have a history of failure. So a great short of mine in Canada was this Concordia. And it was run by a bunch of old BioVale guys and cocksucker Mark Thompson actually sued me because I think I called him a misfit on TV. And it was run by old BioVale guys. Now, I was short BioVale back when. BioVale was a fraud. It was run by this huckster, Eugene Melnick, and I think he's banned from the security business. And Concordia was a leverage more than Valiant,

and everyone at Concordia was former BioVille. And the stock literally went from two to 110 and 110 to now it's 26 cents. I'm still short it. I think you said it was the poor man's Valiant. Exactly. It was the poor man's Valiant. Everyone was focused on Valiant. No one was looking at Concordia. And I said, shit, you know, at least the guys at Valiant had a track record. I mean, Howard Schuller is a Goldman guy. Pearson was educated and went to Duke. And at least he had some form of pedigree.

And they at least had products that worked and they were leveraged. But they weren't leveraged nearly as high as Concordia. And Concordia, being the Canadian hucksters they were, just said, we can do what Valiant does with generic drugs and over-leverage. And the more we buy, the more we raise estimates, the higher the stock goes. The more we buy, the more we raise estimates, the higher the stock goes. And these guys actually believed their own bullshit. And instead of selling stock, kept taking on on debt and when the thing went the other way and they spent the they set the land speed record going from very high to bankrupt and that was a

failure and it's clearly a fraud but who knows if the canadian regulators do something about it or not and was it a fad yeah it was a fad because they also bought drugs shitty drugs and raised you know raised the price five thousand percent so so yeah that that happened to have been a trifecta. But where you ask the question is those guys had a bio-veil pedigree. Gaston at LearnOut had a quarter-deck pedigree, and quarter-deck was a huge failure. So he brought all his homeboys with him to LearnOut. So any, you know, management is very important of where guys were, what they did, how they did it, and how they got there. So management with a history of fraud or failure. What about in terms of the books?

Well, see, depending on the kind of business you're in, numbers should be a certain way. Now, I tend to throw out insurance companies. I mean, the guy who's really good and really good at analyzing insurance companies or complex financial frauds is your guy's very own John Hempton. But there's nothing more fucked up, convoluted than insurance company accounting. And my eyes glaives over, and I just can't take it anymore. I'm just too old. But Hempton's really, first of all, he's really good at this. Second of all, he's very good at complex financial situations.

He's completely forensic. Yes. He helped me and us mightily in a financial insurance fraud called Conseco, which did go to zero. And it was a total fraud. And he had the thing cold. And I gave and give him a lot of credit on that. But that's an example where I could understand the fraud. I could understand the fraud. I could understand the failure. I could understand the shitty business they're in, but insurance accounting. And again, Baldwin United was an insurance counting fraud.

That channel is figured out. See, I'm not as smart as those two. I'm not nearly as smart, but I'm far more savvy. You know, I, I can see things. Those two can't. and I outwork those two laggards.

But they're smart-ass motherfuckers. I mean, that Hampton, he's smart. Yeah, he's sort of off the chain smart. Yeah. Yeah. I mean, he talks way too much, and you can't shut him up, but I adore him. Yeah. And I tell him that to his face, so I don't mind.

And he's great, and he's a dear friend and i've known him forever but he he sees things in financial numbers that others don't see so so finance if i were to find a finance thing i mean i understood the nova star pretty cool and i had that one figured out and i invented that deal so I didn't really need his help there. But finance stuff, if I were to find something, I would sort of defer to him. I also had that home cap thing pretty good, which was sort of the Canadian version of Novastar. But then there's revenue recognition frauds where people stuff channels, where you'll have a receivable issue, you'll have people putting expenses. Instead of running through expenses, they'll put it in inventory so it gets capitalized rather than expenses, expensed. And sort of what that means, ladies and gentlemen, is if you're building a house,

if you're a home builder, you charge Olly Evinrude a million dollars for a house, but you have to buy the lumber, the nails, the concrete, plumbing supplies, the pipe, the appliances, the carpet, the windows, stuff like that. That's your cost of goods. And hopefully when you buy all your cost of goods and it adds up to $600,000, charge a million dollars, you pay your workers a couple hundred grand,

you have a $200,000 profit. That's straight up accounting. Now, imagine if I capitalized lumber or capitalized concrete, meaning I put it on the balance sheet and write it off over 10 years. My profits would be huge. They'd be far better than a 20% margin, $200,000 on a million. My profits would be huge because I wouldn't be expensing them. So I look for businesses that should have margins of a much lower range than they're actually reporting. And if something's at great odds, I'd start kicking the tires there. So that would be a capitalizing cost

rather than expensing them fraud. So it's either on the revenue side or on the cost side. Some cases you would say, yeah, I can understand how this is a $400 million business, but it's not a $4 billion business. What do I mean by that? Well, one of the aspects of this learn-out-and-house-be-fraud, which is where a lot of people know me from,

which is a speech software company based in Belgium. I'm going to ask you about that. They actually told people, and people believed them, that their largest market was South Korea for language. It was actually bigger than the U.S. So one day, after making a bunch of calls over there and getting absolutely nowhere, I bumped into some soft bank guy. And I said, who knew Korea?

And I said, is this shit used in Korea? He goes, yeah, it's used. I said, yeah, it's used. I said, like, how much is it used? He goes, like, what do you mean? I said, like, what would their dollar sales be, you think? He says, well, they could use a little bit in brokerage. I said, okay.

He said they could use a little bit in banks. I said, okay. They could use a little in medical dictation. I said, okay. I said, okay. They could use a little in medical dictation. I said, okay. I said, so shoot me a number. What's the size of that market? He goes, meh. Six to ten million bucks. I said, six to ten million. I said, they're telling people it's a hundred. He said, there's just no fucking way. He says, there's just there's just no fucking way he says there's just

no way and he goes furthermore Korea is one whatever at the time 8th 16th

something besides the US and if the market in the US isn't anywhere near that, so that was like a really, really, really important thread, which led to that thing's unwind.

So another aspect is a number that just makes no sense. Got it. Where you see a number, and you say okay god that seems mighty high to me but i just don't go on hunch right i just don't go on hmm seems kind of high this that and the other then you start making calls and you call people who would know people who compete against them people who are in the space people who lease aircraft people who buy software people who who put bullshit products on people people who prescribe the stuff and then you know you sort of triangulate a fact pattern and you say you know i've made 14 or 15 calls on this fraud my medics and their fake products.

The best I can come up with triangulating everything throughout the high and the low, right? Throughout the person with a crazy low number, crazy high number. Sales are overstated by 70 to 80 percent. You know, best case not at not every you know when you you know when you take a shotgun and you shoot it against the wall there's a bullet pattern and sure there's a couple strays and you wipe them out but by and large you get a real a real uh fact pattern that's yeah that's you know very ugly learn out in house be the short that you just mentioned which was the one that sort of brought you to everyone's attention i mean they'd been between 1998 and june 2000 they'd fabricated about 277 million dollars

worth of sales which is about a third of their total sales yeah which is absolutely absurd but there was something else that was quite instructive about that case which was the way that they originally came across your radar because i think another kind of red flag for you would be a product that's faulty or deficient, that doesn't live up to its promise. Exactly. Can you tell us the story about how you first discovered and learned out in Houseby? Yeah, so about that time frame. So I have a disabled son.

He was born with cerebral palsy. He was born, I think, 10 weeks early. So he doesn't get around well. But, you know, he went to regular school, graduated regular high school, public school, went to college. But when he was a young guy, let's call him, kind of 98 would put him at 11. They had this speech software software this shrink wrap package software out there so i thought that would be a plus for him because he's not very good with his hands on things so i thought if i could get him some speech software that would he could dictate

on a computer or do things to make his life easier, better. So I went all over the place. I mean, I went at the time there were CompUSAs, you know, which were super stores or Best Buys. I went to Vars, value-added resellers, sold the stuff. I said, is this stuff any good? Does this stuff work? And everyone, to a man and woman, said to learn out in the house, this stuff doesn't work. The stuff that works is the dragon product, but that's a little iffy.

I mean, it works if you speak very clearly at a certain cadence into a certain thing. It was about 98%. It was good for medical dictation. Doctors dictating reports. And they'd get two words out of 100 wrong and easy to correct, but for Max it wouldn't work. But to a person, everyone kept saying this learn-out stuff just doesn't work. But to a person, everyone kept saying, this learn-out stuff just doesn't work. So I'm thinking,

hmm, this is interesting. This shit doesn't work. Or so they say it doesn't work. So sure enough, they had a stock and it was based out of Belgium. And I used to call them Crooked Tooth Gaston Bastien's Arch Enemy Number One.

And he used to work at Apple way back when. And he was the head of a failed product called the Newton. Apple doesn't have many failed products, but this guy had one. It was called the Newton. And then from Apple, he went to work at this fraudulent software company called Quarterdeck. That thing failed. And he brought all his homeboys with him

to learn out in Houseby. So it was one bumbling idiot after another and the guys who founded this thing and Microsoft became the biggest holder and when Microsoft, the stock took off. And I'm thinking, this is when I learned about the jaguar and the tree. After it took off, then we got involved. But it about doubled or tripled from there to where it ultimately topped. And then after Microsoft became the largest holder, I can remember my bad days, and I've had many of them.

This was a real fucking bad day. I go home and learn how it comes with news that they sold stock to Intel at a bigger price than Microsoft. So I got Microsoft the number one holder. I got Intel now the number two holder. The stock's now going fucking crazy. We're losing our ass. Investors saying, do you guys know what you're doing? I said, yeah, we know what we're doing, but this is kind of unforeseen. This is not good. This is not kind of in the plan. I say I'm not wrong, but I'm getting killed. So I don't know. We're involved in this stock at 40, 45, some more at 50.

It's now at about 80 or 90. We're just getting pasted. I'm thinking, what the fuck have I gotten myself into? I know these products don't work. I know these guys are bad news. I know they're full of shit. I know the accounting is bad. I got this whole thing wired down. My partner, Monty, and I have this radio show.

Facts from the other side of the tracks. All we're doing is talking about learn out as it goes up and up and up. Sending all my shit into the SEC. I know the SEC is investigating them but they don't put anything out i knew they're investigating just because by the calls and the questions i was getting from those guys right do you also know that they're investigating when they refuse to answer foi no this is this is before there were FOIs. This is like before.

This gets better. Go on. So I figured since you traveled here from 20,000 miles, I figured I'd tell you the whole honor bridge story because I've never really told the whole story before. This is an exclusive? This is an exclusive. So we run this fact from the other side of the tracks program. And stock's about 100 and fucking two or something like that.

And I start to show off and I say, you know what? I said, if anyone listened to us or me on this learn out, I said, I truly apologize. I said, the stock is up my ass, lost our ass. I am still in it. I still believe it. But if you sold the stock on my say so, I apologize. If you shorted the stock on my say so, I apologize. I still think we're going to get them. But I've clearly been nothing but wrong. So I don't know. The show was sort of 2 o'clock Pacific to like 3 o'clock Pacific.

So after the show, I get this call. Because this is, I think, before I have a cell phone. I get this call from a guy and he says, you know what? He says, don't be so hard on yourself. He said, you're dead right on learn out. I said, I am? He goes, yeah.

I said, what makes you say so? He says, because I'm the former head of North American application sales and the numbers are made up. I said, really? He said, yep. He says, you're dead right. I said, good. So now I actually feel a little better. I said, would you be willing to talk to the SEC?

He goes, totally. I said, okay. So I called the SEC guy at home. And I said, there's a guy who just called me. Michael Faraday. I think that's what his name was. And he said, I'm dead right on learn out. He used to work there. He's willing to talk to you. He says, it's completely made up. I said, okay. He says, thank you. I said, that's all you're going to say? He goes, thank you. I said, that's all you're going to say? He goes, thank you. I said, okay.

The next morning, I don't know if it's 11 o'clock or 12 o'clock, it's something like that. Stock's not doing shit. Thank God it's not going up. It's not doing shit. Guy calls me and says, Mark? I said, yeah. He goes, what the hell have you done to me? I said, what do you mean,

what have I done to you? I said, all I did was give your name to the SEC. He said, yeah, but about 20 minutes ago, I got a subpoena from U.S. Marshals on the matter of the government against Learn Out and House B, SEC against Learn Out and House B. I said, really? He goes, yeah. out in house b scc against learn out in house i said really he goes yeah i said that's when i knew the party was fucking over right when when when that guy called and said you know you're right you got him and the scc guy to hit him so fast so hard like that the next day then i knew there was a censure and the thing never saw the light of day since But the SEC guy, they hit them so fast, so hard like that the next day. Then I knew there was a censure. And the thing never saw the light of day since.

Never saw the light of day ever since. And it went to zero. Didn't go to a half. It went to zero. But that took so much out of me. And I learned so much from it and getting killed, you know, we had to cover on the way up and we did some on the way down.

I think we ended up suing the auditors, got money, we ended up suing Cowan, we got money. I mean, we ended up making on it. We ended up making fine on it, plenty. But if I had to do it again and I learned so much from that experience, I'd never, ever, ever, ever want to do something like that again.

And that's how I learned the jaguar out of the tree routine. That's what taught me the jaguar out of the routine. So you wrestled that jaguar all the way down? I fucking wrestled the jaguar all the way down. I killed the fucking thing. I filleted him. I have his pelt on the wall. Yeah. the way down i killed the fucking thing i filleted him i have his pelt on the wall yeah but i lost

five teeth broken jaw lacerated kidney ruptured spleen amputated my right arm uh walking around with three toes i have no hair and i have a glass eye because i learned out so so i don't get carved up again, right? I'll let the young whippersnappers wrestle whoever the fuck they want out of the tree. And when the fucking thing falls to the ground and is writhing in pain and is almost finished, that's when I'll go after them. Because I was up in the tree and it was either the Jaguar or me.

And thank God it wasn't me. I thought it was going to be me. But thank God we got the Jaguar. But, man, I don't need one of those anymore. Yeah. So I wait and wait and wait and wait. And then when something happens, I get them. But that's where the Jaguar out of the tree escapade

began with the learn-how in Houseby. Got it. How's that? That you have an exclusive there. That was incredible. Thank you. And ironically, it wasn't your last sort of Pyrrhic victory, so to speak. I'm going to ask you about Novastar soon,

but I feel like you also kind of went after that Jaguar as well, and it was a bit stubborn. Yeah, well, sometimes I'm a little slow to learn. If the learn-out house was late 90s, early 2000, the Novastar was kind of the early, mid. 2003 to 2007. Yeah, exactly. Yeah, but we'll get to that but anyway so you know we're kind of wrapping up this this i guess in principle discussion about your

style of short selling marketing it's been you know absolutely fascinating we have a lot of people interested in investing who listen to the podcast including a few friends who uh you know big followers of yours on twitter. So hopefully, we're helping out the younger generation. But I'm curious, what does your average day look like? Because I was catching up with our mutual acquaintance or friend the other night, Gabe, and he said when he was over here the other day, you were sort of on the phone all day, chasing down leads, talking to people. Like, what does the actual work look like at a granular level?

What's the balance between, you know, you on the phone and you at your computer looking through spreadsheets? Well, I'm restless. So we have, let's see, we've got one, two, we've got four dogs that sleep in our bed. One's a little puppy that I named Aurelius after the great Aurelius Value. Can't stand my medic, so I named him Aurelius. We live in a rural setting, so there's coyotes. The first dog probably wakes up around 3, and depending what's going on i can't fall back asleep so i walk about 200 yards to where we're currently sitting and i start to work where i do reading catch up on emails read documents read letters that come in to me

read this assorted crap pile here of lawsuits, cases, things like that against my medics. So right now, my day from... I got to be careful what I say. My day... Can this be rated X? Yeah, yeah, absolutely. Right now, back in the day in the hedge fund, in the learn-out-and-house-be-Novastar days.

Yeah, back at Rocket Partners. Yeah, and I don't want this to be a threat to anyone. So I'm just saying that right now. That right now, the mode I'm in is something we used to call eat fuck kill okay you're on the wolf off we used to call it efk and every now and then right rarely i get an efk and right now i'm in efk i eat i fuck and I'm going to kill these mimetics guys. I'm not going to kill anyone personally, right? That shouldn't be a threat to anybody. But this company deserves to be exposed, carved up.

Perpetrators need to be brought to justice. And their crimes, and they are crimes, and they're significant crimes, need to be exposed, and they need to pay the price for them. So it is literally from sunup to sundown and then a whole lot in between. It is 100% mimetics. I mean, I sprinkle in some Badger Daylight, and I sprinkle in some Home Cap. Those are easy because they're just run by bumblers, criminals, and clowns. No, they're not run by criminals. I take that back or you can edit that out because I don't need an

Australian kind of lawsuit. But those are just run by chuckleheads and their businesses will be exposed. These mimetics guys are a special breed and prison will be too good a place for Parker Petit and his buddies but it is literally tracking down leads talking to formers

I think there's I must have 45 different sources on this thing from hospitals to competitors to formers to channel guys to former. Just the whole tree. Yeah. Don't give too much away yet.

We'll come back to that. But literally, my day right now is you caught me in the EFK mode. I'm not working on new names. I'm not interested per se in new names. I mean, I got some stuff I'm kicking around and thinking about, but it is a 100% mimetics-driven ballgame. And if it's reading through stuff or thinking through stuff or writing letters or writing letters with my attorney or tracking down stuff, you never know when you'll find something.

But I found something today that was really good. And it's just a matter of processing it through. And they're under investigation by the SEC, the DOJ, the FDA, and the VA. So it could be anywhere at all and anytime at all on this thing. So that's really where I'm spending the bulk of my time. EFK. EFK. We're in the EFK mode. We're in the efk we're in the efk mode right here right now so so and then gabe

and then gabe showed up and i said you want to do a periscope with me on this and he said sure and we had some fun and he's a talented guy and i think the i medics guys for criticizing him that he's only 24 is foolish because he's smarter than shit. And I wish I was smarter than him when I was 24. So my son and I were pals with the lead singer of Collective Soul, Ed Roland. He's a dear friend. So he was just playing in Reno this past weekend. So Max and I drove up to see him on Friday.

My wife calls me Friday afternoon. She says there's some process servers here to serve Gabe and Aiden, the Viceroy guys. So the mimetics guys are so fucking stupid and they're such lowlifes. They like watch the periscope. And since they're trying to sue those guys, they come to the farm

because they saw the periscope that they were here. But they had left by then. They'd left by then. And to try to serve them in that Viceroy lawsuit since they're in the U.S. Well, I was coming up to the gate. Whoever answered the intercom said, you know, wanted to know exactly who I was and what I was doing there. Exactly. We used to have the open gate before the FBI showed up trying to shake me down and threaten me with the mimetic stuff. And so now we have a gate code on. But what some of these, I mean, this is not the response of innocent people.

Exactly. Right? This tells you how screwed up they really are. For them to resort to this kind of stuff, threaten people and do the whole thing. When two 24-year-old Australians come to the U.S. to try to serve guys at another person's residence because they saw them on a periscope, how messed up must you be? Yeah. Well, it reminds me of a couple of old adages. One is that an honest man has nothing to fear, and another one is you scratch a coward, you get a tyrant. And it's a signal.

It's a signal. Well, again, it's a sign, and it's a real-time deal, and it'll be fascinating to play this podcast back a year from now where everything is and this, that, and the other and exactly how this thing shakes out. But, man, it's something. So I don't want to to go on a bender. And I don't think anyone's going to hear from me for a while. And I told the Australians, I said, I think I'm going to get the biggest RV I can find on the market, pile everyone in, and we're going to go to everyone's trial from west coast to east coast and everyone in between we'll just put as many people we can in the rv and we'll drive from west to east to every one of my medics's trial

and i do plan on seeing pete i'll be visiting him in prison and i'm gonna make him a lemon cake that's what i used to say when learn out was a hundred i used to joke. I said, when the learn-out guys go to prison, and granted, it's a long way from here because the stock's 100, and it's only a $10 billion cap. Back in 98, $10 billion was a real number back then. It was the biggest fraud in the history of Europe back then. I said, I'm going to bring the guy a lemon cake in jail. I never did, but he spent a couple nights there.

But I will, if I do. You'll be baking that cake? I'll be baking the cake for Parker, but I will not be putting a file in it. So it's a long way around my typical day. I mean, my typical day is a lot more calm than that. Yeah. But it usually starts about somewhere between 3 and 3.30 a.m. And we're right now pushing 5 p.m. and we're still going strong.

Credit to you. No, there's not a lot of country club or don't have a plane or a club. And I don't wear fancy clothes. But I kind of enjoy this and I'm sort of driven. So I've got to finish what I started. It was funny. I was reading some commentary by my medics on the short sellers and they were criticizing your dress wear in one of their posts on their website. It was pretty pathetic. They said it was something like Mark Gahotis clad in shorts and Crocs.

Yeah, well, I have shorts and flip flflops and the pink shirt on right now. I think you look fine. But then the next time I put on my pink sport coat and a dress-up shirt and whatever, but I'm not. I mean, if that's how they want to judge my whateverity, veracity, I think that's a mistake. That's a mistake. That's pretty desperate. Yes. Before we wrap up this section,

you said you weren't someone who did particularly well at school or maybe you were a bit of a misfit, but were there any books that were particularly influential for teaching you these dark arts? No. I'm thinking like the Corporate Fraud Handbook or anything like that. No, there's nothing like that. No. Because frankly, if anyone would ever write a book like that, they'd probably sell about five copies.

Yeah. One to the guy's wife and probably four to his family members there'd be no there's no market for books like this yeah i mean i spoke at at harvard a month ago and people seem to enjoy and i'll be speaking at stanford in a couple weeks i think people will enjoy that too but this this i always say this isn't something people should try at home what i what i do think that's as important as anything is if you're a if you're good at psychology if you're either a psychology major or you're trained in psych or you're trained in detecting liars or bad twitchy behavior or there are people, and I wish I would have done this when I was younger,

who can tell by how people blink or how they are with their body or how they answer certain questions are tells. If you have a good handle on stuff like that, I think that would be sort of a huge help. Okay. And I think in any walk of life, you need to look for things that just don't make any sense, right? Where it doesn't compute.

I mean, yeah, Australia has a housing bubble bubble but that can go on for a very long time a very very long time in it would be once the bubble bursts and people will know when it bursts the question is how bad can it it be it's not hard or doesn't take rocket science to know that Australia has a housing bubble. Yeah, well, it's whether it's a correction or a crash. And I know, for example, I mean, I saw Steve Eisman predicting that, you know, obviously Canada's pretty fucked when it comes to housing,

but, you know, he's only predicting a 15% to 20% correction, so nothing to the scale of what happened in the U.S. Well, depending on when you check in, they've already had 30 at certain parts of Toronto. I mean, I think he's being kind, thinking it's 15. Yeah. I mean, but it's heterogeneous. Well, yeah. Some parts are worse than others.

Toronto's really bad. Vancouver's bad. I mean, Alberta, for example, the housing market in the past 10 years is flatter than a pancake. Right. Never went up. Never went. It's just nowhere. Right.

The Chinese weren't buying property that way? No. It's too cold for them there. And then the wild thing with Toronto that I think no one's talking about is the leverage that's not on anyone's books, whether it's the home equity lines of credit or their so-called private mortgages, which is sort of leverage on top of leverage on top of leverage. And no one seems to want to factor in or buy in on that. And until people get their heads in or hands around that, it's kind of all bets are off. And I think Australia is far... The prices may be higher, but the system is far more tame and balanced and run by adults than Canada. Still have a lot of fraud. UBS put out a report in September last year saying that

it estimated there are about $500 billion worth of residential mortgages issued on the basis of some form of deception or misleading, which amounts to about a third of the mortgage market. I mean, it's all stuff that bears watching, but, you know, Hampton hasn't told me what to short yet in Australia, and I'm not interested in being short one of the four banks. Westpac is the worst. Yeah. They're the most over-leveraged. Then CBA, the Commonwealth Bank, my bank.

But yeah, it's a tricky one in Australia. But the Westpac stock never moves, right? I mean, it doesn't have a tight range and pays a big dividend. Yeah, I used to actually own it. It's always sort of in the $30, $ range right but i mean it's it never no no they're getting hammered at the moment in the royal commission right canada should have one of those but but where is westpac right now stock oh it might be you know 28 29 okay and it's been as low as what? Is it as low now? Yeah. Okay. Locally, it's at its lowest.

Okay. Yeah. Well, it's been good. Yeah. I'm going to take a quick bathroom break. Okay. While I take a bathroom break, we are going to take a quick ad break and talk about our sponsor, Glowbite. Glowbite has been helping out travelers since 1911. And if you jump on their website, www.glowbite.com.au, you can enter the discount code SWAGMEN, S-W-A-G-M-E-N, and get 15% off any of their products. So whether that's travel bags, travel adapters, neck pillows,

whatever you need to get ready and comfy for your next trip. Just head to their website and use our discount code. How are you guys enjoying the show? Pretty incredible, isn't it? Mark Cohodes, ladies and gentlemen. We are about to get back in there, in that room. And before we do, take a deep breath with me. Let's do some meditation. Inhale. One, two, three, four. Hold. One, two, three, four. Exhale.

Two, three, four. I'm feeling good. You feeling good? All right. Don't forget glow bite and now please enjoy the rest of the conversation with the great mark cohotis i want to touch on a few war stories with you now mark before we kind of bring it to a close one is nova star financial which we've mentioned. And this was an interesting one for you because the conclusion is very interesting because it sort of became a bit of a Pyrrhic victory. But the story is incredible the way it held on for four years, almost from 2003 to 2007.

So to give people a bit of context, Novastar Financial was a real estate investment trust, which is a special structure in the States. It means 75% of their assets have to be real estate and 75% of their revenue has to come from real estate. But how did it first come across your desk? Where did you discover them? And you've done a lot of work the one the one thing is it's a trust but their spin on it was yeah it was a dividend income trust so they got in this wrinkle where they had to pay out 75% of their income in dividends, which is like steroids on top of heroin, on top of acid with a fentanyl chaser as you're drinking rum punch,

smoking marijuana. So if it was a reed, it would have been simple. But what these guys did was they produced fake non-cash earnings and had to pay out cash for a dividend. So what they ended up doing doing which I never saw coming I never saw anything like this before was they would book fake earnings on gain on sale assumptions

selling these shitty mortgages to people and basically assuming no loss because housing was going straight up so the dollar in earnings And basically assuming no loss. Because housing was going straight up. So the dollar in earnings. That they were reporting when things were a steady state. They were paying out 75 cents. Turned into $9 of earnings.

Which were completely an account in creation. And they were paying out six, seven bucks in a dividend. So not only was the stock going up, we were having to cover a dividend, stock loan fee, off completely fake numbers. And they thought they were so fucking smart that they'd come up with this fake number because they were originating shittier and shittier loans,

selling them into these pools, assuming there'd never be a loss. So it was non-cash earnings having to pay out cash. So as the stock went up, they kept ponziing this thing, issuing shares to get the money to pay the dividend that they weren't earning. I mean, a true scheme. And I guess to add insult to injury, management started claiming dividends without actually converting the options. Exactly. So it was a drunk love,

drug-induced orgy of epic proportions. And we're sitting there again. I thought I learned the Jaguar out of the tree reference. Pretty good with the learn-out. You had one lost jaguar to wrestle. Well, the wrinkle here was I was tight with Nova Star's insurer. The guys who insured their mortgages.

And he knew me. And I knew him. And we were talking Nova Star. I said how's business with Novastar he said we dropped them I said what do you mean you dropped them I said you're their largest insurer he goes not anymore he goes they failed three audits you know we did three spot audits and they failed each one and i knew these loans were no good because i used to scout their branches and some of the branches they claimed they were originating loans no shit we're actually in a massage parlor yeah so vegas so one of the one of the supposedly most high-growth areas was Nevada,

and you actually decided that you'd go and check out on the ground. We knocked on every fucking door in Las Vegas. And these were so-called branches. So-called branches, and they were best case was a ma and pa at a condo in the shitty part of vegas that was the best case i mean we we knocked on doors at whore houses massage parlors fake address the whole thing we had such anecdotal information of what a fake this thing was. It was scary. We had stuff from formers who would check on credit out of Irvine, California.

One story, she'd call a number to verify employment. And it would ring, but it wouldn't answer. And then she'd call another one, it would ring, and it wouldn't answer. She'd call another one, it would ring, and it wouldn't answer. After the fourth one, no shit. Something went on in her head. And said, fuck. When I'm dialing the phone

and I hear the ringtone, it corresponds with a phone ringing in the office. Got it, yeah. So it turns out an origination guy in Irvine was setting up fake numbers to circle back to his desk on any verification. So when you'd call Arkadelphia, Arkansas or Philadelphia, Pennsylvania or

something like that, it would be rerouted back to his office where he'd pick up the phone or get a voicemail. If it was a lady, he'd have a lady call back. If it was a guy, he'd call back. So I think literally at some point they were doing business with people. I mean, it was like 100% fake. I mean, 100%. So we had that part pretty proven.

And we had the insurance guy walking on failed audits. We had a lot of stuff proven. And yet they were a darling of Wall Street for a long time. They were a darling of Wall Street. I mean, I think when you started shorting them, they're around $40, $45. And then you watched it cross $100, $200, $250. No, no, no. It didn't get...

No, no, no, no. See, the chart that you would look at, this thing at the last days of Pompeii did a reverse like six to one split. So it looks... The stuff that was written about it didn't adjust for splits. I think our official cost on this thing, all in, was probably on average $60.

And I think they took this thing on an apples-to-apples basis to about $130. So at one point we were so far in the hole it wasn't funny. But then at the end they did a reverse split on this thing which made some of those numbers look funky. But the sad story there was we had a really big investor and I'll never forget this one. The guy comes in and he says, when are you going to give up on Nova star? I think the thing is a hundred on its way to 120. We're already getting killed.

And I said, we're not. He goes, well, don't you have any loss tolerances? I said, we do on certain things. But on this, we're just going to fight it out and see what comes next. Because I think we're really close. Here's what we got. And we think the government's on them too, which they were. And he goes, well well these losses are unacceptable i said of course they're unacceptable i said it's part of the gig you know i said no one feels worse about it than me i got my own money in the gig

but it hasn't played out hasn't played out i said here's our research i said but you know you never judge a man by the price of the stock and i said things can change and change rapidly he says this isn't good i said i know it's not good he goes well we're going to take out our money i said fine take your money out so they took out like a hundred million dollars which is a lot and everyone was pissed at me too. People weren't happy. And then they said, I'm belligerent and I'm not open-minded and I have to admit I made a mistake.

I said, well, clearly I timed the thing wrong. There's, you know, clearly I timed it wrong. But we're right on this thing and we're going to get paid. And we were right and we did get paid. And they wrote a book about it, and they wrote a Harvard Business School case about it. But again, it's nothing I really ever want to go through again. It just reinforces the jaguar out of the tree thing. But I didn't see the scope and size of the U.S. housing bubble and how crazy it was going to get.

I mean, I thought we were sort of at the tail end of that thing. I mean, the crazy deal is we had that big short trade. I mean, I knew that big short trade. We went to a ballgame with all these guys who did that, and we went to a ballgame with the brokers who did that trade. And I said, walk me through it. And they said, really, in order to get paid, basically the world would have to come to an end

given how these things were collateralized and this that and the other and i said so let me get this right so in order to get paid and you're going to have financial catastrophe the world's going to have to come to an end and i have to make sure i have no counterparty risk. Because even if the world comes to an end, it doesn't mean I'm going to get paid. Because if I have counterparty risk, the counterparty is tapioca. And that's the one pisser about that trade, that those big short guys got very, very, very, very, very lucky that Goldman was counterparty to some of these guys.

Because if the brokers weren't counterparty to these guys, the CDS guys who were along would never have gotten paid. They just would have just said, fine, you own paper, force majeure, and we can't pay you. Stand in line with the creditors. So that was the weird thing about that. It was because that the system needed to get bailed out, the CDS guys had to pay.

Yeah. Sort of an irony, set a list. Yeah, it's just kind of like if Goldman and the other broker guys weren't on the hook, and I think it came across a little bit in that big short when those guys were panicked to take this because Morgan Stanley could go under or these guys could go under. I mean, what the government should have done in retrospect to say, you know what, you guys are all tapioca. We don't really need or not going to pay the CDS guys. We'll make the depositors whole.

And anyone who has securities are whole and the rest of you guys can go fish and the rest of you guys are fired. But because they were worried that the system was going to collapse, part of saving the system was to pay the CDS guys, which, I don't know, God bless them.

I mean, they made out and it's well and to the victors go the spoils, but I didn't see the system doing what it was going to do. Yeah. So just to kind of bring the Novistar financial story to a close, I think you were right, but you fought so hard and long in that one that I think you said you might have been left with a Butterfinger, a hamburger, and a $50 note.

Yeah, Butterfinger, a hamburger, a warm Coke, 50 bucks. We did. Again, these things are so labor, time, mentally, life exhausting. They tend to be very, very, very non-profitable at the end of the day because it's just such a squeamish-ass fight. I mean, ask those. I mean, I learned from it a lot, and I did really well in the Valiant. But ask those early-on guys in Valiant. I mean, Hampton and Chanos and those guys,

those guys got destroyed early on in that thing i mean they just got absolutely obliterated because that stock went i know when people were short that thing that thing went from i mean everyone was short the thing at 20 it went to every bit of 240 right so so people got absolutely wiped out before it hit and with the jaguar in the tree scenario i got in this thing after it broke at 150 60 something in there and the thing went to eight so that's that's where i learned but man learning that lesson cost me years of my life and sense and the whole thing which is again which is why i say don't try this at home which is circles it back to sort of that tesla here and now i mean until someone sees that guy on the ground shot out of the tree

i mean he's leaning out of the tree but he hasn't exactly i don't know if he's fallen i don't know what it is but there's there's definitely something up there yeah so this sort of segues fairly neatly into 2008 firstly just tell us what copper river was well david rocker left the business 2006 ish left rocket partners yeah so then we named it copper river named it copper river and so you're managing over $2 billion. And you're a mostly short fund, and it's 2008. So you guys are killing it. We're killing it when the market's going up.

Yeah. Where we're actually, I mean, the market at the time is up handsomely, and we're, I don't know, we're up 35%, 36%. Yeah, so that's August 2008. You're up about 35% that month. Exactly. That's where we were. We were just killing it. We were making it in the names.

We were right for the right reason. Doing swell. You're working down in Wall Street? No, I'm out here in Larkspur. Okay. I'm in Marin County with Monty and Russell, Sauer, Naveed. I had the whole crew. So we had an office in Larkspur, and we had an office in New Jersey.

Right. So August, you're up. And tell us what happens next no i'm sailing along and the market's uneven and they're worried about finance stocks so i don't know i'm at the ball game i'm at the ballgame with the Safeway management. Actually, I owned some Safeway at the time. And I get a text or an email or whatever

that the government put on an emergency can't short financials decree, can't short financials tax. So just for the non-finance people, why did they do that? Or what does that mean? They did that because obviously the government, they put a short sale ban, I think, on 512 names because people, the government was worried that shorts were knocking down these financial companies. And they foolishly actually believed on this short sale ban that shorts could drive these companies into oblivion, which is a complete misnomer and falsehood because shorts can't drive anything into oblivion.

The companies can only drive themselves into oblivion. The companies can only drive themselves into oblivion. Shorts can expose it. So the government subsequently admitted what a huge mistake it was. So they put this short sale ban on these finance stocks and the next

day, and we're short some of them, not short a lot of them, we're short some of them. So the next day these financial stocks go crazy. They go like way the fuck up. I mean, they must have gone up 20 or 30%, maybe 40% that day. So I don't know. We had a bad day. We had an awful day. I don't know. We lost 8% that day. 7, 8%, something like that. And no problem. Awful to lose.

Sure awful to lose that much. Especially when you're just riding on a high. Yeah. So now we're up 27, 28, something in there. So I don't know if it was the next day or the day after because the market was going up. The government then goes

and puts a ban on all reg SHO names, which are names that are hard to borrow. Well, if the finance names weren't bad enough after that thing, then you get a short squeeze going, which we discussed earlier in some of these gadgety names. And we have plenty of exposure in the gadgety names.

So that was a miserable day. That day, we probably lost about another 8%, 9%, 10%, because a lot of these names were up 20% or so. It was crazy. Crazy. So now we're up, I don't know, 20. crazy. So now we're up, I don't know, 20 high teens. So I get a call from Goldman the next day. And they say...

Is it from a guy you know? No. Some other guy, know? No. Some other guy. Some margin guy. And they basically said, given the volatility that you've had, we're taking your margin requirements from like 30 to 70. 30 to 60.

And mind you, we don't have a margin call or anything like that we don't have a Fed margin call but by doing that we have a house call. And I said, okay. He said, well, by going from 30 to 60, you now have a house call of $600 million. I said, what? $600 million. I said, what? $600 million? And they walked me through the numbers. But by screwing with the numbers versus how we did in the past two days, they came up with $600 or $500 or $400, something like that.

And we didn't have it. And we had like $ 200 million. So they basically made us cover into a decline, pushing up our names, losing in the longs. So we take a bunch of stuff off, but we lose money because our shorts are going up and someone's clearly running in front of us our lungs are going down and as much as we're covering they call back the next day and say well we got bad news we're going because of the volatility we're now going from 60 to 70 or

60 to 80 in margin and you know they just kept perpetuating a call on us till basically we had nothing Nothing meanin we're down at the time We go from up 30 or up 20 when the charade begins To I think we're now down 25 down 25 It's a disaster. But now we're essentially in not many positions at all. So I go to Goldman, I said,

are you guys done, right? I mean, we got plenty of cash now, we have no margin call. I mean, you've made us cover everything. You've sort of destroyed me. You're gonna destroy our business. I mean, I'm going to be on it. No one will keep money with us after this. They said, yeah, you're free.

You're fine. You're good. So the market's falling apart. But we're making now on what we still have left. So we have a good day. So we get it to about down 15. I'm thinking, fuck, let's roll. So I call up Goldman.

I said, well, can I put positions on? They said, no, we're really wrong. We want you guys to just go to cash. We're going to close it down. Or something to that effect. And it was kind of like, you have got to be kidding me. And I said,

when does this have to happen by? And they said, you know, kind of now. So, by the time we were done, and the smoke cleared, I think we were down 50 or 51.

Because they wanted us to liquidate our longs, and we blew out our longs. I mean, like, ridiculously so. And they made us cover all our shorts. And again, I'm 100% convinced they were running in front of these names. And because when we were done, something like ACAS was at 32. And a week later, it was three or something like that. And it was an absolute nightmare. And that was that.

So then at the end of the day, we just said we're closing and and sent money back but it was just an absolute disaster absolute disaster so i thought it was going to be our greatest time and something i'd sort of you know played you know was just waiting and waiting and waiting for for years and years and years actually happened and and sort of got hit right before it happened which is quite unfortunate and i'm not a conspiracy theorist but i have enough information now for what went on back then was beyond untoward and wrong and crooked in the whole thing but so that i talked to you essentially big time i mean it's just beyond awful and you know the calculus about suing them and this that and the other it was you know it's discussed in the whole thing a whole thing a whole thing but

you know i figured it was about 10 years ago, so I'm 58 now, I was 48 then. Figured I don't want to spend the next 10 years of my life stealing Goldman Sachs. You know, end up half dead or this, that, or the other. And those rat bastards are just beyond awful. Yeah. So. Live in a black squid. Yeah, I just took a bunch of time off and, you know,

just kind of did whatever and said i'll never ever ever ever ever ever ever have a fund again that's for sure does it still hurt are you sort of fuck it still hurts it'll always hurt i mean it's just it's awful i mean you can talk about it you can talk about it like you can talk about your family being blown up in the world trade center but it's that kind of hurt it's that kind of thing where it's just disgusting embarrassing humbling awful unfair wrong i mean it's never on i was never on margin and it should never have ever ever ever have happened but i mean those goldman guys are just absolute you knowbed-up motherfuckers, and they're just bad news. And I think it was because they didn't have those Reg SHO stocks borrowed, and I think they were charging us huge amounts of lending fees.

And when the government changed the rules, it was either Goldman was going to go down or they were going to take us down, so it was much easier to take us down than them to admit that they never had the stocks borrowed, the shares borrowed. That's what I think truly happened. But I know that happened because there's been some emails that have been sent my way, shows that that was the case but you know i'm trying to be constructive in my life and positive and there's nothing positive or constructive about that so i can't stand them i mean there's a lot of people at that firm if i ever saw in the crosswalk i would run over but you know it's not the final journey i'd planned but i do have a chip on my shoulder and i am feisty and i'll never forget that and just uh that's why i say it's a dangerous ass business and yeah you shouldn't live and die by the sword yeah live and die by

the sword but you know what i've uh the average person that would have killed 50 times over, but I'm a little tougher than that. And I've done fine for myself since then. And I'm just trying to make a difference. Well, exactly. Well, very fortunately, you have kept shorting companies since then. But, you know, although you've been working only for yourself now. And we've mentioned some of the shorts that you've put on in those years since, Concordia.

There's also Home Capital Group, which I probably don't have time to go into in any depth, but the one that you're AFK on at the moment is my medics oh yeah um so let's just talk about that now so my medics just to give everyone a bit of context my medics is a biopharmaceuticals company that essentially has a patented they call it purion technology which takes amniotic tissue which is i guess placenta fluid to put it bluntly and uh kind of cleanses it dry freezes it and uses it for allografts which are like you know like grafts for people who don't share identical genes. So it's used kind of in wound healing. And the current chair and CEO of MyMedics is a guy called Parker H,

quote-unquote, Pete Petit, who has sort of, I guess, been described as the Donald Trump of Georgia. And he's been in charge since 2009. And he's an interesting guy. he's in his late 70s he he used to you know he had a background in aeronautical engineering and then founded his first company called uh you know then called health dine um back in the in the 70s and i think they did well, but only after maybe 30 or so acquisitions. And then he's now found himself at MyMedix. So that's sort of the background.

Yeah, that's pretty good. I mean, I would argue that people who know him from his health time and matriarch years and all those other things know him as a serial fraudster who was on the wrong side of the law then. But he's about five foot tall. So I have a problem with short guys. I believe you said you'd bury him in a shoebox. Something like that. But I mean, that's figuratively.

Of course. Of course. That's not a... We should stress that. i mean that's figure figuratively of course of course that's not we should stress yeah i don't want to i don't need another fbi visit here but this guy is old school southern yeah he's had guys over the years fix his uh scams and frauds he has a senator who he's very tight with, Senator Johnny Isakson, who's about his age. I think the guy has Parkinson's. Due to various FOIA requests and things like that, and the other, Isakson looks like his fixer.

Along with former HHS Secretary Tom Price, he looks like he was another fixer. Anyone who crosses Pete's path, he sues. Including bloggers and researchers? Bloggers, researchers, formers, anyone who complains. Customers. He has this thing that if you work there and you don't like something, he wants to fix it, so write him a Dear Pete letter.

People I know who used to be there, write him a Dear Pete letter. They're fired between six hours and six days. In all my years, which are way too many, I've never come across someone who's as hated as him, just completely hated uh and now people are just coming from all walks of life with information over the side of the boat uh looking to do him in and one piece of information is more damning than the other i think their sales are completely made up yeah i think it's a massive fraud i think the numbers can't be relied upon. Well, let's start with the product firstly. So, you know, I just described essentially what their business is, but they claim a 90% efficacy in terms of the healing potential.

All their claims are complete bullshit because it's a complex story. And I suggest people who are interested go to the website PetiteParkerTheBarker.com. It's a website all about the misdeeds at my medics. That's an easy way to explain it. And then I think once you hit that website i think a lot of questions to be answered but basically they take donated placental tissue they run it through the so-called purion process which is to me they spray windex on it or essentially something like that they They have issues with the FDA that are significant that they don't disclose. They essentially freeze-dry it or grind it up, freeze-dry it, and it's essentially a wound covering,

a.k.a. sort of a Band-Aid. They have 90% gross margins, which means if something costs them $100 to make, they sell it for $1,000. But the fraud here is in the SG&A. It runs deep. The SG&A runs 70%. So usually, to explain simple business

and why this is a total fraud, if you have 90% gross margins, to explain simple business and why this is a total fraud. If you have 90% gross margins, it means you don't have a lot of competition or your product's in such great demand that you can charge whatever you want for it. If your product wasn't in demand and there's a lot of competition, your margins are lower.

It makes sense right if your product has no demand and you have a lot of competition you may have no gross margins gross margins at supermarkets because you can buy a six pack of coke just about anywhere right supermarket gross margins run 10 maybe right maybe 20 but just depends the model so he runs 90 percent gross margins which is sort of higher than google and apple right but his SG&A is 70%, which is unheard of. Because he doesn't spend a lot of money on R&D.

So he pays people an enormous amount of commission to sell the product, which makes no sense if it's in such high demand. But what they do is they don't net out sales. I think they run, I think, I think when the fraud is, the government or the auditors or the new auditors or the forensics come out with it, they're going to find out that they've been reporting a gross sales number, that the actual sales number is significantly less than they report.

So you should be running a net sales number that the actual sales number is significantly less than they report so you should be running a net sales number but these guys are taking returns rebates kickbacks everything and putting it in sgna so they're grossing up a sales number and because the company really doesn't generate much cash at all, if any. And that's the channel stuff. They have revenue recognition issues. Yeah. So let me interrupt you there. So they've specifically been accused of channel stuffing, particularly around a company called Avcare. Channel stuffing is a pretty classic technique that a short seller would look for to sniff out fraud. Can you just explain what channel stuffing is and then how it applies to this example of mimetics?

Well, channel stuffing tends to really go around booking revenue that probably shouldn't be booked as revenue in its entirety. You tend to do it at the end of a quarter. You tend to do it to make a quarter. You tend to do it to cut someone a deal or product shows up or you get anecdotal stories one anecdotal story I have and I have the documentation behind it his product without a purchase order was shipped to Vegas at the end of a quarter, was intercepted by the mimetics rep, signed for by the mimetics rep using the doctor's name,

and mimetics, of course, booked it as revenue. The doctor never paid for it, bitched about it. The authorities were contacted about it, things like that. One example is a former admits to getting directions from the C-suite crowd to stuff as much product as you can. And if you can't find places to stuff it in the VA through AvCare. The VA? The Veterans Administration Hospitals, the VA hospitals in the U.S. One former mimetics sales person, head of sales, admits to having over $40 million of product in his basement. That was booked as revenue. I have a transcript that the government now has and the forensic guys now have

where he admits that he currently has $40 million of product in this basement. Now, at 90% gross margin, that's an awful lot of stuff. I didn't ascertain if it's cost of goods or actual dollar value product. Because if it costs, that's more than a year's worth of their sales. So that box over there is $1,000 worth worth of mimetics printing that documents everything so I think this is a go to jail round the clock

12 hour fraud threaten the skeptics lie take on the shorts fire people sue people under investigation every which way you can find. And it still trades at a $900 million market cap. Which I told one guy today.

Every night my feet leave the ground and I go to bed. I think it's my medic's last day. Every morning I wake up and my feet hit the ground and I don't read that my medic's was raided or Pete arrested. I wake up in a bad mood and figure I got to work hard today to bring that day one day closer. I mean, you were saying the same things to yourself

during the Novistar period. Without a doubt. How long do you give this? I've said it to myself at Novistar. I've said it to myself on LearnOut. I've said it to myself in AAI Pharma. I said it to myself in Educational Alternatives. I said it to myself in MediaVision.

I said it to myself in California Micro Devices. I said it to myself in MediaVision. I said it to myself in California MicroDevices. I said it to myself in Boston Chicken. I said it to myself all the time on some of these deals where we were once short this educational alternatives fraud, which

was this Baltimore Charter School thing run out of Minneapolis. It was a complete scam. The stock did go to zero. Run by this guy, John Goley, in Minneapolis. I remember I was fucking pissed off at the Baltimore school district that they actually didn't work during Christmas vacation.

I had this thing all dialed in, and I called the Baltimore school board December 20th and they were closed for the holidays. And I was like thinking you fucking laggards. Why aren't you working? I'm working. You should be working. And then someone said, it's Christmas.

They're all off. I said, well, this is the problem with this thing. And they got, then they got back to work and they eventually closed the thing down. I mean, all I can do is the best I can do.

And the only one I really count on is me. And, you know, hopefully people do their jobs. And hopefully people investigate these things thoroughly. And hopefully law enforcement does what they should do. But it doesn't always happen that way. But the best I can do is to keep furnishing the powers that be with more and more and more information until this guy gets arrested and I do think Parker's going to go to prison.

So it's become quite personal between you and Parker. I mean, you... It tends to become personal when someone uses his influence and gins up the FBI to come by to visit you and tell you not to tweet. Yeah, so December last year, the FBI paid you a visit.

Yeah, they paid me a visit, all right. How was that connected to my medics? Well, I mean, these two guys show up, and I took pictures of them. They show up. I'm over at my son's house with him and a buddy of mine who has his terminal cancer my wife walks in or knocks on the door and says there's two guys from the FBI here to see you. I said, no way. She says, yeah, way. She says, it's about my medics.

So I kind of gleefully go out the door thinking it's the feds wanting to talk to me about my medics, the FBI. And they said, they show me this badge without their ID. And they said, is there a place we can go and talk about my medics? I said, sure, come to the house. So we go inside. And they said, we're here to talk about my medics and threatening tweets you've made to Parker Petit.

And I said, am I the subject of an investigation? They said, no. I said, do you have a warrant? They said, no. This is a courtesy visit. I said, okay. I said, do I need to call my lawyer? They said, no. Okay. I said, can you please get the fuck out of my house? And they said, no, not until we talk to you. So my wife's name, Aurora, I said, Aurora, can you call the sheriff?

Because we're in rural here. I said, can you call the sheriff and tell him I got two unwanted guests who claim to be with the FBI, but I don't know if they are? And then I just keep trying to call my lawyer, and these two guys won't leave and they keep asking me about these tweets. I'm like thinking they're innocuous tweets and one of them is the shoebox one.

But that was only in response to being baited by these other guys and it was only, you know, jocular. Yeah, well, I mean, anyone who reads it would know that you were being facetious. I get that. But I eventually got a hold of my lawyer. He called me back. And told these guys to leave the house.

And talk to him. And they were like trying to talk rough with him. They refused to leave? They refused to leave until the sheriff showed up. And the sheriff shoot him. But they were actually with the FBI. But I've known, because my life's been threatened more than once by some ruffians, that the FBI really doesn't care. They say, you know, when we had hard evidence of some troublemakers, the FBI said, call your local police, which we did.

So to gin up a visit by the FBI out of Atlanta to Sonoma County, California, to tell a guy to quit tweeting, stop tweeting, when Twitter never asked me to stop. If Twitter had a problem with my tweets, Twitter would have suspended my account or sent me something, but they never did. That's the first line of defense.

If Twitter thinks there is a problem or a risk, Twitter would then call law enforcement and say, we think we have a problem here. So I'm of the belief that parker called his influencing peddling senator isaacson and isaacson ginned up the fbi visit and i will get to the bottom of it one day and there will be hell to pay one day one day when this thing's said and done, I'm going to settle it with some of these guys. But this thing's fucked up. So I figure anytime a guy like that wants to escalate something like that to that level, that dude has an awful lot to hide. Yeah.

And there's something there that's really fucked up. On the spectrum of things that you've said in the past, where is this right? This is right up there. I mean, I said it, I think at the time it was a top 10 fraud. Then I said it's a top five fraud. Then I said it's a top three fraud. Now I think it's a top fraud, pound for pound, from every aspect of it. I mean, there have been bigger frauds, but this thing for this size company given the chicanery that's going on is is is beyond stout yeah right it's just it's just beyond crazy

so it's going to end very poorly for him and i guess over the weekend parker's goons in the uk were threatening uh frazier pairing six-year-old daughter and his estranged wife over in the UK. And I guess he's filed a criminal complaint. I haven't talked to him since. But this whole concept of threatening free speakers is very, very, very bad. And it really needs to stop and stop quickly. Because that's what makes the world spin, opinion so people can evaluate what goes on. But it's something.

It's something. It's alive. You seem like a very fearless person. As you said, you've copped a lot of, a few death threats in this game um i've seen you know i saw a video of you at one of the my medics shareholder meetings where you stand up and confront parker and i was very impressed but i'm curious you know is there anything that makes you scared are there any situations where you feel frightened?

Yeah, I'm scared of heights. Okay. I don't like scary movies. I don't like movies that have blood in them. That's really about it. I do not like heights. And the other thing is, I've been through a lot in life. I don't think my upbringing was all that great at all.

People have doubted me. Too many times. I think I'm pretty driven. But when you reach a certain age. You just. You sort of realize what stuff really is. And. If you bow your back. And stand up for what you believe.

Things tend to work out okay. And I believe in hiding in the daylight. I always use my own name. I don't have aliases contrary to popular belief. My enemies are well known. They're known by the authorities and people like that and basically people who talk a big game and threaten and they talk a lot of shit on twitter

and guys like Parker I mean these are cowards these aren't stand up men these are just cheap shit punks and those guys first of all I'd kick the shit out of every last one of them, physically. And two,

they just, again, they're all talk, and they have more to hide than anything. And if someone really had something to say, they would address it straight up, rather than all the bullshit. So, they should fear me more than I would fear them, I've done my work and I'm prepared and I know what I'm talking about.

I mean, I can be wrong on the stock and stocks can go up and go up against me and this, that, and the other. But I don't think there's a way out for Parker and my medics. I really don't. I mean, I'm going to say this because it's a podcast. This guy is such a sociopath. He's such a, you know, kind of a Ken Lay, Bernie Madoff, sociopath, psychopath guy. You know, when his world comes down on him, I think he's taking that mig that he flies around, all five foot of him, and I think he's going to take it

in the side of Stone Mountain and do himself in because he won't be able to face the people who he's lied to for so many years. I mean, his life is just one giant lie and it it's been a giant scam, and he's such a small man, and he's such a coward, that's why he has to put his name on everything out there. He puts his name on some third-rate football stadium, the Pete Petit Engineering School, the Parker Petit this, that, and the other.

I look forward to going back to Georgia one day and being part of ripping all that signage down and buying some of that stuff at auction and that's how bad I think this guy is he's that bad I mean I don't wish him harm I think he's you know he's gonna

he's his own worst enemy cause he hasn't yet come clean on the fraud he's perpetrating. Stuff like all those philanthropic donations to Georgia State and Georgia Tech also smell a little bit like compensation for wrongdoing. It's what someone would do to signal. Well, again, there's every sign there is uh to be had this guy has it i mean the cfo is not a cpa his prior gig was that he was the cfo of park and ride some third-rate private company and somewhere in new york and prior gig was some penny stock fraud and all these other guys who are high up used to work it i mean it's

one guy's troubled past over after another i've checked all these guys out 54 employees who used to work at abh yeah advanced biohealing biohealing which which my medics makes it look like johnson and johnson but i've I've done enough reconnaissance on everyone in that C-suite, and one story's worse than the next. So it's the guys, it's the accounting, it's the business practice, it's the retaliation against whistleblowers and skeptics.

It's the constant lies. It's a product that the FDA should take off the market and or banned. It's failed inspections. It's Medicare fraud. It's Medicaid fraud. It's private insurance fraud. It's gouging. It's kickbacks. It's everything. It's not reporting under the Sunshine Act. I mean, I don't know if you guys or the listeners are baseball fans, but to me, Ken Griffey was the best player I've seen in my life. And he could hit for average. He could hit for power. He could drive in runs. He could steal bases. He was a leader. He was a great fielder, right? He was everything. Everything he did, he was great at. He was great. And he's in the Hall of Fame, and he would have the best numbers around. And if he played 20 years,

he was probably injured six of those years. So if he would have played a full career without being hurt, he would be the best ever, I think. But my medics is a Ken Griffey all-around fraud. Sometimes it's just management. Sometimes it's just management. Sometimes it's just accounting. Sometimes it's just a product, which is a scam.

Sometimes it's just stuff in channels. Sometimes it's just revenue recognition. This thing literally is everything. And the problem is, I can't get away from it because prior to you showing up, and all during this interview, all during this podcast, I have a huge live thread of this doctor who they've paid off,

who I have on the Alder Lane farm sunshine act site is brandon hawkins is this on twitter or the website it's it's on the website it's on petite parker the barker.com just as you and i have been talking i have like fresh information that just came in on this scumbag and it's like every day and it usually happens between the hours of five and seven pacific time there's this fresh thread that comes through and on any given name one of these threads is enough to do the company in on any given day but this thing has so much stuff it's literally hard to wrap your head around which indicates how right i am because you can't have so much stuff coming in, right? It's every description there possibly can be of a kangaroo.

And for someone to say it's a goat just doesn't compute, right? And no matter how many times they say it's a goat, it has a pouch, it hops. It can kick. It only is on two feet, right? It's only found in Australia. Well, it's a fucking kangaroo. No, it's a goat. Okay, here's a picture. Well, you've doctored that picture up. You're a liar, right? So this is what it is. But I think after this, I'm going to take a break for a long time because I do think I'm getting a touch old for this. Well, I mean, this could well be one of the biggest shorts of your career.

I've had some great stuff. So we'll see how it all ends up yeah we'll see where the where the final chapter goes but you think it's a matter of time now days weeks months it could be it could be tonight for all i know yeah i mean it it could be it could be it could be at any it could be at any point in time. Yeah. So what keeps you going with this stuff? Is it the thrill of the game? Is it the money? Is it the holding bad people to account?

It's not. All of the above? It's not the money. I think there's, I don't exactly know what it is. I mean, I was thinking about this the other day. So I got some pals who are sick, really sick. And, you know, I'm 58. And I've been doing this since I was 21. Professionally.

Since 21. So, I do have some time left, but I know at some point, given how I do things, I'm not what I was at 38. I'm a little savvier. I'm not going to be doing this much, much

longer. Because I just won't have the mental whatever to do it. Because I'm not going to be doing this much, much longer. Because I just won't have the mental whatever to do it. Because I'm not interested in losing or losing a lot or whatever. So I'm definitely running out of fights like this. But man, I'm going to miss it. And I do enjoy the the challenge and and Take it to Ness so I think

You know when you realize you have blank years left doing this at a really high level That you appreciate it. You know, you kind of give it the last hoorah kind of thing there's a certain moral dimension to what you're doing yeah big time like one of the themes throughout a lot of these shorts is that it's crop deletes ripping off little guys always it's always some form of scheme it's never that the stock's too high or can you believe this or believe that it's always some form of scheme it's never that the stock's too high or can you believe this or believe that it's always it's always a scheme and given what this parker petite does to people i mean there are women floating around texas with loaded handguns in their purse because they fear for their lives from this guy.

No shit. This is a guy. This is a guy who, after a bad meeting with the FDA, shits in a bathtub, puts water in it, and sends that picture to all his employees. Literally? Yeah. Yeah. Shit. I did a periscope on that and i and i put the picture up i mean no no shit this this is what he doesn't have that one yeah this is what he does this is

this is what he does and this is this is the kind of guy he is so you you say to yourself, what kind of guy does stuff like this? What kind of guy is wired like that? Who would do something like that? Right? Is this like CEO material? Well, I mean, it very much sounds like what you described as sociopath. Mark's just showing me a photo and it is a poo in a bathtub. Yeah.

Right? Yeah. So someone took... Interesting tactics, Pete. Yeah, it said this was a picture Pete sent out in an email. And I'm trying to find the exact email. It was in regards to a meeting they had in D.C. with the FDA. It was basically saying they are shit.

And the metadata from the picture shows that it was in the suburb of Washington, D.C. Ah. Right? picture shows that it was in the suburb of washington dc uh right so what kind of ceo does something like that when it does something like that forget what kind of ceo does something like that yeah period yeah okay new paragraph what kind of ceo does something like that and then emails it to every employee he has? Huh? And this thing sells at $900 million and is under investigation by every alphabet guy in this country? Seriously. I mean, that's just, I don't want to say and play a pun, that's just for shits and giggles, but that's just an example of what we're dealing with here.

Do you think you could ever forgive Parker or is he completely irredeemable? If Parker at sentencing, when he's sentenced, if he hasn't taken his plane into the side of Stone Mountain at Mach 1.5, right? If he were to formally apologize and walk back everything he said about me, I then would possibly, possibly forgive him. Possibly. Right? But then he'd also have to apologize to my son about the FBI and my wife about the FBI. Yeah. So he'd not only have to walk everything back and apologize for it, he'd have to make it right with them. And if it was sincere, I would cut him slack and say he's okay.

And bake him a lemon cake with frosting. Of course. I find that very interesting because there are people in your position who would say i'd still want to kill him but something i've noticed about we got to be careful with the word kill right we can't we can't use words like that so i'll edit that out yeah it's gonna be it's a fbi around yeah exactly but, you know, there are certain examples where you've turned former enemies into friends. Like I'm thinking, Byrne, the CEO of Overstock, Erwin, the financier. You're good.

What is that? Well, that's kind of like after the battle, you know, you can shake hands. Say, I wish I didn't say some of this stuff i wish this i wish that i'm sorry or this side or the other and shake hands and go forward takes a man to say i fucked up and i was wrong because these are people that you've been in in serious battles of the will with i've been in serious battles with erwin Jacobs. Erwin Jacobs. Yeah. Erwin Jacobs once on a Remesoft, you know, where we were sued again. My son was in my office when he was a whole lot younger,

really young guy, when he was a kid, when he was in grammar school. And Erwin was on the phone screaming at me about something. And Max was giggling. And he goes, who is that? And I said, that's my son, Max. And Erwin goes, Max, your dad's a very bad man. He tells stories, and he makes things up. And Max says, Erwin, my dad is a great man.

And I think he's wonderful. And I love him dearly. And if I were you, I wouldn't mess with him. And he goes, Max, that's very good that you love your dad. He says, it's nice meeting you. And Max goes, it's nice meeting you too. So that was circa kind of 2000 yeah kind of somewhere around there for that aromas off so last year last year 17 max and i were in minneapolis to see southside johnny and the asbury jukes and i call everyone up said, we're coming by your office because we made peace by then.

So Max and I go by his office and I give him a big hug, take a picture. And Max is there. Everyone goes, Max? Yes. I need to apologize to you, right? What I said about your dad was wrong. He's a good man. He's a better dad.

You know, blah, blah, blah. I'm sorry. And he goes, Erwin, you're okay in my book. Right? So sometimes people fuck up, you know? People fuck up. I mean, if you mess up, you got to fess up, I say. And, you know, Erwin and I are cool.

Burn and I are cool. I mean, I'm cool with a lot of guys. Yeah. Burn, you used to be short overstock. Now you're long. I mean, that Mark Thompson at Concordia fame is just a motherfucker. He can rot in hell. I'm glad he's cutting his own grass.

I think he was worth $400 million. I was not worth a box of fucking jacks. So, screw him. And there's Parker 400 million. I was not worth a box of fucking jacks. So screw him. And there's Parker Petit. He has it coming for threatening me and doing all that bullshit. But I mean, your ability to forgive certain people, it reminds me of, you know, one of my favorite quotes in the world has been for maybe 10 years, Oscar Wilde, every saint has a past and every sinner has a future. Look, I mean, that's right.

Yeah. I mean, it also kind of parlays into this notion of thesis creep, like willingness to change based on the facts. Maybe we could wrap with that. Just some advice for young investors or young short sellers. Firstly, what is thesis creep and what's some wisdom you have to share there? First of all, if you're a young short seller, you should get your brain checked out and make sure that you actually want to do this. Young and short selling is a bad mix. You can have people to have sex with, but it's hard to find lifelong partners because you're so deranged or demented. That's for starters. So if you're young and want to short stock, something's fucking wrong with you. That's for starters.

Two, thesis creep is know why you're in something. Stick to it. And if the reason you're in it changes, you best get the hell out because you're probably going to get killed. Right? And it's kind of like if you leave San Francisco on a boat

and you're boating to Sydney, you're on heading 156.8. And you better stay on 156.8. Because if you go to 163.4, you end up in Tokyo, not in Sydney. And in a lot of places, in the short-selling scheme of things, you will die. Or you will get killed. And that's why people get killed. They say, well, I was shorted for this quarter, but the quarter was good.

I'm shorted because of the next quarter. Or I'm shorted for this quarter, but the quarter was good. I'm shorted because of the next quarter. I'm shorted because this guy's leaving. They keep changing their story. So the second their story changes, there tends to be a big problem. Now, I tend to be in things that have about 10 ways to win, and I focus on those 10 ways to win and I don't know what the headline is going to be that either gets my medics halted, stock goes to one, Pete gets rusted. I don't know what that headline is going to be. It could literally be one to 20. But what I do know for sure is with each passing day my stack of evidence on my medics is thicker

not thinner i have more things to discuss not less and the fraud widens not shrinks if all of a sudden the my basis for the fraud goes away or changes or something happens then i change and we'll say i change but until then it is full go it is full fucking go and it's kind of like i've got friends who are football players i got friends who are race car drivers this guy i know jimmy Spencer, used to drive NASCAR. We were chums. And I said, like, how do you do that? And he goes, well, how do you do what you do? I said, just do it. He goes, well, what you do is crazy. I said, I know what I do is crazy. I said, but what you do is crazy. He goes, well, I don't think it's crazy. I don't think driving around at 205 miles an hour,

an inch and a half away from a guy in the front with a guy an inch and a half away from me from the back and a foot away from each side, I don't view that as crazy. I mean, I'd vomit. Well, he's not afraid of dying in an auto wreck, so he drives like a fucking crazy man. Well, I invest full tilt.

And that's all I know, right? That's all I know. So I think my advice to, you know, whoever's doing this, young or old, go at it full tilt. Know what you're in. Know why you're in it. Be mindful of the story changing

or thesis creep, better or worse. If it gets worse, do more. If it gets better, get the fuck out. But it's not a passive thing. It's not, well, I hear this, so I should go short this. No, no, no, no, no. It needs to be an all-in deal.

And if you're not comfortable with it or don't know why you're in it or you can't explain it in a paragraph or so to a 10th grader, you probably shouldn't be in it. That's my simple advice. Keep it simple. Keep it square and just stay straight up. That's all we got.

That's enough, isn't it? You got a... That's it. Huh? Yeah. Well, it's been an absolute privilege speaking with you well it's been great i mean you flew 50 000 miles to get here i mean how can i not right yeah but look thank you so much for your time and well you got you got a lot

here you can make this three or four podcasts yeah i think we could probably carve it up into a mini series or something yeah you, you have some good stuff here. You caught me in a strange day. No, look, it'll be interesting to check back in. See where everything is. See how it plays out. Damn straight. Well, thanks for doing this with me.

Thanks, Mike. And that is a wrap. Thank you, my friend, for finishing this podcast with me. Mark Cohodes, not just one of the most impressive short sellers in the world, but above all, just a really good guy. And I hope you enjoyed that conversation as much as I did, because I certainly enjoyed it. And the fight against Mimetics still continues. In fact, two days after I left Mark on the farm, so this was the 11th of May, news came out that three Veterans Affairs employees were being served federal indictments over charges that they accepted bribes from Mimetics officials

to stock Mimetics products. Now, this doesn't mean mean that mimetics itself was being held criminally responsible but its market cap is still 900 million dollars and these short sellers including and especially mark is still engaged in furious battle with the company and if you want to stay abreast of all the developments there i'm going to be putting links up to mark's twitter page the website he mentioned petite park of the barker.com, which Mark himself actually created, as well as everything else discussed in the show, like the Harvard Business Review case study of Novastar Financial and all the other links that are relevant on our website, TheJollySwagman.com. We're actually in the process of fixing up our website so i do apologize for

its current uh shabby state but you can find everything from this show on the web page and if you're enjoying what we're doing please subscribe on your itunes app or wherever you get your podcasts so that you can get more from us. And I thank you, and I look forward to speaking with you again next week. Ciao.