Hacked Printers. Fake Emails. Questionable Friends. Fahmi Quadir Was Up 24% Last Year, But It Came..

Discussion in 'Wall St. News' started by dealmaker, Jan 10, 2019.

  1. dealmaker


    Photographs by Jonno Rattman

    Hacked Printers. Fake
    Emails. Questionable
    Friends. Fahmi Quadir
    Was Up 24% Last Year,
    But It Came at a Price.

    The femme fatale of short selling’s interesting first year.

    January 09, 2019

    It’s night in New York City. Steam from a manhole billows across Wall Street. An American flag flies in the foreground as a camera pans from an office overlooking the city’s lights to a solitary woman watching her Bloomberg terminal flash the plummeting stock chart of Canadian drug company Valeant Pharmaceuticals.

    With the Empire State Building in the background, Fahmi Quadir comes into full view. “I was always this Pollyanna growing up,” she says — the first words uttered in her starring role in the Netflix documentary seriesDirty Money, whose third episode, “Drug Short,” tells the epic tale of the Wall Street battle over Valeant, which lost 90 percent of its value between 2015 and 2016, taking down billionaires and making an internet heroine of Quadir, one of a small group of short sellers who bet, correctly, that the drug company’s price gouging, questionable tactics, and massive debt burden could not be sustained.

    Yet the film’s noirish setting takes Quadir far beyond the world of Pollyanna. Instead, it casts her as something of an exotic femme fatale, continually draped in dark: dark hair, dark nail polish, dark, deep purple suede designer dress.

    “I do my work in the shadows,” she says in a later scene, riding in a taxi through the streets of Manhattan, her dark eyes shielded from the sun by mirrored sunglasses.

    Few people had ever heard of Quadir before the release ofDirty Moneyin January of last year. She has since stepped out of the shadows. At the age of 27 — after working only two years as an analyst at the small hedge fund that had shorted Valeant — Quadir launched her own hedge fund last January. The child of Bangladeshi immigrants who settled in the Long Island town of New Hyde Park, the young woman called her new firm Safkhet Capital, named after the Egyptian goddess of mathematics and wisdom.

    At the start of 2018, Safkhet had two employees (both women) and about $6 million — a tiny amount for a hedge fund, even one dedicated to the risky business of short selling, a technique that bets that a stock will go down in price. Nonetheless, Quadir planned big. She immediately registered Safkhet with the Securities and Exchange Commission, looking forward to a big future that would draw in the type of institutional investors that largely eschew a fund whose manager has such a slim track record as hers.

    Fortune favors the bold: 2018 would end with a market meltdown that left famous hedge fund managers nursing losses and facing redemptions. Quadir, on the other hand, is on the upswing. She starts 2019 with more than $35 million and five investors, with most of them signing up during the second half of last year. She’s also boasting a net gain of 24.14 percent during a year when the S&P 500 fell 4.4 percent.

    “To start a fund and to make it through a year, there's nothing that makes me more proud than that,” Quadir exclaims in Safkhet’s sparkling midtown Manhattan office in a Sixth Avenue skyscraper, its third home since launch.

    Safkhet is all the more impressive since the number of women running their own hedge funds is a minuscule fraction of the total. Only 2.5 percent of the approximately 10,000 hedge funds are headed by women, according to Meredith Jones, who tracks diversity in finance and authoredWomen of The Street: Why Female Money Managers Generate Higher Returns (and How You Can Too).

    Short selling is also largely a man’s game — one that lost so many players in the decade-long bull market that Hedge Fund Research quit posting returns for a short-biased index at the end of 2017. But if recent trends are any indication, women can also play what can sometimes be the nastiest, most testosterone-dripping game on Wall Street, one replete with Twitter wars, lawsuits from target companies, and all types of intimidation.

    At former hedge fund manager Whitney Tilson’s most recent short-selling conference, held in December in New York City, five out of 22 presenters were women short sellers — although none are well known.

    That seems to be the way most of them like it. When contacted for this story, one well-regarded female short seller — 221B Capital's Jillian McIntyre, whose Twitter page background affirms that “she is badass” — firmly said she was “not interested” in participating.

    Quadir, however, is not shy in expressing her opinion on the subject. “All short sellers are outsiders,” she offers. “And women are especially outsiders in this world.”

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    Visaria, zdreg and guru like this.
  2. Woman or not woman - she will become of interest for institutional players with at least 2 year track record (most prefer 3) and at least $100 Million not to say $200 Million in AUM.

    Otherwise: good job, keep moving on, make some more Alpha next year!

  3. Pekelo


    Did I miss the hacked printers part?
  4. destriero


    She sounds nuts.

    She gave back a 24% gain in a month, ending flat. She told some story about a broken printer in her home starting to printing “emails” from whistleblowers. Thing must think it’s a fax machine.
    athlonmank8 likes this.
  5. Overnight


    "...Safkhet requires investors to place at least $3 million in the fund. “I really want investors who understand what we're creating. And we're completely unhedged, short only. So it's a small investor base; you really have to understand the kind of volatility that will come with it,” she explains. The fee structure is also complicated. To collect performance fees, Safkhet has to have both positive alpha (i.e., do better than the market) and positive absolute returns (i.e., above zero). The incentive fees are calculated on a sliding scale, and there is a management fee of 1.5 percent."

    Gee, that's going to end well.
  6. destriero


    The stupidity of alluding that some clandestine corporation that she's shorting... is hacking into her comms... and printing out whistleblower emails? rly?
  7. Overnight


    I have ruminated upon that hacked printer thing for a bit, and concluded that she has a multifunction printer, and she is receiving unsolicited faxes to her phone number, and does not know that that is what they are...Faxes (as des mentioned). I can imagine other scenarios where these messages might occur over a networked printer, but I ain't gonna' think that deeply into it because there is too much information missing from that "hacked printer" statement to come to any solid conclusions. Just conjecture at this point.
    Last edited: Jan 10, 2019
  8. destriero


    I mentioned that it was a fax machine. The story is ludicrous. If I were an investor and read this article... I wouldn’t be an investor for long.
  9. Overnight


    Yes, I forgot to mention that it was your comment that made me start thinking about the scenarios. Sorry, fixed the post. :)

    (No, seriously, it is true. Your comment got me thinking about it, and I agree, that is the most likely scenario.)
  10. starting a fund after 2 years at one, at that age, is very impressive. I wish I could have done anything close..
    #10     Jan 11, 2019