Short seller makes millions by exposing corporate wrongdoing, at a high price

Relaxing on a couch in the living room of his newly-built house, former social worker turned short-seller Fraser Perring does not seem like a man who would strike fear into the hearts of executives from New York to Tokyo.

But from a sleepy village near Lincoln he runs Viceroy Research, which makes its money by betting against companies and then releasing research reports into their activities.

I am ferried to his luxury home in a sleek black Bentley SUV, so it looks like his career move has largely paid off.

Aside from his Bentley, he owns another black SUV, an Audi and an orange Lamborghini Urus. He calls them his ‘toys’.

Short-sellers like Perring are often painted as vultures, feasting on crisis and misfortune. Their own view is that they are essential to markets functioning well, often acting as canaries in the coalmine and alerting the wider world to disasters in the pipeline.

Typically, they are fond of secrecy, so our conversation is a rare insight into their mindset and methods.

It is six months since Viceroy’s explosive report into Home Reit – a property investment trust helping homeless and vulnerable people. After the report’s release, Home Reit’s share price sank before trading was suspended.

Several of its charity tenants are now in liquidation and a probe into its accounts is being conducted by auditor BDO.

Forensic accountants Alvarez & Marsal discovered a lack of transparency on the part of the firm’s former investment adviser Alvarium as well as failings of due diligence and the monitoring of the finances of its tenants.

It is music to Perring’s ears who alongside his colleagues at Viceroy profited handsomely from Home Reit’s collapse. He is thought to have made more than £4 million. He won’t reveal the exact sum, merely saying it was ‘a f***ing good trade’.

Perring has no sympathy for those in charge of the business. ‘The board denied our information and said it was utterly false [when published]. As it transpires we were accurate,’ he exclaims.

Over lunch Perring outlined the philosophy behind Viceroy’s process when deciding which firms to target. ‘There is always something missing,’ he says, noting that with Home Reit there had been a gap between what residents had been saying about the quality of its properties and the ‘ESG [environmental, social and governance] bulls**t that was told to the market’.

He also rejects claims that his work is based on underhand tactics. ‘We rely on public disclosures and we give our opinion on a company,’ he points out.

Perring is currently involved in spats with several other companies globally. One of these is Medical Properties Trust, a US-listed healthcare property investment trust that was targeted by Viceroy in January and has since seen its share price plunge by more than 27 per cent. In March, the firm decided to sue Perring’s outfit, arguing that its allegations were baseless. But he remains unfazed by the legal battle, saying the company’s business model ‘doesn’t stack up’.

Viceroy is also in a fight with SBB, a Swedish landlord whose founder and boss Ilija Batljan stepped down earlier this month, with his empire facing ruin as it struggles with a £6.4 billion debt pile.

Perring targeted SBB in February and has kept up the pressure ever since. He describes Batljan as ‘a complete and utter fantasist’ for previously dismissing vulnerabilities in the business. ‘If he told me the time, I’d need three other people’s watches to verify it,’ he said. ‘He’s not fit to run a burger van.’

His latest target is Abalance, a Japanese solar panel manufacturer that Viceroy accuses of using a Vietnamese subsidiary to avoid US sanctions against Chinese goods made using Uighur forced labour. Abalance vehemently denies the claims.

Others to have caught his ire include Elon Musk’s Tesla, which Perring shorted early last year on claims that it was overvalued. Another is German-South African retailer Steinhoff, which faced an accounting scandal in 2015.

Perring believes fund managers who put client money into fraudulent firms should be held accountable. ‘If they are found to be involved in fraud they should be penalised,’ he says. ‘Their fees should be reduced. There is currently no penalty for doing bad work.’

Perring doesn’t hold back against critics. Veteran Labour MP Liam Byrne, a former chief secretary to the Treasury, claimed in Parliament in March that Perring was ‘a not infrequent visitor to Moscow’ and called for a Government probe into whether some short-sellers were linked to the Kremlin.

Perring denies the allegations and called on Byrne to repeat his statements outside the House of Commons, and thus without legal protection. ‘He’s a coward and he won’t even provide any information so he’s gone and lawyered up,’ Perring says.

The 49-year-old began short-selling in 2011 while working as a child protection officer. His social worker career ended in 2013 amid allegations that he had failed to contact a foster child’s extended family to arrange alternative care. He was subsequently struck off.

A 2014 report from a regulator accused Perring of forging records and then lying to his supervisors. Perring said he followed protocol, but was punished for questioning the placement of the child.

He later sued his former employer Lincolnshire County Council for mistreatment, defamation and a breach of employment rights. The two sides eventually settled, with Perring receiving £24,000.

He pursued his investment passion full-time and within three months had made more money than during a decade in social work.

His first research company, Zatarra, was set up alongside fellow short-seller Matthew Earl to publish reports anonymously.

In 2016, he met Australian researchers Gabriel Bernarde and Aidan Lau and together they formed Viceroy Research – a partnership that thrives to this day.

Not all of his shorts have played out as well as Home Reit, but the one he regrets most is the one that first put him on the map.

‘Wirecard,’ he says, referring to the German payments giant that collapsed in 2020 after admitting it was missing £1.6 billion in cash, sparking a global scandal that saw the arrest of chief executive Markus Braun, who is on trial.

‘It brought out the best and worst in people, including myself,’ he admits. ‘I became obsessed.’ Perring claims the aggression of Wirecard and its agents was like nothing he had ever experienced.

He says the stress caused transient ischaemic attacks, known as ‘mini strokes’. Some associates thought he had turned alcoholic due to the effects on his speech.

‘Would I do it now?’ he asks himself. ‘Yes, because I know what to expect. But as a way to start off a career in short-selling, I would say absolutely not. I was f***ing nuts. I went swimming with sharks and thought I was in a goldfish bowl.’

Despite the baptism by fire, Perring shows no sign of wanting to change direction.

‘I love it now. Plus I don’t think there’s another job out there for me. Pretty sure I’m unemployable anywhere else.’

Relaxing while sitting in his cavernous living room with a view of his rolling lawn, Perring still feels a need to look over his shoulder.

In 2016, shortly after dropping off his daughter at school, he was trapped in his car by two men who threatened to harm his family unless he admitted writing reports into Wirecard’s business. Out of fear, he lied and denied being behind the reports.

As with many jobs, Perring says it is the people that make it hard, rather than the work itself or the intricacies involved in researching and building Viceroy’s reports.

‘If it wasn’t for the people, short-selling would be the easiest vocation in the world. Do I think short-selling is stressful? No. Do I think the people you expose are? Yes.’