Viceroy finds a buddy – and another big stock feels the heat

By Alec Hogg

In his seminal work The End Of Power, Moises Naim unpacks how bigger no longer means stronger. Anyone who has read the book will quickly see how evidence of decay in the traditional power equation is all around us. Including in the financial markets.

Take three person short-selling research fund Viceroy, which hastened Steinhoff’s collapse and is attempting to do the same to Capitec Bank. Viceroy’s business model is to find hidden flaws in companies, sell their shares and profit by publicly sharing its findings.

On Tuesday, Viceroy went hunting alongside Israeli tech research firm CTS Labs in a co-ordinated attack on US semiconductor manufacturer AMD. The two small firms, who employ just seven people between them, simultaneously released reports claiming to have “exposed fatal security vulnerabilities” in AMD products.

AMD’s shares dropped 3%, but recovered after CTS admitted it had given the company just 24 hours (rather than the usual 90 days) to test its allegations, which techies say is an impossible task. It also surfaced that, like Viceroy, CTS stands to profit from a falling AMD share price, raising questions about its motives.

However, even sober industry voices like Wired magazine caution, although the allegations have not been properly assessed, its readers should dump the AMD chips as “it’s not worth letting doubts about the messenger get in the way of the message.” It’s a strange, strange world we live in, Master Jack.

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