Viceroy May Have Copied Steinhoff Research, Intellidex Says

(Bloomberg) -- Short seller Viceroy Research, which has targeted companies from Australia to the U.S., was accused of plagiarism in a report issued on Thursday by Intellidex (Pty) Ltd., a South African research and media company.

The study found almost identical wording in sections of Viceroy’s report on Steinhoff International Holdings NV as those contained in an analysis six months earlier by Portsea Asset Management LLP, according to Intellidex, which has offices in London, Boston and Johannesburg. London-based Portsea declined to comment.

Viceroy’s report into Steinhoff, released shortly after the global retailer announced accounting irregularities, gave the firm “considerable influence” in the South African market because it was so widely spread in the days that followed and provided some explanation of what had happened at the company, Intellidex said. Steinhoff’s shares have plunged 94 percent since it disclosed a probe into its books in December.

Portsea didn’t send Viceroy any research, Viceroy said in the email on Thursday. Viceroy receives “significant amounts of data anonymously” via email, some of which may come from funds, and which is included in its research where “it is valid,” it said.

Won’t Last

Viceroy’s influence won’t be sustained because the quality of its work varies so widely, Intellidex said. The reports range from coherent and robust calculations on Syrah Resources Ltd. to weak methodology that relies “on little more than anecdotes, ad hominem attacks on management and no attempt at balanced assessment," like with Capitec Bank Holdings Ltd. and Advanced Micro Devices Inc., Intellidex said.

In response, Viceroy said its research is “thoroughly back-tested” and any evaluation of its quality is inevitably subjective. “Our work speaks for itself and the report does not disprove any of the content,” the firm said.

The study was commissioned by Business Leadership South Africa, a lobby group including chief executive officers of some of the country’s largest businesses, to provide insight into short-selling activities in the country, Intellidex said.

Internally Funded

While Capitec is a member of the business grouping, and would’ve indirectly funded the research, “this is not a report that has been paid for” by the South African lender, BLSA CEO Bonang Mohale told reporters in Johannesburg.

The four authors of the report, including Intellidex Chairman Stuart Theobald, also called into question the credentials of Viceroy’s three members and the company’s business model. The company seems to be working with hedge funds and other short sellers to generate negative publicity while taking on the legal risk that comes with that, Intellidex said.

“We have no business relationship with any individuals or funds cited in Intellidex’s report, and our work is funded internally,” Viceroy said, denying that it works in concert with funds. The firm has a network of industry consultants used on a “case-by-case basis under strict non-disclosure agreements.”

Viceroy uses journalists by giving them embargoed copies of their reports so these are published simultaneously with their release, Intellidex said. “This serves to amplify the impact of Viceroy’s research,” it said. “Indeed, it is often the media coverage, rather than the reports themselves, that move the share prices of its targets.”

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