Posted on April 21, 2021 by Florian Buschek
A good article by Michelle Celarier in Institutional Investor about Carson Block and his fund/firm Muddy Waters. I knew that Block was a good short seller but I was not aware that he totally killed it.
Not all of Block’s short campaigns have worked out, of course. Yet over the past five years, Muddy Waters has produced an annualized return of roughly 19 percent — and that’s after a 2.5 percent management fee and a 30 percent performance fee. It gained about 15 percent last year, when the broader market rose 18.4 percent. In 2021, Muddy Waters is already up close to 6 percent.
Quite amazing that he did so well short selling in the bull market of the past years. A great anecdote is of course that Block is short GSX (disclosure: no position) while Archegos/Bill Hwang was on the other side. The irony is that Archegos blew up and despite Hwang having a checkered past Goldman Sachs and Credit Suisse were his prime brokers, the same banks that would not take Muddy Waters as a client for reputational reasons. It seems like justice won in the end here.