American Consequences - August 2017

believe that they, too, could be him. Wuyang Zhao, a professor at the University of Texas, Austin, who wrote his dissertation on activist short-selling, told me: “People read Andrew Left, and they’re like: ‘Oh, my God, it’s not impossibly difficult. It’s not a lot of work, and you can bring down a big company.’ “ One of Left’s friends recalled a visit Left made to a university to give a lecture. In the hallways afterward, the students swarmed him. “It was like he was Mick Jagger,” the friend said. From 2006 to 2015, the number of activist short campaigns rose by 1,300%, to 1,289. In the past three years, the number of activist short-sellers working globally has nearly doubled, to 72 from 39. Very few have a positive track record. Left does. On average, the value of companies he writes about drop 10% in a year, and some drop as much as 95%. One morning last spring, Left and I stood in his lush backyard while he smoked a Marlboro Light. Beyond the swimming pool, the land fell sharply into the valley, and Los Angeles lay prone in the heat. We could see DJ Khaled’s recently purchased house over the fence to our left. Tan and unshaven in loafers, Left possessed the vaguely louche charisma of a club promoter, which is what you might mistake him for were it not for his eyes – green, wet, melancholy eyes, which, because they cannot but project sincerity, are his greatest tools on television. His eyes are the reason he could stand in his million- dollar lawn and say to me, without irony, “I’m an investigative journalist who trades on his information.”

For many years that risk was taken on in secret: Short-sellers would make their bets and passively wait for the market to move in their direction. The figure of the activist, who goes public with his positions, emerged into prominence in recent years. One crucial event in Wall Street history provided the foundation. In 2001, James Chanos, a hedge- fund manager, discovered an accounting scandal at Enron, then a little-known energy company in Texas, and shared his information with journalists from Fortune. The journalists got a best seller, Chanos got his money and Jeffrey Skilling, Enron’s chief executive, got 24 years at the Federal Prison Camp in Montgomery, Alabama. Short-sellers of Left’s generation are following this example but cutting out the middleman. You don’t need an office in a flashy building in the Battery, they have realized, or the validation of the press. If you build enough of a reputation, all you need are some Twitter followers and a website. Left has emerged at the forefront of this new guard. Unlike Chanos, who managed billions of dollars of other people’s money, Left invests his own, which exempts him from disclosing his holdings to the public. And now that his work has brought him national attention, he has found that others are willing to make it easier, by leaking documents to him and passing tips. In many cases, Left’s dossiers against his targets are not wholly his own but built using information from a confidential source. He is, in this sense, a bit like a journalist. He also makes it look easy. One result of Left’s fame is that today’s younger traders

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