Wirecard scandal / Germany's Enron

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Stef
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Wirecard scandal / Germany's Enron

Post by Stef »

Image

Anyone following what's happening in Germany right now?

https://www.reuters.com/article/us-wire ... SKBN23P24Q

This company is listed on the DAX, so one of the 30 biggest companies in Germany.
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firebirdparts
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Re: Wirecard scandal / Germany's Enron

Post by firebirdparts »

Where I've seen it discussed, there's been some discussion about how much Wirecard debt various EU banks have, and how much the bank stocks could be affected. I don't think it's a big deal, but I guess we'll see. I've certainly been tempted to put some quotes from "Office Space".

This is a payment processor, so I would have thought they were rolling in a big room full of doubloons myself.
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02nz
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Re: Wirecard scandal / Germany's Enron

Post by 02nz »

Yikes. And last year the financial watchdog actually filed a criminal complaint against the journalists that exposed this: https://www.ft.com/content/8e1948be-606 ... cd5d43599e. Doesn't look like prosecutors actually charged the case, but that's a lot of egg on BaFin's face.

Oh, and another brilliant investment by Softbank! /s/
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Re: Wirecard scandal / Germany's Enron

Post by stormcrow »

02nz wrote: Fri Jun 19, 2020 11:12 am Oh, and another brilliant investment by Softbank! /s/
Honestly, an inverse Softbank fund would be a remarkably solid play.
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Re: Wirecard scandal / Germany's Enron

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Softbank sure knows how to pick them these days.
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happyisland
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Re: Wirecard scandal / Germany's Enron

Post by happyisland »

Holy mackerel!
I just read an article on FT that closed with a paragraph that is a great reminder that "nobody knows nothin":
Analysts from at least half a dozen banks still had “buy” recommendations on Wirecard stock ahead of this week’s shattering news, several with outlandish price targets. Marius Fuhrberg of Warburg Research, for instance, told clients on June 11 that he saw what was then a 146 per cent upside for the shares, publishing a target price of €230. Knut Woller of Baader Helvea topped that with a forecast of €240, while Heike Pauls of Commerzbank, who has repeatedly and aggressively dismissed criticisms of Wirecard, set her €230 target price in mid-May, heralding a “strong buying opportunity” when the shares were trading at “an excessive discount”.
Source: https://www.ft.com/content/b3d664db-17c ... bd667e290e
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Quercus Palustris
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Re: Wirecard scandal / Germany's Enron

Post by Quercus Palustris »

2nd largest mutual fund holder of WDI.DE is Vanguard Total International (VGTSX), at 1.51% :(
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Re: Wirecard scandal / Germany's Enron

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Quercus Palustris wrote: Fri Jun 19, 2020 4:24 pm 2nd largest mutual fund holder of WDI.DE is Vanguard Total International (VGTSX), at 1.51% :(
What? Germany is 5.7% of this fund and Wirecard makes up 0.5% of Germany, so 0.03% in Wirecard.
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Re: Wirecard scandal / Germany's Enron

Post by 02nz »

Stef wrote: Fri Jun 19, 2020 5:10 pm
Quercus Palustris wrote: Fri Jun 19, 2020 4:24 pm 2nd largest mutual fund holder of WDI.DE is Vanguard Total International (VGTSX), at 1.51% :(
What? Germany is 5.7% of this fund and Wirecard makes up 0.5% of Germany, so 0.03% in Wirecard.
I think the earlier post means 1.51% of Wirecard is held by VGTSX/VTIAX.
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Re: Wirecard scandal / Germany's Enron

Post by palanzo »

Stef wrote: Fri Jun 19, 2020 10:59 am Image

Anyone following what's happening in Germany right now?

https://www.reuters.com/article/us-wire ... SKBN23P24Q

This company is listed on the DAX, so one of the 30 biggest companies in Germany.
Thursday’s news involves cash that’s consolidated on Wirecard’s balance sheet but held in third-party trust accounts. There are signs that third parties provided “spurious balance confirmations” to EY, with the aim of deceiving the accountants for Wirecard’s benefit, the company said. As a result, Wirecard’s audited 2019 financial statements were not released as planned. If they’re not published by Friday, lenders can terminate 2 billion euros’ worth of loans.
Sounds like fraud by the third parties and Wirecard. Will be interesting to see where the 1.9 billion euros of cash went. :moneybag
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Re: Wirecard scandal / Germany's Enron

Post by thx1138 »

Quercus Palustris wrote: Fri Jun 19, 2020 4:24 pm 2nd largest mutual fund holder of WDI.DE is Vanguard Total International (VGTSX), at 1.51% :(
Well of course, VGTSX is the largest international index fund in the world. (And the 11th largest mutual fund overall). If they didn’t own that much they wouldn’t be an “index fund”.
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Re: Wirecard scandal / Germany's Enron

Post by milktoast »

thx1138 wrote: Fri Jun 19, 2020 10:13 pm Well of course, VGTSX is the largest international index fund in the world. (And the 11th largest mutual fund overall). If they didn’t own that much they wouldn’t be an “index fund”.
So that implies they own 1.5% of all ex-US, right?

That’s actually kinda amazing.
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Re: Wirecard scandal / Germany's Enron

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02nz wrote: Fri Jun 19, 2020 5:21 pm I think the earlier post means 1.51% of Wirecard is held by VGTSX/VTIAX.
Ah damn, got it now!

Well, Vanguard and Black Rock are basically owning the world at this point.
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Re: Wirecard scandal / Germany's Enron

Post by TheoLeo »

My boss bought wirecard in march during the dip and was braging at work how much he already had made with. Then it all came crashing down within hours. Can't say i am unhappy about this :happy
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Re: Wirecard scandal / Germany's Enron

Post by Stef »

TheoLeo wrote: Sat Jun 20, 2020 1:46 am My boss bought wirecard in march during the dip and was braging at work how much he already had made with. Then it all came crashing down within hours. Can't say i am unhappy about this :happy
Stock pickers are always talking about the winners, but never talk about their losses. It's like casino players. In the end the house (the market) will always be the winner.
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Re: Wirecard scandal / Germany's Enron

Post by SunDevil »

Just listened to an interesting episode of NPR's Invisibilia podcast with a strange Wirecard connection. The newest episode, "Trustfall".

Sure sounds like Wirecard hired some thugs and a hacker-for-hire company to try to silence a short seller who was calling attention to their fraud.
Last edited by SunDevil on Mon Jun 22, 2020 9:57 am, edited 1 time in total.
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Re: Wirecard scandal / Germany's Enron

Post by Valuethinker »

Stef wrote: Fri Jun 19, 2020 10:59 am Image

Anyone following what's happening in Germany right now?

https://www.reuters.com/article/us-wire ... SKBN23P24Q

This company is listed on the DAX, so one of the 30 biggest companies in Germany.
Not bust as yet, but perhaps that is to come. Bonds are at 53 cents.

Impressively messy. Another Parmalat (Italian dairy company that collapsed just after Enron, as I recall).
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Re: Wirecard scandal / Germany's Enron

Post by Retired CPA »

Another unfortunate victim of the Wirecard debacle are the thousands of global cruise ship crew, whose wages are paid through, and often held (for “safekeeping”), by Wirecard. These poor victims have been through enough already, with what the entire industry is going through. As anyone who is following the travails of this industry knows, many of these crew have been kept from returning home through no fault of their own, and now this.
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Re: Wirecard scandal / Germany's Enron

Post by thx1138 »

milktoast wrote: Fri Jun 19, 2020 11:04 pm
thx1138 wrote: Fri Jun 19, 2020 10:13 pm Well of course, VGTSX is the largest international index fund in the world. (And the 11th largest mutual fund overall). If they didn’t own that much they wouldn’t be an “index fund”.
So that implies they own 1.5% of all ex-US, right?
Roughly speaking yes. For instance they hold:

1.5% of SIE.DE (Siemens on the German exchange)
1.6% of LLOY.L (Lloyds on the London exchange)
1.2% of 7203.T (Toyota on the Japanese exchange)

There's a whole science to tracking an index without owning every single stock in the index at the exact percentage of their capitalization. So out of smaller stocks some might not even be in the index fund while others are overweight to make up for that. It seems like for stocks that have a very large percentage of the market's capitalization you'd need to have pretty close to similar amounts of them as the few examples above show.
That’s actually kinda amazing.
Indeed!
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Re: Wirecard scandal / Germany's Enron

Post by Chicken Little »

Stef wrote: Fri Jun 19, 2020 10:59 amAnyone following what's happening in Germany right now?
Yup, have been for a while. I generally viewed Germany as a place of sanity, strength, and reliability. I was already questioning that based on the Volkswagon emissions scandal, the Bayer purchase of Monsanto, and the existence of Deutsch Bank.

Now add WireCard.

Some will undoubtedly use this as a justification of American exceptionalism, conveniently ignoring Enron, Lehman etc. My take away is that the system, such as it is, does nothing to guarantee that any of the stocks in my index holdings aren't outright frauds.

The amount of debt-driven money sloshing around incentivizes impropriety, if not outright crime. Why not have creative accounting? Get in, get rich, get out. Lou Pai got out of Enron with $250 million.
Quercus Palustris wrote: Fri Jun 19, 2020 4:24 pm 2nd largest mutual fund holder of WDI.DE is Vanguard Total International (VGTSX), at 1.51% :(
Some of that is my money.

The idea that this is the "cost of doing business" is ridiculous.

This is the cost of inadequate oversight, disproportionally light consequences, and investor apathy. This is the cost of runaway, irrational, debt. Every investor understands how pernicious irresponsible personal debt is, but they fail to extrapolate.
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Stef
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Re: Wirecard scandal / Germany's Enron

Post by Stef »

There is a thread in the German forum Ariva.de "Wirecard best stock 2014-2025". Pretty entertaining if you are able to read German.

So many tragic stories! One guy was close to retirement and was invested only in Wirecard, now looking at a -490k loss. One other guy invested 250k and bought even more with a loan (also only invested in Wirecard). Sold everything last Friday and now left with a 61k debt with 9% interest. Just 2 examples that shocked me.
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Re: Wirecard scandal / Germany's Enron

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