Episode 15 - Kurt Feshbach

This week, The Pack takes a trip back to the early days of short
selling only to find out that, sadly, not much has changed. In
1970, Kurt Feshbach (@Kurt_Feshbach on Twitter) was a high school
dropout, described in one article as a “typical SoCal surfer”
sporting long hair, flipflops and a tank top. Based on appearance
alone, nobody could have known that his small company in
California, Feshbach Bros., was actually one of the most feared
Activist Short Sellers in the world.  


Kurt takes us through his first trade (which netted him $5k) and
through some of the biggest hits that, in 9 years, had Feshbach
Bros. managing a billion dollars - for those keeping score,
that’s an annualized return (IRR) of 232.4% - not bad for high
school dropout. 


Kurt went to war with journalists and banks while balancing a
complicated relationship with the SEC and other regulators. He
was criticized at the time for using what many considered to be
unorthodox investigation techniques but has now become standard
practice for top-tier Activist Shorts.


Kurt now runs https://bindlepaper.com. The Bindle Paper is an
independent boutique research firm which produces deep dive,
single-stock short research for a discrete and limited group of
institutional clients.


bin·dle pa·per: A clean piece of standard-size, folded paper used
to contain trace evidence.


Sit back, grab a drink, and enjoy the trip through time,
knowledge, and experience that Kurt imparts during our
fascinating conversation.


“We're doomed to repeat the past no matter what. That's what it
is to be alive. It's pretty dense kids who haven't figured that
out by the time they're ten.... Most kids can't afford to go to
Harvard and be misinformed.”


― Kurt Vonnegut


1:05 Kurt talks about how he got started and the help he had from
his partners and his father.


2:42 Go directly to jail, do not pass go, do not collect $200.
Hear the long list of companies whose executives ended up in
prison after dealing with the Feshbach Bros. 


6:05 Kurt working on the sell side of Wall St, and meets a man
that showed him the light, which led him to his first short idea.


12:26 A business is born; Kurt brings in his brothers and gets
some seed money from a partner to start Feshbach Brothers.


15:03 Green energy was booming in the 1980’s - the problem was
that most of them were frauds. Kurt made a killing exposing them,
including one that claimed to create "clean" energy from human
waste… turns out they were full of shit.


17:40 Kurt takes us through the process that they employed to
obtain SEC filings via 1980’s technology.


28:06 Kurt talks about ZZZBest and Barry Minkow, one of the
biggest and best shorts on his impressive track record, as well
as a few others that were absolutely amazing finds.


34:55 All that swag, congressional hearings, and Robert Flaherty.


41:19 Picking through the trash, putting the puzzle together, and
working with reporters to get your story out before the internet
was invented.


48:48 How the market is essentially the same 40 years later, well
except for the valuations...


58:57 Kurt addresses the "rumors" that Wells Fargo killed his
business


1:06:38 The SEC and 20,000 pages of thermal paper.


1:19:39  The next big thing for Kurt: The Bindle Paper.