Tracy Alloway and Joe Wiesenthal interview Fami Kadeer, founder and CIO of Safkap Capital and known as 'The Assassin' in short selling circles. Kadeer gained fame for successfully shorting Valeant and Wirecard, and has appeared in multiple Netflix documentaries about financial fraud.

The conversation, recorded live in London, covers the existential crisis facing short sellers in current markets, where traditional price discovery mechanisms have broken down. Kadeer discusses her transition from exclusive short selling to long positions in Korean markets for the first time in her career.

Key topics include the structural challenges facing US consumers, the 'golden age of fraud' in markets, and Korea's recent corporate governance reforms. Kadeer explains how Willful Blindness concepts apply to current market dynamics where deregulation enables businesses to exploit consumers while investors ignore fundamental problems.

The Dying Breed: Short Sellers Face Extinction

Safkap Capital exclusively holds short positions with zero hedging allowed, requiring conviction on every trade - 'we need to be really down right on every position we take' - Fami

Institutional allocator interest in short funds collapsed after 2021 GameStop events, creating 'no business case for running a short fund because no one was willing to pay you to do it' - Fami

Traditional informational alpha from short research no longer affects price discovery effectively, forcing short sellers to become 'factor investors like everyone else'

Short sellers now focus on timing fundamental catalysts and 'shorting on the way down' rather than building long-term conviction positions

Consumer Stress and Generational Wealth Gaps Drive Opportunities

US household debt servicing has reached 11% of income, with households carrying student loans facing 'much much higher' burdens according to Kadeer's analysis

A 'bifurcation within households' shows older generations stabilizing while younger generations face 'greater unemployment and this generational wealth gap'

Target sectors include consumer discretionary businesses with high funding needs, levered roll-ups, and healthcare services facing reimbursement pressures

Healthcare represents a 'mid long term' short theme due to populist pressure on 'reimbursement, cost of care, and systemic issues in the US healthcare system'

The Golden Age of Fraud Meets Regulatory Retreat

SEC enforcement actions dropped 26% from 2023-2024, then another 22% the following year, reflecting 'procyclicality' where 'no regulator wants to stand in the way of something as big as the AI boom'

Current market dynamics mirror 1920s radio utilities with 'layers of financing at each level' and 'cash flows being recycled between each of these layers' creating black box structures

The concept of Willful Blindness explains how deregulation creates environments where 'businesses may look robust' but depend on 'exploiting the consumer price gouging'

OpenAI's eventual IPO could serve as 'an important repricing moment for the market' by revealing financial narratives currently hidden in private structures

Wirecard Investigation: Following Behavioral Pressure Points

Wirecard's US operations were built around money laundering through a 'kingpin, the fixer' who was 'best friends with Jan Marsalek, the Russian spy co-founder'

The arrest warrant for Marsalek's best friend in March 2020 created 'psychological collapse' - Marsalek was 'chugging bottles of vodka, rolling around on the floor' at his birthday party

Within six weeks of the arrest, 'two billion dollars missing, Wirecard goes bust,' demonstrating how understanding pressure points reveals when 'the house of cards is starting to fall'

Successful fraud detection requires understanding 'what are these pressure points, what will actually make these guys sweat' beyond just financial metrics

Korean Market Revolution: From Short Ban to Long Activism

Korea banned short selling in November 2023, prompting Kadeer to launch her first-ever long strategy focused on shareholder activism in Korean companies

Korea enshrined shareholder rights in corporate code 'not even a full year ago,' establishing fiduciary duty for 'fair and equitable treatment' of shareholders

Korean chaebols historically used governance structures to 'depress the value of assets in order to minimize their inheritance tax burden' - essentially 'fraud in the other direction'

Third-generation chaebol owners are 'much more globally oriented' and 'much more willing to engage' with capital markets reform initiatives

Companies trading below book value on KOSPI will be 'named and shamed' by financial regulators, creating systematic pressure for value realization