Student offer; Klarman; Cannibis bubble; 3 scams

1. I'm looking for four students who want to attend our conference on short selling in NYC on Monday, Dec. 3. We'll comp you if you help us the evening before and during the day of the conference. Email me if you're interested.

2. A nice article about Seth Klarman and his classic book, Margin of Safety, which was one of the first investing books I ever read: Meet the Billionaire Investing Guru Whose 27-Year-Old Book Is Now Selling for $3,000. Excerpt:

The author of Margin of Safety is well-known in investing circles for, among other things, not being particularly well known by the masses. He obviously isn't anywhere near as famous as billionaire investor and philanthropist Warren Buffett, the so-called "Oracle of Omaha." But as far back as 2012, the Economist referred to Seth Klarman as the "Oracle of Boston" (where Klarman's Baupost Group is based), noting both his investing prowess and his ability to fly very much under the radar.

"Klarman keeps a low profile and rarely speaks at industry shindigs," the Economist reported. "He is probably the most successful long-term performer in the hedge-fund industry who has managed to stay out of the spotlight."

Likewise, the New York Times wrote in 2017 that while "Klarman has long kept a low public profile, he is considered a giant within investment circles."

3. Cannabis stocks are already in bear market territory – but still have much further to fall. When silly bubbles burst, the declines are 20%, but at least 80% (often 90%, even 99%). Cannabis Stocks Aren't Just Plunging, They've Already Fallen Into Bear Market Territory. Excerpt:

Some of the heaviest declines came in cannabis stocks that were favored by speculators. Tilray, the first weed company to list on the Nasdaq, fell as much as 21% at one point Monday afternoon before rebounding slightly to $122.60 at the market's close, which marked a 16% decline on the day. OTC shares of Aurora Cannabis, which officially trades in Toronto and is planning an IPO on a U.S. exchange, fell as much as 20% before closing down 13% at $8.69 a share.

Tilray's stock has lost 31% of its value in the past five trading days, while Aurora is down 29%.

With recreational marijuana becoming legal in more places, cannabis stocks have become something of a speculative fad this year, drawing comparisons to bitcoin because of speculative bubbles generated in what may well become viable markets in time.

4. Speaking of scams, I'm really enjoying this new book, The Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World. Excerpt:

In 2009, with the dust yet to settle on the financial crisis, a mild-mannered Wharton grad set in motion a fraud of unprecedented gall and magnitude--one that would come to symbolize the next great threat to the global financial system. The scandal is known as 1MDB, and the man behind it, Jho Low, is a figure so preposterous he might seem made up.

5. Kudos to the WSJ for its front-page story in today's paper on this scam. How One Stubborn Banker Exposed a $200 Billion Russian Money-Laundering Scandal. Excerpt:

It took a £1 payment to uncover one of the world's biggest money-laundering scandals.

Howard Wilkinson, a British trader at a Danish bank's branch in Estonia, noticed that a London business, which moved more than $1 million through the branch almost daily, had filed a report with the U.K. government claiming it had no income or assets. Downloading the report cost Mr. Wilkinson one pound.

The discrepancy didn't immediately strike him as malicious. Later, he began tugging on the thread. And five years after Mr. Wilkinson raised the alarm, his old employer, Danske Bank , DNKEY -1.76% last month announced that more than $230 billion had flowed from Russia and other former Soviet states through its tiny branch in Estonia. A large part of this was probably illicit money, the bank has said.

It is a money-laundering scandal on a grand scale, broaching one of the West's rawest subjects, its tense relationship with Russia. The money involved is equal to more than all the corporate profits in Russia in a year. The scandal has tarred the reputation of Denmark, a country ranked among the world's most transparent, and wiped out nearly half the stock-market value of the Scandinavian country's largest bank, which knew about the problems for years before they became public. Its star CEO has resigned.

The revelations have ignited soul-searching in Europe about the cost incurred by some of its banks to survive the global financial crisis, especially how they welcomed flows of thinly monitored money from countries with weak rule of law. Regulators increasingly wonder whether their defenses against criminal money are broken, given how so much moved through the brand-name bank of a Scandinavian nation.

6. More kudos to the WSJ for its coverage of this scam: Private-Equity Firm Abraaj Raised Billions Pledging to Do Good—Then It Fell Apart. Excerpt:

In January, the Abraaj Group had $14 billion of assets under management and was trying to raise $6 billion for what would be the world's largest emerging-markets private-equity fund.

It's now the world's largest insolvent private-equity firm. In June, it filed for provisional liquidation.

During its rise, the Dubai-based firm attracted many Western investors. Its founder, Arif Naqvi, promised to make money by doing good in poorer countries, including with a fund that would invest in hospitals serving African and Asian cities.

Abraaj's fall stands as a warning to those misled in their enthusiasm for the idea behind the firm. One former employee described Abraaj's work as "inspirational capitalism at its most enlightened." Signs of trouble went overlooked, with one investor receiving an anonymous email alleging problems at Abraaj.

The collapse has led some investors to question whether Dubai's regulatory environment is sufficiently safe—and privately, some worry it has damaged trust in the movement to use private capital to solve social problems in emerging markets.

Mr. Naqvi raised billions from the likes of the Bill & Melinda Gates Foundation, Bank of America Corp. and the U.S. government. He made annual appearances at the World Economic Forum in Davos, Switzerland, and sponsored the Clinton Foundation's 2012 summit in New York. Abraaj marketing documents touted 17% net annual returns.

Mr. Naqvi himself started a $100 million charity in his home country of Pakistan, and funded students attacked by the Taliban. He accumulated estates in England and France, a $20 million yacht, a private jet and Asian and Middle Eastern art.