- Head of credit job allows fund to target unlisted companies
- Terrence Ing will focus on credit and finding financial fraud
Muddy Waters Capital LLC, the activist investor founded by short seller Carson Block, has hired Pimco’s Terrence L. Ing as its first head of credit, enabling it to target both listed and unlisted companies.
Ing was a senior credit analyst and portfolio manager at Pacific Investment Management Co.’s $3.3 billion Global Credit Opportunity hedge fund.
When he joins Muddy Waters in June, Ing will scour corporate credit markets for new targets, the firm said in a statement seen by Bloomberg. For example, he will look for investment-grade securities that subsequently get downgraded.
Block, 40, started taking outside money in January, when he created Muddy Waters Capital as a new activist money-management firm and an affiliate of the Muddy Waters research arm.
“The Muddy Waters brand and Carson’s name is becoming a lot more well known in the debt world right now,” Ing, 40, said in an interview. “They really have a different angle on research: in-depth due diligence, investigative work, forensic accounting. We can figure out which securities are best to short, especially if there’s a fraud element, if financial shenanigans are going on.”
Block shot to fame by publishing bearish reports on Chinese companies. His research preceded the 2012 collapse of Hong Kong-based Sino-Forest Corp. Last year he released skeptical reports on Noble Group Ltd., France’s Casino Guichard-Perrachon SA and Telia Co.
The new fund started with $100 million from one investor, a person familiar with his firm said at the time. Block also said he recently hired a former CIA employee as his chief of staff.
Bull markets and near-zero interest rates have helped prop up equities for years, he has said, making this an apt time for short sellers to pounce. His 2016 theme: shorting “heavily financially engineered companies.”
“We’ve obviously done some work in credit and see an even greater intersection between activist opportunities and credit, with the amount of debt that’s spiked on balance sheets in recent years,” Block said in an interview on Wednesday. “Terry’s coming in from one of the best operators in the asset-management business, so I’m excited to see what he looks at with us.”
Ing said he met Block while both men were finance students at University of Southern California. They both speak Mandarin and share an April 27, 1976 birthday.
With an average negative return of 34 percent versus the S&P 500, Block ranks 19th of the top 43 short sellers tracked by research site Activist Shorts. A negative return is good for a short seller.