Credit Suisse and the German Wirecard have a lot in common. Over the weekend, funds from the CS came to light that invested heavily in Wirecard shares.
According to the Sunday newspaper CS has acquired “around 740,000 Wirecard shares with a value of over EUR 100 million for at least five of its investment funds”.
The investments in Wirecard have taken on considerable weight in some of the funds. The CS fund managers were happy with Wirecard.
The company, along with others, made “some of the best contributions to performance,” noted in its May 31, 2018 report.
At that time, the Financial Times was already writing about possible accounting tricks for the Munich company. Thanks to bank recommendations, investors still pounced on the stocks.
In a fund called “Small and Mid Cap Alpha Long / Short”, the Wirecard position was a kind of cluster risk.
For 31. May 2019 At that time, Wirecard shares accounted for 7.7 percent of the total fund assets. The next largest position came from a company called Morphosys, which had 5.7 percent “weight” in the CS fund.
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The CS fund managers stuck to Wirecard from 2018 to 2019, when questions about possible Wirecard fraud scams began to pile up in the Financial Times.
As of May 31, 2018, Wirecard’s weight in the small and midcap funds was 7.64 percent. The CS thus increased the relative position from 2018 to 2019 instead of reducing it.
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In other funds, CS had opted for Wirecard and invested a lot of money from its customers. As of May 2019, Wirecard’s share in the Europe Equity Absolute Return Fund CS was 3.23 percent.
Here, too, Wirecard shares held the top position in the fund, followed by the next largest stocks at some distance.
Keeping to the beat: As of May 2019, Wirecard shares were in the top 10 in the CS “Global Security Equity Fund” with 2.73 percent. The gap to the leading stocks was small.
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A year earlier, as of May 2018, Wirecard was still number one in the security fund, with a share of 3.1 percent of the total fund assets.
Zu diesem „Global Security Equity Fund“ schrieben die CS-Fondsmanager im Mai 2018: „The main positive contributor in the last month was (…) Wirecard AG, a leading provider of software systems for online payments (IT security)“.
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The FT reported last week that Wirecard had only made significant sales with a few customers, including those from the porn industry.
“A significant part of the remainder comes from the pornography industry, with some clients paying unusually high rates for payments processing,” wrote the FT journalist, who had reported irregularities at Wirecard since 2015.
Instead of taking him seriously, the bankers believed the Wirecard bosses. They hunted down the journalists with their lawyers.
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The losses in the CS funds are borne by the bank’s customers. With their money, CS had bought shares from Wirecard. These are now junk.
On Friday, CS said on request: “Wirecard’s position was a long-standing part of the investment universe and the portfolios of these funds, and this was communicated transparently to investors.”
“Due to the active risk management and broad diversification, the impact of the fraud case on the performance of the funds is within the scope of normal fluctuations.”
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