So im one of those guys, who invested in Wirecard and want to share some of my experience.
Afterwards one is always smarter or what’s the word? With Wirecard, I was actually really wrong. I think that you have to stand up for it and you should check whether you made a mistake in your investment decision. I want to work through that in this report.
How did the investment come about, why did I hold on to the company despite the attacks of the short sellers and the reports of the Financial Times? No matter how the result turns out in the end, it is always worth thinking about your bad investments and questioning yourself even more self-critically. This is the only way, and I am convinced of this, to get ahead on the stock market.
Why did I invest in Wirecard at all?
I actually stayed away from Wirecard for a long time. I missed the price increases of the last few years. Before contactless payment became more and more popular, I did not have this trend on my screen. So I did not continue to deal with the company. In addition, until a few years ago I only and exclusively dealt with strong dividend payers. That has changed somewhat in the last 3 years. I have further developed myself and my investment style, as probably everyone does.
Then the Apple Watch came to my wrist and the possibility to pay contactlessly with the watch everywhere. More and more people were doing it and the topic was more and more often covered in the media and relevant stock market magazines. Since I don’t buy bank shares due to bad experiences, I had a gap in my portfolio. How do you fill it now? I decided on system providers who have their foot very far in the door. That was VISA on the one hand and Adyen and Wirecard on the other. I liked the story at Wirecard. Not least of all, that a man named Markus Braun is obviously such a passionate manager who managed to launch the store from nowhere into a world-famous corporation within a few years. Sales and profits knew only one direction. Due to the many untapped markets, the chance of a growth rocket emerged. Despite the already immense price increases – there was still plenty of room for the next few years. I dared the first small entry with 5 shares at a price of 135 Euro.
The shortsellers are coming
At some point, the time was when the short sellers attacked and the reports in the Financial Times about inconsistencies in the balance sheet. For me it was a classic. I thought: Hey, we’re talking about a DAX company here. Who else would you choose to attack from the DAX? The business is entangled and you need subcontractors or partners all over the world to be able to represent the transaction at all. It is difficult to see through that, even if you do everything right. A real find, then. Moreover, the price of the share had long since been geared to the growth of the company. That means that future growth was already priced in. Such shares are increasingly susceptible to volatility as those of solidly valued companies where the price reflects the business. So what did I do? Repurchased, of course!
Why did I stick with Wirecard and what did I learn?
I just couldn’t believe it. It was beyond irrational. If I have to realize that you can’t hide something like that forever, it should have been clear to a CEO of a DAX company long ago. Besides, every year there was a certificate and economic report from the renowned auditors. You look twice as much on the fingers of a DAX company.
Wrongly conceived! That is the greatest learning in history. You cannot even trust the auditors to do their job properly. I have closed my eyes for too long in good faith that there are too many functioning control bodies. With my capabilities, I have to trust my gut. But even large investment funds like DWS, which can have insight into the company at any time, have been deceived.
I am convinced that no small shareholder could have foreseen the fraud itself, but I decided for myself that as soon as shortsellers on a large scale start attacking a stock somewhere, I am OUT! We small shareholders have even less insight than the big boys and then such an investment quickly turns into a gamble. Since my money is too good for gambling I will keep my hands off such shares in the future. There are so many wonderful opportunities and companies, it is not necessary to take such a ride on the cannonball.
What did I do with the Wirecard shares?
I still have it! At the first massive slide last Thursday, I still thought something was wrong. Why does the auditor only come around the corner on the day the annual financial statements are published and say “Hey, we’re missing 1.9 billion euros”? I thought it was clearing up. If I sell now, I’ll have massive losses and tomorrow the price will go through the roof. On Friday, when it was clear that there was no 1.9 billion or the two banks did not know Wirecard as customers, it was too late to sell. All in all, I have never been heavily invested in Wirecard. I had and have a total of 20 shares. At a price of 80 euros I can sell them +/- 0. I have decided to sit out the dilemma. I have mentally written off the money but who knows: Maybe there will be a turn around story with new management at some point or another company or bank will buy Wirecard.
In this sense, my thoughts are with those who had to cope with high losses with Wirecard. It shows once again how important diversification is. Do not put all your eggs in one basket. A good guideline is certainly that no position in the portfolio should amount to more than 5%. I do very well with a maximum of 2-3 %. But that also means a lot of work, as I have to deal with more and more companies all the time.
It is important that you do not let your head hang down and question whether company investments are the right investment. To lie beside it belongs to it when investing. It is much more important to learn from it. To look the facts in the eye and to question critically where you could have done something better yourself. On the stock exchange, nothing is as important as experience – the good ones, and unfortunately also the bad ones!
Are you invested in Wirecard or have you sold at a loss? I am looking forward to your comment.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.