A. Four, according to his answer to a reporter in September 2001.

Q. Who are they?  

A. Hedge funds who apparently want to remain anonymous.   He does not disclose their names.

Q. What’s the secret?

A.  The site cannot speak for his clients.  But it's clear that anonymity enabled them to have simultaneous long/short positions without detection for many years.  It's also possible that being known as a supporter of Asensio's activities might concern anyone who cherishes a reputation as a respected businessman, professor, and/or philanthropist.   

Q. If Asensio won't name his clients, how did you identify any of them?

A. John Griffin owns the fund, which is located in New York city.  Griffin is vice-chair of the board of trustees of the University of Virginia McIntire School of Commerce, a visiting scholar there, an adjunct professor at Columbia University, and a trustee of several foundations.

A. Quilcap is owned by Parker Quillen, who manages several hedge funds under its umbrella (Little Wing and Tradewinds). The SEC has few filings from Quillen's funds. They are probably small enough to be exempt from quarterly filing requirements.  Quilcap is located in New York City.

West Highland is owned by Lang Gerhard, who also operates the Gerhard Family Foundation.  The fund is located in Greenbrae, a suburb of San Francisco.  It had enough assets under management to be required to file quarterly reports with the SEC until a few years ago, when the value of its assets plummeted.  Bad investments no doubt played a role—the fund had heavily invested in a few companies that went bankrupt.  However, the sharp decline may also reflect a decision to shift assets to a new fund.  As of 2006, only two people remain on the West Highland staff.  

Some former employees now work for Kingsford Capital Management. Kingsford originally operated from West Highland's office but now has its own in Point Richmond (another Bay Area suburb).   Former West Highland portfolio managers David Scially and Mike Wilkins own the fund, which they founded in 2001. 

We have no document that says Kingsford is an Asensio client.  However, for a variety of reasons—such as the evidence that Scially turned to Asensio for help with a problem short pick in 2003—we believe that it is.  

We can also say that, in our view, there is no longer any doubt that Mike Wilkins is "Bill Wexler," the Silicon Investor pundit who denies a hedge fund affiliation or use of an alias.  "Wexler" lives in Florida now. So he apparently co-owns Kingsford but doesn't work in its office.  

Also noteworthy is that Asensio claims to be a principal in a short-biased hedge fund.  Naturally, he does not reveal its name, despite his obligation to make full disclosure.  The hedge fund universe has only a handful of short-biased funds. Kingsford is one, and Asensio is known to be close friends with co-owner Mike Wilkins.

We won't go so far as to claim that Kingsford is the unnamed fund.  But it would not surprise us if it is.  It also would not surprise us if Asensio is spinning another yarn here and is a hedge fund principal only in his self-aggrandizing fairy tales.

Q.  Is there any evidence that clients help Asensio prepare his reports?

A.  Yes.  In a sworn deposition given in 2002, Asensio acknowledged that Mike Wilkins of West Highland Capital and Judy Stone and Parker Quillen of Quilcap assisted him "with everything" related to preparing his reports on Chromatic Color Sciences.  In his words, "We worked closely together" [page 178]. 

That is the only admission we have from Asensio himself.  However, our own analysis shows that certain reports he claims to have authored were obviously the work of his clients.  We've also questioned whether clients drafted complaints about companies they were shorting that Asensio sent to regulators.  The letters did not disclose that he represented hedge funds with large short positions who would profit handsomely from regulatory action against those companies.

Q. Does Asensio's compensation come from serving as broker to hedge fund clients?

A. Very unlikely.  During the Hemispherx trial, he told jurors that his clients pay him "what they want to, when they want to, and how they want to."  Similarly, Exhibit B of the Lowry Report shows that his hedge fund clients used other brokers to handle their trades.

Q. Then how do his clients compensate him?

A. He told the jury: "We do research and we publish that research and people act upon that research. . . . They pay us based upon what they believe our research is worth over time."

A. Asensio and his clients need to answer the question—but haven't. That they have evaded it reflects poorly on them and regulators, who have focused on minutiae rather than the most material issues in their complaints against him. Everyone agrees it would be fraud if a company sponsored an analyst recommendation without making disclosure. Yet Asensio and his clients operate as if there is no parallel when they engage his services to circulate attacks on their problem short positions—attacks that in some cases they have obviously written themselves.  

We'd like to see the SEC or the New York Attorney General step in and require Asensio to disclose the information that he and his clients have been concealing for years.  Investors have a right to know who writes and who pays for his "research reports" and also about the size of clients' long and short positions.


Q. Do other hedge funds have many Asensio's "picks" in their SEC reports?

A. Yes, several do.   But it's obviously not possible to rule them in or out as clients based solely on these similarities.

Page Created 11/30/02 ●  Updated 1/26/06  ●   Updated 12/28/07