(Bloomberg) Ten years on from the financial crisis, bank balance sheets haven’t become any simpler to digest for the average investor. Finance firms are big and leveraged; regulations have just become new instruments of complexity. That might suggest a potential windfall for any brainy number-cruncher who’s bored enough to spend a year looking for inconsistencies in the industry’s accounts.
London hedge fund Caius Capital certainly thinks so. It carved out a niche for itself in 2017 when it accused Britain’s mighty West Bromwich Building Society – 750 employees, 9 million pounds ($12 million) in profit – of wrongly classifying debt instruments as core capital. Not exactly the stuff of a Michael Lewis thriller, but it kind of worked. The Midlands firm bought back the instruments before the regulator had made a final judgment on the case. Caius made money.