On Fridays,  John Hempton decamps to the solitude of his Sydney beach house, where the locals know nothing of his quirky stock research and focus on sniffing out fraud.

The tax official turned hedge fund head, who built an online following by scouring numbers that don’t add up, has also posed as part of a gay couple trying to buy a home beyond their means to build a case for short-selling Australian banks. You’ll find him in Bangkok, talking to prostitutes about the hair dye they use. Or squaring off against billionaire investor Bill Ackman, who says Hempton is nuts.

The self-described eccentric has got some big calls right. His Bronte Capital Management Pty has bet profitably against Valeant Pharmaceuticals International Inc. and made money on a stake in Herbalife Ltd., both of which pit him against Ackman. It still holds the positions. While Hempton is known mostly for short-selling, he says he makes his real profits from long-term stock picking.

“We’re far longer than we’re short, and over time I expect to make more money on the longs," Hempton, 49, said in an interview before going for a body surf. “But our shorts are really quite unusual, and they are a lot of fun.”

Tax Official

Hempton’s path to becoming Ackman’s tormentor was unusual. He worked at the Australian Treasury for much of the 1990s, dissecting accounts to investigate tax avoidance.

A chance encounter with a headhunter on a Sydney ferry in 1999 got him in the door at Platinum Asset Management Ltd. By the time the firm started by billionaire Kerr Neilson went public in 2007, Hempton was a junior partner.

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Retired at 39, Hempton says he co-founded Bronte in 2009 when his wife threatened to divorce him if he didn’t get out of the house. The four-person firm manages more than A$100 million ($75 million) from an office near Bondi beach.

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