Bronte came to prominence for bearish bets on Chinese companies that had listed in North America. They included Sino-Forest Corp., a tree plantation firm that filed for bankruptcy protection in Canada in 2012 after short-seller Carson Block said the company overstated its assets. And Longtop Financial Technologies Ltd., a software company that was delisted from the New York Stock Exchange in 2011.

Sometimes, Hempton’s research takes a comic tone, both for long and short investments. Once, he went to a Bangkok hair salon to investigate how well Henkel AG had done its marketing for its Schwarzkopf brand of hair dye, and ended up discussing the products with women who he says were call girls getting ready for the evening. The experience helped convince him he was right to own Henkel’s shares.

Hempton also posed with researcher and author Jonathan Tepper as graphic designers looking to borrow 10 times their combined income to buy property in Sydney’s suburbs. The ease with which they could do this signaled to him that Australia had a housing bubble and that it made sense to bet against the country’s lenders.

‘Certifiably Crazy’

Hempton is “certifiably crazy,” Ackman wrote last year in an e-mail released by U.S. lawmakers as part of a Valeant hearing, discussing whether Bronte was shorting the drugmaker because he was an investor. Fran McGill, a spokesman for Ackman’s Pershing Square Capital Management, declined to comment.

“I have learned that you have to fact-check everything,” Hempton said of Ackman’s presentations about companies. “If all the facts line up you should probably put the same trade on. And if all the facts don’t line up, you should probably take the other side.”

Hempton says he started shorting Valeant when it rose to $130 a share. That happened in January 2014, and Hempton first wrote about it on his blog in June of that year. Ackman’s Pershing first teamed up with Valeant on an unsuccessful bid for Allergan Inc. in April 2014. The drugmaker’s stock ended last week at $23.25, after months of turmoil including U.S. federal investigations, an accounting scandal and scrutiny over drug-price increases.

Red Flag

Hempton finds such targets, he says, by tracking people close to past cases of corporate malfeasance. Then, he reads filings and talks with all kinds of people, including customers and suppliers, but very rarely management. He publishes theories on his blog to get reaction, testing his short case. Often, Hempton says, he’ll know a company is hiding the truth, but he won’t know what the truth is.

For Valeant, Hempton says the first red flag was Norma Provencio as head of the audit committee. Provencio previously held the same post at a small company that went by names including Signalife Inc., which went bankrupt after a half decade of fraud.