Short selling is complex in execution (involving swaps, puts, margins, etc.) but it's fairly simple in theory: a short is a bet that a company will fail and take its stock price down with it. Short sellers win when someone else fails. They’re not bad guys exactly but they’re not quite good guys either. That’s part of what makes Fahmi Quadir, the protagonist of “Drug Short”, an episode in the acclaimed Netflix documentary series Dirty Money, so unusual.
For one, Quadir is young American-born woman of Bangladeshi descent in an overwhelmingly male field — in 2017 only 1 in 20 hedge funds employed a female portfolio manager. More importantly, she exposed (along with some dedicated reporters and a handful of fellow short-sellers) the price gouging tactics of the multinational pharmaceutical corporation Valeant. For years, Valeant had been acquiring smaller pharma companies for their patents on specialty life-saving drugs, hiking up the prices, and reaping the profits.
If this sounds familiar, you’re probably remembering the incident of “Pharma Bro” Martin Shkreli: He acquired the drug Daraprim, commonly used in the treatment of AIDS-related illnesses, and raised the price of a single dose from $13.50 to $750. While Shkreli was being publicly excoriated for his actions, Valeant was quietly operating on a similar business principle with the backing of some of the most powerful hedge fund managers in the world. Its stock price soared.
While the rest of the financial world remained bullish on Valeant, Quadir, who’d double majored in Mathematics and Biology at Harvey Mudd College, conducted extensive research into Valeant’s business practices and encouraged her firm to take a short position in the company. The bet paid off when Valeant was exposed for price gouging. Today, Quadir operates the hedge fund Saftkhet Capital Management and was named one of Forbes 30 under 30 list in the finance category.
We spoke with Erin Lee Carr, the director of "Drug Short" about the labyrinthine world of finance, pharmaceuticals, and finding an unlikely hero to navigate a complicated a story about greed.
Tell us how you found out about Valeant and the Fahmi Quadir.
"I was approached by Alex Gibney's company, Jigsaw, and they said they had and idea for a show about corruption and power. These are long-standing themes that Alex Gibney's been involved in, but they really wanted to make this an anthology show. They asked if I'd be interested in directing an episode. They were talking over the ideas, and they mentioned Valeant, and the world of pharmaceutical companies. To me, It really felt like a new, incredible version of a story [about greed]: One where the people that are affected the most are the people that need medicine. That’s an incredibly vulnerable population.
"I think Alex actually wanted to direct the episode but I said, 'I want to do this one! This one's amazing.'"
How do you tell a story that’s filled with a lot of technical jargon, in a new, fast and exciting way?
"I was working with Will Cohen, who came onboard before I did, and he was tasked with basically finding out the characters and stories. He felt that one interesting element of this was the short selling, and how the short sellers were the ones who realized that Valeant was a fraud.
"Will mentioned Fahmi as one of the short sellers and the pure fact that she’s a woman and is doing short selling is incredibly rare and very powerful. He wasn’t sure she would go on the record, so I set up an in-person meeting with her. You spend five minutes with her, either in real life, or watching her on camera, and you see she's an incredibly smart, mystical, and incredibly powerful presence.
"I had to convince her to go on camera, which was a little bit of a challenge, because she faced some risks and she wanted to be careful. But we were able to spend some time together, do some other sequences, get her feeling more comfortable, and ultimately she was the stand-out in the show."
What were the risks she faced in going on camera?
"There’s a stigma against short selling and a lot of short sellers operate in the shadows. You don't want to have your name associated with a giant short because the next short that you're gonna look after, even if you’re using a synonym to research it, people will know that you’re taking a short position. She has to do research and she has to look at companies very closely. If she's very public when she’s investigating as a short seller, trying to bring companies down, it makes her job a lot more difficult."
Why is it so difficult to put a short seller in the role of protagonist?
Short sellers are really looked down on the financial sector. They’re compared to ISIS, or Al-Qaeda — all these incredibly incendiary comments, but in this film, the way that the short sellers are framed and shot, you can tell that they're fashioned as heroes. And that's not to say there are no unethical short sellers. They definitely exist. But there has to be checks and balances with everything, and I think that people who stake this kind of money and their reputation on a company going downhill — they’re doing it for a reason. They've done the research. And it’s their money.
"Fahmi stands to make a lot of money when a bet on shorting a company comes through. The money is a part of it. One of the perks of being a short seller is the ability to make a fantastical amount of money. That being said, a lot of people don't. A lot of people lose their shirt because the risk and the loss is infinite. It's the wild, wild world that is the financial market."
What made you choose Fahmi as the center of a story that's about powerful men manipulating the system? She’s actually doing research on the sidelines.
"What I did was I re-watched the movie Ocean's Eleven. I really wanted this to feel like a heist film and in every ensemble cast, you're going to have a stand out like Fahmi. But a lot of other people in this story did a lot of work to expose Valeant and I included their stories as well. It really was through the very intense detective work done by people like the journalist, Roddy Boyd, and another short seller named John Hempton — all these people are working in back channels to topple this giant, billion-dollar company."
Have you kept in touch with Fahmi since the film came out?
"She came to me to visit me in Queens, which I don't think she had been to in a while. She came in this incredibly beautiful fur coat. It was incredible to see her come into this Thai restaurant in Queens. It felt like a mirage. She's epic. I would be nervous if I was one of her enemies."