Comment by paxys
Comment by paxys 3 months ago
Getting out while they are ahead is a smart move, especially considering multiple governments have started to take a closer look at their shorting tactics.
Comment by paxys 3 months ago
Getting out while they are ahead is a smart move, especially considering multiple governments have started to take a closer look at their shorting tactics.
I'm assuming when he says "governments taking a look at" he means like the Indian government and it's more of a Mafia-type "taking a look at" than a serious inquiry with any actual merit. A strongarm type thing
I think its brought attention to numerous cases of accounting and other shenanigans.
What I've noticed, casually, is that they often target companies or management with a pattern of fraud and abuse, and surprise they keep doing it.
VP of Sales gets slapped on the wrist for illegal tactics?
A few years later he goes on to be promoted to CEO and.... does the same thing!
Amazing.
I doubt that's the whole of it, but I'm sure a past pattern definitely comes into play. As someone once said, we are faithfully true to our defects - we tend to repeat our mistakes.
Someone who plays fast and loose with the law to get their sales bonus doesn't just find Jesus and give up one day. More likely he gets promoted and does it all over again.
But some of the short seller research I've heard of like interviewing ex-employees about internal irregularities is quite clever.
In another case (I think it was a different short seller) he went to the actual physical locations declared on paperwork as "offices" and found them to be empty warehouses.
So this kind of interviewing and boots on ground stuff is next level.
But the Indian regulator was going after the short seller suggesting they used non public info. Turns out India is corrupt which we already knew as a fact and one of the chiefs owned the stock.
The source is their research. Much of which was publicly available.
You can draw your own conclusions but a company worth hundreds of billions of dollars being audited by a mom and pop shop is more evidence than anyone needs that their books are made up.
The fact that the Adani group couldn’t refute any of their claims was pretty telling as well.
Yeah not like Hindenburg researched a large Indian company with close ties to the BJP.
https://www.aljazeera.com/economy/2023/3/1/modi-govt-allowed...
They interview people involved with these companies, then based on these interviews write report that is privately distributed and take out coordinated short positions.
That’s almost the definition of insider trading. Almost. Now afaik what they are doing is nominally above board, but they are walking a very fine line.
In less than a week a president will take power whose chief advisor has a really big grudge against short sellers.
Getting out now is on point for Hindenburg.
I wouldn't say they were ahead at least in terms of reputation. They targeted India's Adani group and failed. The Supermicro "revelation" was also a damp squib. I suppose they made plenty of money with their short-selling though, so in that sense they are, perhaps, ahead enough.
Only failed Adani because they misunderstood how deep the Indian government would go to join in the cover-up, instead of actually investigating it.
The Big 4 auditor for Supermicro literally quit, citing concerns. It's the SEC's job to do the investigating (and it's failed badly and likely to fail more with the coming admin).
Can someone give me the context please? I’ve never heard of this organisation before. What do they do and what are they known for?
I'd really recommend Matt Levine's various columns on this. Here's one [0] - it's paywalled, but if you sub to the newsletter you get the full texts for free. Not sure if you can get historical ones, but I'm guessing he'll talk about it again in the next issue this or next week. I added the excerpt here [1] too. Very entertaining and informative take on most things finance.
[0] https://www.bloomberg.com/opinion/articles/2024-07-02/people... [1] https://telegra.ph/Hindenburg-01-16
Their "shorting tactics" ? You mean doing extensive well sourced research that convinces other people that their position is correct?