Last Sane Man on Wall Street

[weijian]

An interesting read on Hindenburg Research, who gotten their fame from their major breakthrough from their short report on Nikola ~1.5years back.

There are cohort of activist long buyers and of course cohort of activist short sellers. In this way, then the Market will be more efficient.

Last Sane Man on Wall Street

On a practical level, though, the rolling truck was the killer detail — the spark that incinerated a high-flying stock to the career-making benefit of Nathan Anderson, the proprietor of Hindenburg Research.

Anderson belongs to a cranky cohort of “activist” short sellers. They make money by taking positions in the stocks of shaky or shady companies, which pay off if the price goes down — an outcome the shorts hasten with public attacks, publishing investigations on their web platforms and blasting away at their targets (and sometimes at one another) on Twitter.


To their many powerful enemies, they are little more than internet trolls, a fun-house-mirror image of the day-trading dumbasses on Reddit who drive up meme stocks for the lolz. Anderson prefers to think of himself as a private detective, identifying mischief and malfeasance that might otherwise go undetected by snoozing regulators. He used to poke around in shadowy corners, but lately he has been seeing fraud sitting right in the blazing light of day.

https://nymag.com/intelligencer/2022/01/...lling.html

https://hindenburgresearch.com/

[weijian]

So another short seller has given up. Short sellers make more fame than money. Never be a (perennial) short seller if you want to make money. But for that intellectual training, OPMIs probably need to have a short seller mentality - I call that long term investing with a short seller's mentality.

Short-seller Hindenburg Research to be disbanded: founder

Founded in 2017 as a kind of corporate muckraker, the short-seller with around 10 employees has pushed several companies to admit accounting errors or misrepresentations.

“The plan has been to wind up after we finished the pipeline of ideas we were working on,” Anderson said Wednesday. “And as of the last Ponzi cases we just completed and are sharing with regulators, that day is today,” he added.

https://www.businesstimes.com.sg/compani...ed-founder

[specuvestor]

yes in aggregate it's difficult to be perennial bear in an inflationary world with constant innovations. In 10 years black swan probably happens in 1 year... the probability and risk / reward is skewed. Structurally it's difficult to short with borrowing cost (which is ironically very vulnerable when you are right and stock is suspended for extended period of time, contrary to investing 101) and recall risk (investors recall only when they want to sell so stock spiked on recall just to go down later as owners sell) and the conundrum that good stocks are easier to borrow but bad stocks not so easy

Hindenburg has been pretty educational and now follows Andrew Left and Jim Chanos. An end of an era and wonder if it is a sign just as Julian Robertson gave up early 2000

[weijian]

Hi specuvestor,

The folks you mentioned are probably the figureheads and there are tons of short sellers who fly under the radar as they do not appear in the newspapers. They have to be unknown so that they don't invite a target on that back for short squeezing. Many hedge fund managers like John Hempton continue to truly stick to their trade of hedging their longs with shorts. They are not perennial bears but they invest with a short seller mentality.

Unfortunately, short sellers create a lot of enemies because they throw stones at individuals who create dreams and riches (whether ephemeral or not) for a section of people.

The Adani short report from Hindenburg created 1 of the largest market cap drop for them and short selling in general. But it was reported that they only earned a very small fraction of that drop as they sold this idea to others instead. So along the lines of how physical products have been subcontracted/offshored out for efficiencies, the future of short selling may probably also be very similar.

[specuvestor]

Hi Weijian

These folks I referred to specialise in short selling like Taleb profess to

There are many long short strategies or market neutral hedge funds that make their niche but usually not so vocal nor activist. The former don't short for the sake of shorting while the latter I am doubtful of their strategy in the long term as per my reasons I stated above, and trying to leverage on alpha trades

[Behappyalways]

"From A Place Of Joy": Short Seller Nathan Anderson Will Wind Down Hindenburg Research After 7 Years
https://www.zerohedge.com/markets/place-...er-7-years

[weijian]

Hi specuvestor,

The folks you mentioned are probably the figureheads and there are tons of short sellers who fly under the radar as they do not appear in the newspapers. They have to be unknown so that they don't invite a target on that back for short squeezing. Many hedge fund managers like John Hempton continue to truly stick to their trade of hedging their longs with shorts. They are not perennial bears but they invest with a short seller mentality.

Pretty apt that John Hempton's latest letter is out after mentioning him a couple days back. I haven't followed the market much and hence was appalled to see his current underperformance relative to his benchmark. Astute VBs who look at the historical performance (and relative to the benchmark) will say that his current underperformance certainly rhymes with 2021 before the 2022 bear. But I will throw caution to looking at some correlations to establish causation. Sometimes, all of us just love to overlearn the last bear market, isn't it? 

Many moons ago, market reflexivity was something I learnt as a theory from George Soros. But over recent moons, I am starting to learn how it really works in practice. Fake it till you make it, works a lot of times - It has to because if it didn't, there wouldn't have been tons of people trying to fake it in the first place.

So companies with rich valuations, may actually become good quality because of their rich valuations after they make it. And on the other spectrum, companies with poor valuations, may actually become poorer companies because talented employees don't get a good bang from their ESOPs (if there is any) and eventually tempting the majority shareholder to profit from private valuations than public.

Amalthea Fund – December 2024

Moreover, many of the current big movers have been complete and demonstrable frauds. Some started as frauds but raised so much money in the rally that they are frauds no longer. (They could buy or build real businesses with that money.)

Bronte is a short first investigate later firm.

https://files.brontecapital.com/amalthea...202412.pdf