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Roula Khalaf, Editor of the FT, selects her favourite stories on this weekly newsletter.
When shills and stock promoters are in all places, it’s encouraging to notice the recognition of a person who worked tirelessly to make stocks go down.
Nate Anderson, founding father of the activist short seller Hindenberg Research, said yesterday he was closing the firm. Its hit list includes Adani, Nikola, CloverHealth, DraftKings, Block, Icahn Enterprises, Super Micro Computer and Twitter (where Hindenburg switched its short to long, predicting appropriately that Elon Musk couldn’t back out of a takeover).
The destruction of misplaced value in its seven years of operation — throughout the biggest bull run for US stocks on record — has been cathartic.
Short sellers all the time seek to portray themselves nearly as good guys who expose bad guys. With Hindenburg, the fame fit. It’s no surprise that Anderson, in an emotional farewell note, chooses to measure his value in perps fairly than dollars. “Nearly 100 individuals have been charged civilly or criminally by regulators a minimum of partly through our work, including billionaires and oligarchs,” he writes. “We shook some empires that we felt needed shaking.”
Anderson’s approach helps explain Hindenburg’s popularity. He signs off by linking to a deep-house set by British DJ Lee Burridge that was posted on YouTube in February 2020. Since his announcement, by our calculations, it has been adding about 2,300 views per hour. All the highest user comments are about Hindenburg:
Public celebration of short sellers represents a welcome tone shift from 2008 . . .
. . . and from as recently as 2019 . . .
Which makes this little bit of Anderson’s exit note particularly intriguing:
[O]ver the following 6 months or so I plan to work on a series of materials and videos to open-source every aspect of our model and the way we conduct our investigations.
Plenty is being written about how a Trump administration will make things even tougher for activist short sellers. But things are already pretty tough.
They’re using fundamentals to battle passive flows and other dumb money. The windows to shut positions keep narrowing, so shock-and-awe tactics turn into increasingly aggressive. The SEC’s case against Citron Capital and its founder Andrew Left is alleged to have prompted some hedge fund backers to ringfence investment functions from activist-short research, so it’s easier to throw the general public face of any campaign under the bus.
In a really perfect world, corporate investigations (like journalism) can be done for the glory fairly than the profit. Will the following wave of finfluencers be proto-Nates craving popularity that’s measured in felt collars and YouTube streams? Probably not, but we will hope.
Further reading:
— Safkhet Capital’s defence of short selling (FTAV)
