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Clover Health: How Chamath Lured Retail Investors into a Broken Business
- edoceo 6y agoThis is the "famous" Hindenburg, who had that short-report a while ago and Chamath who's been using SPACs to take things public (IPOC became Clover) and he's in other IPOx names too
- Mengkudulangsat 6y agoI enjoyed their report on Nikola but in a market where fundamentals mean nothing, all of these will fall on deaf ears I'm afraid.
- AlexandrB 6y ago> a market where fundamentals mean nothing Eventually the music will have to stop. I wonder what's going to be the trigger.
- jkhdigital 6y agoDedollarization
- ackbar03 6y agoThis would be a massive (although it could very well be a gradual process) but given everything that's been going on so far and how the dollars been trending so far you can't help but wonder if its actually going to happen some day
- pjc50 6y agoGiven the progress so far, something monumentally stupid. I'm increasingly reminded of https://en.wikipedia.org/wiki/Pyramid_schemes_in_Albania https://en.wikipedia.org/wiki/Pyramid_schemes_in_Albania , although that was a much smaller economy with a much more limited capacity to absorb fraud.
- Jimmc414 6y agoIt took about 10 words to realize this was written by someone holding a short position. This is fine, but Wallstreetbets demands some sort of regulation?
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- whatok 6y ago> Initial Disclosure: This report represents our opinion, and we encourage every reader to do their own due diligence. Please see our full disclaimer at the bottom of the report. We have no position (short or long) in Clover Health because we think in this moment for public markets, it is more important for people to understand the role short sellers play in exposing fraud and corporate malfeasance. For more on that discussion, see our conclusion. For members of the media who wish to independently corroborate our work, please contact us for information on sources on condition that their anonymity is maintained unless they explicitly agree to go on-record.
- ctvo 6y agoIf you would continue reading beyond 10 words you'd see this: > Initial Disclosure: This report represents our opinion, and we encourage every reader to do their own due diligence. Please see our full disclaimer at the bottom of the report. We have no position (short or long) in Clover Health because we think in this moment for public markets, it is more important for people to understand the role short sellers play in exposing fraud and corporate malfeasance. ...
- fallingknife 6y agoIt's important to note that the company who wrote this report makes money by shorting stocks and then putting out negative reports about them. This is not to say that the allegations are false, and, in fact, many such reports by similar companies have been true, and excellent works of investigative journalism. However, this type of report often turns out to be nothing more than market manipulation and fraud. So all of these allegations should be taken with a grain of salt. edit: Since multiple people asked, source is I used to trade a lot and have been in trades where entities like this have put out similar fraud reports that have turned out to be false, and also seen others that were true. Also it's common sense that you should always question statements from people who stand to benefit from them.
- logifail 6y ago> this type of report often turns out to be nothing more than market manipulation and fraud Source? Do authors of "this type of report" get investigated, tried and convicted of market manipulation/fraud often?
- notional 6y agoWhat kind of source are you expecting the op to provide?
- barney54 6y agoAnything other than an unsupported accusation. It could be a link a to Hindenberg being wrong in the past, for example.
- sydd 6y agoWhy do you think they make this investigation? I doubt because of public goodwill
- fallingknife 6y agohttps://www.dlapiper.com/en/us/insights/publications/2018/10/sec-fires-warning-shot-against/ https://www.dlapiper.com/en/us/insights/publications/2018/10...
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- Jimmc414 6y agoDownvotes should not be tools of censorship.
- ctvo 6y agoChamath and others using Elon's playbook of leveraging social media to create a brand mostly opposite of what reality is continues. Elon: I'm a genius! Also TSLA's self-driving technology is better than Waymo's Chamath: Big Wallstreet needs to be taken down! Get off of Robinhood! Use SoFi instead! I'm taking it public via a SPAC
- runawaybottle 6y agoCome on man. They latest spacex sn1 crash happened because the motherfucker is trying to stand the rocket up vertical just before landing. The bro is way doper than any billionaire ever and deserves all the hype. Just take a moment and watch those videos and tell me your conclusion is ‘yeah, this guy is a charlatan’. Also, mainstream EV talk started with Elon. The hype is real and believe it or not, he earned it.
- kfarr 6y agoIt is possible for these things to be true at the same time: Tesla is overvalued, spacex is not, Elon started both.
- AlexandrB 6y agoIt's also important to note that Musk is not SpaceX. He leads and funds it, but it's a bunch of hard working engineers and scientists doing the work.
- karlmdavis 6y agoNeeds air quotes: “started”.
- LMYahooTFY 6y agoThese are ridiculously broad strokes. It's not at all obvious to me that the notions you're derisively referencing are 'opposite of reality'. When you respond with pure rhetoric to an op-ed it just sounds like an echo chamber.
- bhupy 6y agoA meta-point: I see this as the single best outcome of the SPAC craze. By taking private companies public sooner, rather than later, we provide an incentive for short sellers to find mal-practice which is otherwise difficult to surmise among privately held companies (see: Theranos, WeWork, etc)
- itsoktocry 6y agoLet's see what happens. Some of the richest, most powerful people (who conveniently benefit greatly from inflated share prices) are coming out hard against short-selling lately. The narrative is strong.
- bhupy 6y agoYeah I think the angst against short-selling is misguided. It serves a very important function in market price discovery.
- thesausageking 6y agoIf Theranos had done a SPAC, retail investors would've lost a lot of money when it was discovered as a fraud and shorted. Betsy DeVos and Rupert Murdoch can afford to take the loss and should be sophisticated enough to do their own diligence. If normal people who watched Chamath on CNBC and put their money into an interesting company lose their shirts, that's much worse.
- bhupy 6y ago> If Theranos had done a SPAC, retail investors would've lost a lot of money when it was discovered as a fraud and shorted. You don't know that for sure. Betsy DeVos and Rupert Murdoch lost their millions precisely because there was no mechanism to discover the "counterargument" against Theranos. They were sold on a vision by the founder, and they bought the pitch. It was impossible for anybody else to do any research on whether the pitch was actually accurate, and therefore that research never happened until many years later. Hype continued to grow in a positive feedback, and there was no mechanism to provide any negative feedback. In the counterfactual, Theranos would have gone public, some retail investors would have bought in, but right at the outset there would be a mechanism (and an incentive!) to provide negative feedback and kill the hype before it gets too big. This is exactly what happened to Nikola. The net harm caused by Nikola to all parties involved is much lower than that caused by Theranos. Also, retail investors shouldn't be investing in SPACs, which are obviously risky. They have every right to, but I have little sympathy for people that lose money on risky bets. Ultimately, having a risky company go public allows institutional investors to have their say and contribute to the price discovery. It's sort of like peer-reviewed research.
- runawaybottle 6y agoI don’t know if I have the appetite for this anymore. For anyone successful, there seems to be this market where someone has space to write the broken lover’s lamentation starting off with ‘Well actually, this is why my ex is awful’. Like really? For everything and for everyone? There’s no adults in the room that go ‘that’s not worth writing about’?.
- tinyhouse 6y agoChamath's trying to build a persona of someone who cares about social issues. I'm not surprised to see this, he was always a fraud in my eyes. A lot of people can lose money because of him. I cannot believe billionaires like him and Mark Cuban tell retail investors to hold GME. Even if they are right, don't they think they have some responsibility given their influence as successful business people? And don't even get me started on the biggest troll of all, mr. Musk. But at least he's not trying to hide behind some fake persona.
- optimiz3 6y ago> And don't even get me started on the biggest troll of all, mr. Musk [Citation Needed] Otherwise this is unsubstantiated vitriol. From my standpoint Musk is responsible for a staggering amount of retail wealth creation and real world technological progress.
- pjc50 6y agoNone of that is incompatible with him trolling on twitter. Surprisingly.
- LMYahooTFY 6y agoTrue but I wonder how relevant the two are to each other. "Trolling" is starting to feel semantically bankrupt.
- bpodgursky 6y agoCuban gave very generic advice re: GME on his reddit AMA like "Don't panic sell". It was only controversial in the context of him being on /wsb in the first place. He wasn't actually giving dumb advice.
- ffggvv 6y agoamazing how he pretends to be for the little guy and then dumps worthless spacs on them leaving them to be bag holders in the long run that being said, i wouldn’t short anything in this market. considering there are some outright frauds like gsx, nkla and btbt but nothing is happening
- pjc50 6y agoClicking about on their site and I read: https://hindenburgresearch.com/nikola/ https://hindenburgresearch.com/nikola/ Somebody started a company called Nikola? As an overtly fraudulent knockoff of Tesla? Amazing.
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- optimiz3 6y agoSo why aren't these guys actually short then? Out of the goodness of their heart? Would be a first. Low conviction. Put your money where your mouth is.
- norswap 6y agoSpeculation: They might be afraid of a GME-style short squeeze. They also might be waiting to see if the stock starts dipping to jump in.
- optimiz3 6y agoThat's only a consideration when SI is a high relative to available float. As of 1/15 CLOV short interest was 9.11M shares out of 143M shares outstanding (minuscule squeeze risk).
- hervature 6y agoDamned if you do, damned if you don't. In this climate, short sellers are viewed as evil. If you are trying to speak to those exact people about one of their heroes, do you follow the playbook of one of their enemies (shorters who post negative outlooks) or try to appear genuine by not having a position?
- optimiz3 6y agoThere has to be an end game though, if it's not to put food on the table then what is it? These funds are generally closed to outsiders so its unlikely they are just trying to virtue signal to retail.
- ernopp 6y agoApparently there is a 1 year lock-up period for the sponsors & directors during a SPAC [1] Which I guess means it's harder for e.g Social Capital to do a pump & dump (in the case of Clover they couldn't sell until June 2021 at the earliest) [1] https://corpgov.law.harvard.edu/2018/07/06/special-purpose-acquisition-companies-an-introduction/ https://corpgov.law.harvard.edu/2018/07/06/special-purpose-a...
- bob_theslob646 6y agoIt doesn't mean that he can't get a loan on those shares that are locked up.
- btbuildem 6y agoHe reminds me of that guy who was selling the Four Hour Work Week book -- able to "work" four hours a week while living off proceeds from said book.
- diebeforei485 6y agoThis report is a nothingburger. Clover put out a detailed statement today debunking everything in it. This short-and-distort crap needs to end.