6 ms·

From what I can tell, and have seen in the past, scorpion capital make a business out of poorly researched, hearsay based, high-school level 'presentations' lik

From what I can tell, and have seen in the past, scorpion capital make a business out of poorly researched, hearsay based, high-school level 'presentations' like this. Always published _after_ taking a huge short position. They might not be wrong, but that would be a happy coincidence imo

drcongo 4y ago
I'm slightly fascinated by this document. It's so shoddy and the language used does indeed read like it's written by high school kids, or perhaps the mind behind the time cube. And yet it's 183 pages. Why go to such great lengths to produce a document that it's very hard to take seriously?
- jacquesm 4y ago
  Because if you throw a lot of shit at a wall something may stick.
  - drcongo 4y ago
    But, couldn't you throw a lot of shit and make it actually look professional?
    - jacquesm 4y ago
      That would require a lot of effort and then it no longer would look like shit which may not help in the plausible deniability department, and to make it look like shit also has the same effect as the spelling errors and weird salutations in those scam emails: it filters for extreme gullibility. You are clearly not the intended audience.
      - drcongo 4y ago
        No idea why you got downvoted here, I thought it was an insightful answer.
- AlanYx 4y ago
  They're trying to manage their legal risk here, that's why the document (after the first 25 or so pages) is almost entirely presented as quotations or specific references to research interviews they've conducted, rather than a narrative presentation. Without a solid factual matrix, making accusations of serious wrongdoing (e.g., fictious revenue via sham transactions with a related party) would put them at risk of defamation claims. That's also why they're throwing in the kitchen sink; there has to be enough damaging information in the document that's factually correct to make it fruitless for IONQ to pursue litigation against them.
- blitzar 4y ago
  Welcome to the world of consulting and finance. You know all those 1st/2nd/3rd year big firm employees that you hear grinding away for 16 hours on presentations and papers, being degraded by senior managers pushing them constantly? This is what they produce - quantity over quality. This is what their managers think the client wants - they are paying by the hour afterall, got to give them a big pile or work.
  - mardifoufs 4y ago
    Short sellers like these are usually small, single digit headcount operations. If anything, the dubious quality of the document reflects exactly that. And those big firm employees are usually very good at making good looking presentations and documents, though I agree that they are usually devoid of substance. So I'm not sure they are behind this shoddy looking document to be honest.
    - blitzar 4y ago
      They outsource a lot of this stuff now - brokers, banks etc. The fund itself doesnt give a shit about pages >2 and just really care about the conclusion. You can only have two of; fast, accurate and magnificent prose.
gruez 4y ago
>Always published _after_ taking a huge short position. as opposed to what? being a neutral observer? taking a short position after publishing the report? this is basically standard behavior from short-sellers.
emehex 4y ago
Not to defend Scorpion Capital (because I don't know anything about them), but this is specifically why our public markets allow short selling... to provide an incentive to do this type of research (uncover alleged fraud, crimes, etc), stake a position, and then (optionally) advertise that position. Also, seems like they've had some decent wins in the past: https://scorpioncapital.com/track-record https://scorpioncapital.com/track-record
- fnordpiglet 4y ago
  That’s not why we allow short selling. We allow short selling because it’s a reasonable way to allocate securities that makes people money sometimes while generally not hurting others. Our securities regulations are generally about allowing most transactions that aren’t done in an unfair way. It has nothing to do with creating incentive to investigate publicly traded companies. Investigations with huge payouts depending on their results aren’t unbiased and should never be taken as factual or helpful.
  - thethirdone 4y ago
    In what way could short selling not generally hurt others? Any gain a short seller makes is a lost opportunity by the holder.
    - FranksTV 4y ago
      There needs to be a way to create downward pressure on the price of an equity.
      - renox 4y ago
        ?? If there is no buyer for a given price then the seller will have to reduce his price, no need to have this dubious mechanism.
        fnordpiglet 4y ago
        The party loaning the security to the short seller makes a profit too as part of the loan. The only person potentially going to lose money is the short seller. The person loaning the security might end up getting the security back once it’s fallen a lot, or it might have risen, but they don’t really take any outrageous risk. Just the person who borrowed and sold takes the potential losses. What is dubious about this mechanism? It seems fairly straight forward and short selling doesn’t even depress the price any more than someone simply selling it to the market. In fact since they have to buy it back later they first create sell pressure down then buy pressure up later.
SketchySeaBeast 4y ago
Scorpion capital? "Why do you do this?" "Because it's in my nature."
marcosdumay 4y ago
Hum... TFA looks quite well researched to me. For sure, it's badly written, and lazily formatted. It does extrapolate quite a bit from the data it gathers, and has no undisputable evidence. But then, it's way too much to expect some small private group to do elaborate reports and gather evidence suitable for a criminal court. If you catch them being wrong, that would be enough of an issue to discredit them. But none of the above is.
simias 4y ago
No opinion on the quality of Scorpion Capital's research but of course they would short before they publish their negative research. Why wouldn't they?
Mathnerd314 4y ago
They read the financial prospectus, the website and scientific papers, news articles, and watched some videos, and interviewed some ex-employees. It's a lot more due diligence than most investors. (e.g. consider r/wallstreetbets)
- fxtentacle 4y ago
  Agree, I find their argumentation quite convincing and it's easy to check, too. Yes, the IonQ prospectus does have a lot of hockey-stick graphs and lots of roadmaps that look ambitions. And yes, they do distance themselves from all of those graphs in the footnotes. I do find that suspicious and somewhat misleading, too. And an employee saying "I guess [the old fired CEO] wasn’t hype enough. And then this [new CEO] came in and just set up a SPAC, just to go public." seems pretty damning, too.
maxbond 4y ago
If you believe they are taking positions in their research, and you believe they're as accurate as a stuck clock, how is it you explain that they're still in business? I see comments like this in any discussion involving short sellers, and I've not been given any reason to believe it is more than sour grapes. But my mind is open to it.
- ProjectArcturis 4y ago
  You could build a short position, publish fake research, and then quickly cover your short on the initial move before anyone had time to rebut you. That is definitely illegal fraud, though, and both the target and the SEC would try to find you.
  - maxbond 4y ago
    You can say the same thing for the long side, but no one seems to mind when people go on TV and blow a bunch of smoke about their favorite companies. Yes this is theoretically possible but no it is not likely someone can make a career out of it. Short research isn't a magic wand that makes the price go down. Good faith short sellers have their positions blow up in their face all the time, sometimes just because people don't like them and wouldn't mind seeing them get their comeuppance. A short seller publishing in bad faith would be fighting an uphill battle while surrounded by easier grifts. Surely there must be some frauds among the short sellers some of them time, but there's a common view that it's all of them all of the time. From my perspective this appears to be a conspiracy theory among bulls who think that publishing negative information about any company is a threat to their portfolio, and reason backwards from there.
mabbo 4y ago
Only being half serious of course ('taking the piss' being an accurate euphemism here), but if you think Scorpion Capital are wrong, you can always take the opposite position. You could even publish a better document rebutting their claims and calling them out. The question is: how much money you're willing to bet that they're wrong?
- JackC 4y ago
  This argument assumes the market is rational and well informed. It would be totally possible to have a market where a well-resourced player could tank arbitrary stocks, and smaller players would lose by betting against them. Making no claims about the situation here in particular, just that “put your money where your mouth is” isn’t convincing.
  - Bubble_Pop_22 4y ago
    The stock market will never be bigger than the product/service market Sales and profit are real and 100% liquid unlike the marketcap which is essentially a perpetual voting machine. If the product is legit and starts selling , then it's gonna be shortsellers to lose out and and people betting on the company would win as long as they don't screw themselves using leverage.
    - melony 4y ago
      But on paper it is, sure the value will plunge the moment a significant liquidation event happens but as far as things go on paper, the market valuation of companies (and especially tech companies) are magnitudes bigger than their net income.
      - Bubble_Pop_22 4y ago
        Net income and free cash flow are real, once achieved only long lawsuits and the government can take that away from the corporation. Marketcap can be deflated instantly just if enough people click the sell button. If you want to compare them you have to discount the marketcap adjusting it for the instability and undecisiveness of the human brain and also the instability of the marketplace of ideas and political currents, the instability of hero worship around the CEO and millions of other things. Once it's said and done it's a pretty big discount you have to apply.
Bubble_Pop_22 4y ago
If it wasn't for shorsellers and skeptics PT Barnum would have become emperor of the world given his ability to con people.
api 4y ago
This article seems full of easily falsifiable claims, chief among these being the claims made about the fraudulent credentials of the CEO. If that claim is false the CEO could easily puncture the whole thing by showing proof otherwise. Not only that, but if this is false it seems extremely actionable. Couldn't the characters here sue the pants off the authors if these claims are false? Not to mention the exposure to SEC action for taking a short position and then slandering the company. I know this does happen and is rarely prosecuted but combined with the civil liability that seems like a lot of exposure for Scorpion Capital.
99_00 4y ago
You don't need to attack to messenger to asses the report. It is very simple and you can see the primary sources for yourself. They compare the public messaging from executives and the company website with what is publicly disclosed in the company perspective. The report could have been 4 pages long.
packetlost 4y ago
As someone in this industry, this report ia

drcongo 4y ago

I'm slightly fascinated by this document. It's so shoddy and the language used does indeed read like it's written by high school kids, or perhaps the mind behind the time cube. And yet it's 183 pages. Why go to such great lengths to produce a document that it's very hard to take seriously?

jacquesm 4y ago
Because if you throw a lot of shit at a wall something may stick.
- drcongo 4y ago
  But, couldn't you throw a lot of shit and make it actually look professional?
  - jacquesm 4y ago
    That would require a lot of effort and then it no longer would look like shit which may not help in the plausible deniability department, and to make it look like shit also has the same effect as the spelling errors and weird salutations in those scam emails: it filters for extreme gullibility. You are clearly not the intended audience.
    - drcongo 4y ago
      No idea why you got downvoted here, I thought it was an insightful answer.
AlanYx 4y ago
They're trying to manage their legal risk here, that's why the document (after the first 25 or so pages) is almost entirely presented as quotations or specific references to research interviews they've conducted, rather than a narrative presentation. Without a solid factual matrix, making accusations of serious wrongdoing (e.g., fictious revenue via sham transactions with a related party) would put them at risk of defamation claims. That's also why they're throwing in the kitchen sink; there has to be enough damaging information in the document that's factually correct to make it fruitless for IONQ to pursue litigation against them.
blitzar 4y ago
Welcome to the world of consulting and finance. You know all those 1st/2nd/3rd year big firm employees that you hear grinding away for 16 hours on presentations and papers, being degraded by senior managers pushing them constantly? This is what they produce - quantity over quality. This is what their managers think the client wants - they are paying by the hour afterall, got to give them a big pile or work.
- mardifoufs 4y ago
  Short sellers like these are usually small, single digit headcount operations. If anything, the dubious quality of the document reflects exactly that. And those big firm employees are usually very good at making good looking presentations and documents, though I agree that they are usually devoid of substance. So I'm not sure they are behind this shoddy looking document to be honest.
  - blitzar 4y ago
    They outsource a lot of this stuff now - brokers, banks etc. The fund itself doesnt give a shit about pages >2 and just really care about the conclusion. You can only have two of; fast, accurate and magnificent prose.

gruez 4y ago

>Always published _after_ taking a huge short position. as opposed to what? being a neutral observer? taking a short position after publishing the report? this is basically standard behavior from short-sellers.

emehex 4y ago

Not to defend Scorpion Capital (because I don't know anything about them), but this is specifically why our public markets allow short selling... to provide an incentive to do this type of research (uncover alleged fraud, crimes, etc), stake a position, and then (optionally) advertise that position. Also, seems like they've had some decent wins in the past: https://scorpioncapital.com/track-record https://scorpioncapital.com/track-record

fnordpiglet 4y ago
That’s not why we allow short selling. We allow short selling because it’s a reasonable way to allocate securities that makes people money sometimes while generally not hurting others. Our securities regulations are generally about allowing most transactions that aren’t done in an unfair way. It has nothing to do with creating incentive to investigate publicly traded companies. Investigations with huge payouts depending on their results aren’t unbiased and should never be taken as factual or helpful.
- thethirdone 4y ago
  In what way could short selling not generally hurt others? Any gain a short seller makes is a lost opportunity by the holder.
  - FranksTV 4y ago
    There needs to be a way to create downward pressure on the price of an equity.
    - renox 4y ago
      ?? If there is no buyer for a given price then the seller will have to reduce his price, no need to have this dubious mechanism.
      - fnordpiglet 4y ago
        The party loaning the security to the short seller makes a profit too as part of the loan. The only person potentially going to lose money is the short seller. The person loaning the security might end up getting the security back once it’s fallen a lot, or it might have risen, but they don’t really take any outrageous risk. Just the person who borrowed and sold takes the potential losses. What is dubious about this mechanism? It seems fairly straight forward and short selling doesn’t even depress the price any more than someone simply selling it to the market. In fact since they have to buy it back later they first create sell pressure down then buy pressure up later.

SketchySeaBeast 4y ago

Scorpion capital? "Why do you do this?" "Because it's in my nature."

marcosdumay 4y ago

Hum... TFA looks quite well researched to me. For sure, it's badly written, and lazily formatted. It does extrapolate quite a bit from the data it gathers, and has no undisputable evidence. But then, it's way too much to expect some small private group to do elaborate reports and gather evidence suitable for a criminal court. If you catch them being wrong, that would be enough of an issue to discredit them. But none of the above is.

simias 4y ago

No opinion on the quality of Scorpion Capital's research but of course they would short before they publish their negative research. Why wouldn't they?

Mathnerd314 4y ago

They read the financial prospectus, the website and scientific papers, news articles, and watched some videos, and interviewed some ex-employees. It's a lot more due diligence than most investors. (e.g. consider r/wallstreetbets)

fxtentacle 4y ago
Agree, I find their argumentation quite convincing and it's easy to check, too. Yes, the IonQ prospectus does have a lot of hockey-stick graphs and lots of roadmaps that look ambitions. And yes, they do distance themselves from all of those graphs in the footnotes. I do find that suspicious and somewhat misleading, too. And an employee saying "I guess [the old fired CEO] wasn’t hype enough. And then this [new CEO] came in and just set up a SPAC, just to go public." seems pretty damning, too.

maxbond 4y ago

If you believe they are taking positions in their research, and you believe they're as accurate as a stuck clock, how is it you explain that they're still in business? I see comments like this in any discussion involving short sellers, and I've not been given any reason to believe it is more than sour grapes. But my mind is open to it.

ProjectArcturis 4y ago
You could build a short position, publish fake research, and then quickly cover your short on the initial move before anyone had time to rebut you. That is definitely illegal fraud, though, and both the target and the SEC would try to find you.
- maxbond 4y ago
  You can say the same thing for the long side, but no one seems to mind when people go on TV and blow a bunch of smoke about their favorite companies. Yes this is theoretically possible but no it is not likely someone can make a career out of it. Short research isn't a magic wand that makes the price go down. Good faith short sellers have their positions blow up in their face all the time, sometimes just because people don't like them and wouldn't mind seeing them get their comeuppance. A short seller publishing in bad faith would be fighting an uphill battle while surrounded by easier grifts. Surely there must be some frauds among the short sellers some of them time, but there's a common view that it's all of them all of the time. From my perspective this appears to be a conspiracy theory among bulls who think that publishing negative information about any company is a threat to their portfolio, and reason backwards from there.

mabbo 4y ago

Only being half serious of course ('taking the piss' being an accurate euphemism here), but if you think Scorpion Capital are wrong, you can always take the opposite position. You could even publish a better document rebutting their claims and calling them out. The question is: how much money you're willing to bet that they're wrong?

JackC 4y ago
This argument assumes the market is rational and well informed. It would be totally possible to have a market where a well-resourced player could tank arbitrary stocks, and smaller players would lose by betting against them. Making no claims about the situation here in particular, just that “put your money where your mouth is” isn’t convincing.
- Bubble_Pop_22 4y ago
  The stock market will never be bigger than the product/service market Sales and profit are real and 100% liquid unlike the marketcap which is essentially a perpetual voting machine. If the product is legit and starts selling , then it's gonna be shortsellers to lose out and and people betting on the company would win as long as they don't screw themselves using leverage.
  - melony 4y ago
    But on paper it is, sure the value will plunge the moment a significant liquidation event happens but as far as things go on paper, the market valuation of companies (and especially tech companies) are magnitudes bigger than their net income.
    - Bubble_Pop_22 4y ago
      Net income and free cash flow are real, once achieved only long lawsuits and the government can take that away from the corporation. Marketcap can be deflated instantly just if enough people click the sell button. If you want to compare them you have to discount the marketcap adjusting it for the instability and undecisiveness of the human brain and also the instability of the marketplace of ideas and political currents, the instability of hero worship around the CEO and millions of other things. Once it's said and done it's a pretty big discount you have to apply.

Bubble_Pop_22 4y ago

If it wasn't for shorsellers and skeptics PT Barnum would have become emperor of the world given his ability to con people.

api 4y ago

This article seems full of easily falsifiable claims, chief among these being the claims made about the fraudulent credentials of the CEO. If that claim is false the CEO could easily puncture the whole thing by showing proof otherwise. Not only that, but if this is false it seems extremely actionable. Couldn't the characters here sue the pants off the authors if these claims are false? Not to mention the exposure to SEC action for taking a short position and then slandering the company. I know this does happen and is rarely prosecuted but combined with the civil liability that seems like a lot of exposure for Scorpion Capital.

99_00 4y ago

You don't need to attack to messenger to asses the report. It is very simple and you can see the primary sources for yourself. They compare the public messaging from executives and the company website with what is publicly disclosed in the company perspective. The report could have been 4 pages long.

packetlost 4y ago

As someone in this industry, this report ia