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“ Initial Disclosure: After extensive research, we have taken a short position in shares of Block, Inc. (NYSE: SQ). This report represents our opinion, and we e

“ Initial Disclosure: After extensive research, we have taken a short position in shares of Block, Inc. (NYSE: SQ). 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.” I’m surprised that it’s legal to short sell then go on the attack. If it is, imagine having the cojones to do that and then go live with this report.

bobnamob 4y ago
That’s Hindenburg’s MO. Extensive research -> short position -> publication of research
Closi 4y ago
It’s legal but you must talk about facts and not make anything up, and you must act without insider information. This is why the report is surgical in its wording.
mschuster91 4y ago
It actually is legal and the way how Hindenburg Research (and other popular/infamous shortsellers) make money: Research and expose fraud to hold companies accountable, with a (massive) financial stake to be correct in the research. Personally, I used to be quite antagonistic to shortsellers, but at least the ones holding onto the principles of journalistic integrity and good research provide good value to society. Just look at Wirecard.
- jhugo 4y ago
  > Personally, I used to be quite antagonistic to shortsellers, but at least the ones holding onto the principles of journalistic integrity and good research provide good value to society. Just look at Wirecard. Which ones don't provide value to society, and how do they differ from shills with a long position?
  - mschuster91 4y ago
    > Which ones don't provide value to society, and how do they differ from shills with a long position? For example, ones that bet on a stock price where the resulting market cap goes far below the net value of the company (i.e. value of assets - value of liabilities) without any indicators backing that. The "ape army" exposed these shortsellers at GME and iirc, led to the dissolution of at least two of them.
    - jhugo 4y ago
      How do these differ from shills who pump a stock price far above the net value of the company without any indicators backing that?
      - burnished 4y ago
        What are you getting at?
        jhugo 4y ago
        There is no fundamental reason to be upset with short sellers; they can be honest or dishonest about their motives just as holders of long positions can be. When they are honest and open, they provide a service to the community in the same way that honest & open holders of long positions do.
        burnished 4y ago
        The short position is fundamentally the belief a venture will fail and historically there is three ways for that to be a successful bet; 1) be lucky 2) do your research thoroughly and then be lucky or 3) cause that venture to fail. So in this case your defense is limp wristed, you ask only 'well what about' without ever answering the core qualm.
        jhugo 4y ago
        > The short position is fundamentally the belief a venture will fail and historically there is three ways for that to be a successful bet; 1) be lucky 2) do your research thoroughly and then be lucky or 3) cause that venture to fail. This mirrors precisely the ways for a long position to succeed. A holder of shares in a venture can work to cause that venture to be successful. This is pretty common, in fact.
chewz 4y ago
What I am surprised of is how it is legal to have long position in stocks and then lie and pretend to increase the company value...
- xmcqdpt2 4y ago
  This here is why I never believe anything someone says about cryptocurrencies. Every time I ask a crypto enthusiast they'll eventually relent that yes they do own a lot of crypto they expect will go up in price. (And in case someone argues that this is the same as anything else, it isn't. I own an iPhone. I recommend them to people, it works well etc. I don't benefit at all from Apple stock price going up.)
tylersmith 4y ago
It's wonderful; a natural market incentive for well-capitalized players to expose fraud and misconduct instead of participate in it.
jsemrau 4y ago
If you'd spent 2 years researching a topic you'd likely think otherwise.
bobcostas55 4y ago
Are you equally surprised that it's legal to go long and then talk your book?

bobnamob 4y ago

That’s Hindenburg’s MO. Extensive research -> short position -> publication of research

Closi 4y ago

It’s legal but you must talk about facts and not make anything up, and you must act without insider information. This is why the report is surgical in its wording.

mschuster91 4y ago

It actually is legal and the way how Hindenburg Research (and other popular/infamous shortsellers) make money: Research and expose fraud to hold companies accountable, with a (massive) financial stake to be correct in the research. Personally, I used to be quite antagonistic to shortsellers, but at least the ones holding onto the principles of journalistic integrity and good research provide good value to society. Just look at Wirecard.

jhugo 4y ago
> Personally, I used to be quite antagonistic to shortsellers, but at least the ones holding onto the principles of journalistic integrity and good research provide good value to society. Just look at Wirecard. Which ones don't provide value to society, and how do they differ from shills with a long position?
- mschuster91 4y ago
  > Which ones don't provide value to society, and how do they differ from shills with a long position? For example, ones that bet on a stock price where the resulting market cap goes far below the net value of the company (i.e. value of assets - value of liabilities) without any indicators backing that. The "ape army" exposed these shortsellers at GME and iirc, led to the dissolution of at least two of them.
  - jhugo 4y ago
    How do these differ from shills who pump a stock price far above the net value of the company without any indicators backing that?
    - burnished 4y ago
      What are you getting at?
      - jhugo 4y ago
        There is no fundamental reason to be upset with short sellers; they can be honest or dishonest about their motives just as holders of long positions can be. When they are honest and open, they provide a service to the community in the same way that honest & open holders of long positions do.
        burnished 4y ago
        The short position is fundamentally the belief a venture will fail and historically there is three ways for that to be a successful bet; 1) be lucky 2) do your research thoroughly and then be lucky or 3) cause that venture to fail. So in this case your defense is limp wristed, you ask only 'well what about' without ever answering the core qualm.
        jhugo 4y ago
        > The short position is fundamentally the belief a venture will fail and historically there is three ways for that to be a successful bet; 1) be lucky 2) do your research thoroughly and then be lucky or 3) cause that venture to fail. This mirrors precisely the ways for a long position to succeed. A holder of shares in a venture can work to cause that venture to be successful. This is pretty common, in fact.

chewz 4y ago

What I am surprised of is how it is legal to have long position in stocks and then lie and pretend to increase the company value...

xmcqdpt2 4y ago
This here is why I never believe anything someone says about cryptocurrencies. Every time I ask a crypto enthusiast they'll eventually relent that yes they do own a lot of crypto they expect will go up in price. (And in case someone argues that this is the same as anything else, it isn't. I own an iPhone. I recommend them to people, it works well etc. I don't benefit at all from Apple stock price going up.)

tylersmith 4y ago

It's wonderful; a natural market incentive for well-capitalized players to expose fraud and misconduct instead of participate in it.

jsemrau 4y ago

If you'd spent 2 years researching a topic you'd likely think otherwise.

bobcostas55 4y ago

Are you equally surprised that it's legal to go long and then talk your book?