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Japan's Most Actively Traded Stock Is a Fraud and Ticking Time Bomb [pdf]
- senkora 2y ago> DISCLOSURES ... Scorpion Capital LLC is short Lasertec Corporation I have no information about either company and take no position on whether the allegations are true. But note that what Scorpion Capital is doing here is a classic play of 1) establishing a short position and then 2) publishing research to convince the market to dump the stock. Of course, this classic play is most effective if they are right. Again, I know nothing. I just find financial markets interesting.
- ttul 2y agoThese short analyses are always in the form of ultra-dense slides. It’s something of an art form.
- duskwuff 2y agoThis one's got an overview of what EUV is starting on page 32. Interesting reading even if you aren't interested in the market play.
- keiferski 2y agoYou would probably find Hindenburg Research interesting: Hindenburg Research LLC is a U.S. investment research firm with a focus on activist short-selling… Named after the 1937 Hindenburg disaster, which they characterize as a human-made avoidable disaster, the firm generates public reports via its website that allege corporate fraud and malfeasance. https://en.wikipedia.org/wiki/Hindenburg_Research https://en.wikipedia.org/wiki/Hindenburg_Research
- lencastre 2y agoThe GOAT
- hackton 2y agoThis is called Trash and Cash, this is a market manipulation https://www.marketconductrules.com/risks/trash-and-cash/ https://www.marketconductrules.com/risks/trash-and-cash/
- vasco 2y agoNot necessarily. The target company almost always complains about manipulation, because of course they do. But even Herbalife, a clear pyramid scheme, shouted "we're being manipulated!", when people published research saying they were a pyramid scheme. I don't know this Japanese company so I don't know in this case. https://www.google.com/amp/s/www.businessinsider.com/bill-ackman-herbalife-stock-manipulation-investigation-2015-3%3famp https://www.google.com/amp/s/www.businessinsider.com/bill-ac...
- fshbbdssbbgdd 2y agoA good example of how the market can remain irrational longer than you can stay solvent. Just because Herbalife is morally a pyramid scheme doesn’t mean the FTC was going to shut down the company. Herbalife stock went up and Bill Ackman exited his trade at a loss after five years. When Herbalife stock finally crashed last year, Bill Ackman declared victory for his “psychological short”.
- jojobas 2y agoIs is still manipulation when what you're publishing is true?
- hdjdjdj 2y agoIANAL but if it is not true, you open yourself up to libel.
- Beijinger 2y agoAfter a short glimpse, it is hard to tell if the allegations are true. With other short sellers, the story was easier to understand and verify,e.g. Chinese plane ticket sellers where it turned out basically impossible to buy a plane ticket. I also found the allegations against Wirecard in Hackernews plausible, since such a complex network of companies rarely has legit applications. But Lasertec Corporation, I don't know. E.g. :"Sources indicate that customers – presumably Intel - who claim to use Lasertec’s EUV tool are secretly using its old DUV system instead; that TSMC is running parallel, redundant inspections with non-EUV tools and has reverted to the DUV-based inspection process it used prior to Lasertec; that the market window for actinic EUV mask inspection is rapidly closing, as the next phase in EUV is High NA, which requires an electron beam solution, as OPC patterns and sub-resolution assist features (SRAF) are smaller than 13.5nm and cannot be detected with actinic EUV light – leading ASML, KLA, and others to develop multi-beam inspection tools for High NA masks that render the ACTIS tool obsolete." A lot of claims, very little beef. And why should Intel "secretly" use other equipment? Are they a stakeholder in Lasertec? All the allegations are possible, but not convincing, as laid out.
- bpfrh 2y agoFrom point 6a: Struggles at Intel. Lasertec’s EUV mask inspection effort is Intel’s baby, which it sponsored with $300-500MM in advances >5 years ago as its “founding” customer after failing to convince KLA. Intel’s mask group is trying to save face and cover up that its investment has been a debacle, giving it supplier prizes for public PR while “blowing up” on Lasertec behind the scenes, according to multiple research sources Intel currently has issues with marketshare from amd and arm maybe they don't want to post that loss and setback for some targets? Edit: spelling
- baq 2y agoI like this business model, you have to invest a lot of your own money to make a credible report like that, preferably multiple to establish reputation and keep doing that. If the SEC or equivalents don't do that, might as well let private capital hunt down fraud.
- throwaway4good 2y agoWhat’s the jargon for the reverse of a pump and dump scheme? Trash and cover your shorts?
- ghayes 2y agoShort and Distort https://www.investopedia.com/terms/s/shortanddistort.asp https://www.investopedia.com/terms/s/shortanddistort.asp
- elp 2y agoOr if the plan is to get the shares cheaply: Poop and scoop.
- greenavocado 2y agoI love this term!
- sam_bristow 2y agoThat only really applies if the company shorting the stock is lying. Otherwise it's the market working exactly as it is intended.
- hackton 2y agoTrash and Cash https://www.marketconductrules.com/risks/trash-and-cash/ https://www.marketconductrules.com/risks/trash-and-cash/
- mr_world 2y agoI was going to short a few shares just for fun, but TIL that the tokyo stock exchange only lets you trade in multiples of 100 shares (~228 USD per share right now for TYO: 6920 Lasertec Corporation)... https://www.jpx.co.jp/english/equities/improvements/unit/ https://www.jpx.co.jp/english/equities/improvements/unit/
- fshbbdssbbgdd 2y agoLooks like the places I have brokerage accounts don’t let me make a trade like this at all after hours.
- resolutebat 2y agoAt $22,800 with unlimited downside if the stock goes up, that's a pretty expensive gamble.
- reedf1 2y agoThere are many, many ways to construct the trade to limit the downside risk.
- greenavocado 2y agoThat's not true if you buy a single put option (it is 100 shares). If you sell a naked put option you're opening yourself up to unlimited losses potentially. Not to worry, most brokerages won't let you put in such an order unless you file some paperwork attesting to your level of trading experience, often referred to as Level 3 or 4. When you buy a put option, your risk is always limited to the premium paid, and nothing more. The upside is potentially unlimited profit. And I'm not even getting into the dozens of options architectures which optimize for specific trading theses.
- jojobas 2y agoSurely some puts are in order?
- resource_waste 2y agoI wanted to do 3 year puts on Tesla, every 6 months. I would have done fantastic, but I didn't have the 30k/buy it took to pull off the deal. For the same reason, 100 shares were needed.
- deleted 2y ago[deleted]