After years of exposing fraud, scams, and deception by publicly traded companies, a short selling firm Hindenburg Research is closing its doors. This news was surprising and unexpected for many including myself. In my opinion, Hindenburg Research has been one of the most important and needed market participants. I especially liked the business model. What Hindenburg Research has been doing is conducting extensive investigations and research, identifying wrongdoings and not so honest practices by publicly traded companies, and afterwards taking a short position and sharing the research with the public. Investigating companies and doing thorough research requires skills, time, and money. However, professional research and well executed short trades would cover all the costs and bring profits. While making money, the firm would also serve the other participants of the market by identifying and revealing important information about these companies and their stock valuations.
Nate Anderson, the founder of Hindenburg Research has decided it was time to disband the firm and move on to more interesting things in life. Of course everybody is asking why? However, it seems there no real answer to this. Or in other words the answer is Just because. Usually, we would expect some direct reasons like firm is going bankrupt, internal conflicts, external threats, conflicts of interest, acquisitions, etc. None of these seem to apply here. In a way, this may the most ethical way of reaching an end for a firm like Hindenburg Research. There is no need for a reason. There was a mission. A mission became missions. All mission accomplished, time to move on. Maybe this was the thought process. Or maybe we will hear more in the future. For now, it seems the firm has shown a better way of participating in the markets, and has educated many that there are dishonest players in the markets. While they have done a great job with their research and investigations, and earned themselves a good reputation, what Hindenburg Research have done can be done by others as well. Maybe this is the way of Hindenburg Research passing the torch to the crowd in making markets transparent and efficient.
It seems like they will reveal their processes and procedures in the near future for others to utilize if they choose too. We may hear more to the Hindburg Research story when this happens. For now, we can thank them for their service and wish them well in their future endeavors. I will definitely miss their reports on market scams and deceptions. Over the last couple of years I have become a regular reader of their publications, and have been following their cases. I have written multiple blog posts regarding their research and trades when I found them to be interesting. What really still surprises me is that how much fraud and deception is allowed for publicly traded companies. I have also understood how SEC was more of a political agency rather than a neutral regulator that protects people from scammer and fraudsters. Hindenburg Research has show how there is a lot to be corrected in markets by agencies like SEC. However, instead of dealing with real criminal behavior, SEC have chosen to go after crypto in the recent years and haven't improved anything.
By doing excellent job investigating, researching and trading based on their findings, Hindenburg Research earned themselves a great reputation. So much so, that their publications alone would influence the markets and make their short positions profitable even without a need to convince the investors. Participants would simply trust, or use the news as a shorting opportunity. Not only they have gone after smaller companies, but they have targetted more powerful players like Adani Group, and even made Carl Icahn their enemy. While there have been many legal threats for defamation by powerful players in the markets against Hindeburg Research, in my opinion, none of them had any merits, nor they have accomplished anything. I am sure Hindenburg Research have done a great job protecting themselves from malicious legal actions.
It seems like the decision to shut down the firm wasn't a sudden one, and rather planned decent time ago with a goal of finishing research and ideas already in process. According to Nate Anderson, last of their Ponzi case was completed and findings were shared with regulators. The end of their last project came in today, and this will mark the end of the firm itself as well. I would like to see Hindenburg Research continues, because of the quality of their work. But I also believe they deserve to end things in their own terms and there is much more to live than research and markets. I am sure there are other firms that will emerge with similar quality research and dedication of making things better while making money, rather than utilizing tools to take away money from retail traders. I am curious to see more about their processes and procedures of how they have done their research and planned short positions. What I really interested to know is how profitable this business model has been. I hope they have been winning with their trades as well, just like they won with their audience and other market participants.
Not everybody can just walk away from a successful business. Those who can are impressive. It not easy to just say "I quit" doing things that you have enjoyed over the years and probably gained many skills along this journey. I am not sure how these skills would translate into their lives beyond Hindeburg Research, I am sure they have better things to do, and life is not only about money and profits. I wouldn't be surprised to see similar projects that benefit people form this team in the future. I hope will have even more Hindenburg Research like firms to emerge and continue making the markets more transparent and efficient.
Some very good calls. Short selling is hard. I always wonder how close to the top we are when prominent short sellers fold up and leave.
I hadn't know about the Hindenburg. But my feeling is that last couple of years independent researchers are dying. Maybe because the capital is not their friend.
It sucks to hear them go away. I wish them good luck in their personal lives and I am glad to hear that they will at least share their processes so others can use them. They did some great work in showing some of the scams out there in the market.
A very empathetic and thoughtful post. I can clearly see how you loved to read the new reports of Hindenburg and how you cherished their work. Very good „closing norice“
I myself have kind of heard of them, the name rings a bell but I cannot connect any specific report or Company with it that they examined. Was Tesla among them or any other famous tech?
Anyways. Have a great day!
Thomas
There were many. Nikola, scam version of Tesla was targeted by HR.
Oh thats where I probably heard of them, this Nikola issue. Since I am following Tesla. 👍🏻
It's clear how much you liked the firm and how much you respect their decision to close. Like you, I hope that other people accept the baton being passed and continue to do the good work so as to ensure continuity.
It is said to have wiped market values of some companies.
!hiqvote
I didn't know anything about them, thanks for writing it up and let me know, they seemed doing a very useful work!
Maybe they touched some big interests and they got told it was better to close rather than risk the life?
Good article, good afternoon and greetings to all of us.
I'm sorry that Hindenburg Research is closing. They may not tell us why, but it could be due to political pressure. They got a lot of backlash on social media for closing it.
There game was a tricky one exposing challenges, while benefiting from the very fall they are pushing aiming for by exposing a particular entity.
Sad to see Hidenburg go, a bittersweet story I am just curious what caused this or they have a new strategy about to hit the airwaves.
Shame! For some reason it looks like the world boosts even and companies that expose it are crushed so that the wrong does can thrive.
I didn't know there are selfless firms like this. Firms interested in the interest of the people. This is exactly what we need in the part of the universe where I come from. I wish Hindenburg Research well
Thats a good review on this company. I heard about it before, not as detailed !
Hindenburg seem quite popular but I’m basically knowing it for the first time
I love what you said in this article. Life is not only about money and profits
There’s more to business than that
I got to know about Hindenburg after Adani case and it was a big news. They do extensive research and this is incredible
While their departure is significant, I look forward to seeing new firms emerge that will continue this important work of promoting market transparency.
Their dedication and selflessness would not be forgotten in a hurry. I hope another firm takes up this job and does it as well as they did or even better so we don't start to miss them so much after a while.
!PIZZA
I respect the 'just because ' reason so much even though I have rarely seen it play out and hence find it surprising.
I am glad they did what they did when they did it, hoping to see new faces take on the challenge.