Founded by Nate Anderson, CFA, CAIA, Hindenburg Research specializes in forensic financial research. Our experience in the investment management industry spans decades, with a historical focus on equity, credit, and derivatives analysis.
While we use fundamental analysis to aid our investment decision-making, we believe the most impactful research results from uncovering hard-to-find information from atypical sources. In particular we often look for situations where companies may have any combination of:
2020 (September): We released a report titled “Nikola: How to Parlay An Ocean of Lies Into a Partnership With the Largest Auto OEM in America” that, with the help of whistleblowers and former employees, called out a vast array of alleged lies and deceptions by Nikola in the years leading up to its proposed partnership with General Motors.
Among dozens of other issues, we pointed out that Nikola’s “In Motion” promotional video for its Nikola One semi was nothing more than the truck being rolled down a hill in the Utah desert, a claim the company later admitted. Nikola Founder and Executive Chairman Trevor Milton promptly resigned from the company. The story garnered attention from mainstream international media, featured in the Wall Street Journal, Financial Times, CNN, Barron’s and CNBC, among others. Both the SEC and DOJ are reported to have investigations into the company following the report.
2020 (June): We wrote about WINS Finance, pointing out that a company subsidiary in China was subject to a RMB 350 million asset freeze which had not been disclosed to U.S. investors. We also pointed out that WINS’ parent, which owned 67.7% of WINS’ equity, had already been declared insolvent in China with no disclosure to U.S. investors. About four months later, in October 2020, NASDAQ delisted WINS specifically due to the undisclosed asset freeze we identified.
2020 (June): We wrote that Genius Brands, then trading at about $6.86 per share, would soon become a $1.50 stock due to extreme retail euphoria and pending dilution. By the end of July, just under two months later, shares were trading at $1.50, a decline of almost 80%.
2020 (May): We wrote about China Metal Resources Utilization, calling it a “zombie company” with 100% downside. We showed how the company was under severe financial distress and identified numerous accounting irregularities, including evidence of undisclosed related party transactions. Months after our report, Ernst and Young withdrew as auditor after refusing to issue an audit opinion upon identifying accounting issues and undisclosed related party transactions. Shares have fallen more than 90%.
2020 (April): We wrote about SC Worx (NASDAQ:WORX), stating that the company’s announced COVID-19 testing deal looked to be “completely bogus”. We also raised questions about the CEO, who is a convicted felon, and the track record of the company’s claimed COVID-19 testing partner, which was run by a convicted rapist. SC Worx was halted by the SEC on the same day as Predictive Technologies in late April.
2020 (March): We wrote our second report on Predictive Technology Group (OTC:PRED), calling into question the company’s COVID-19 related press releases. The company was halted by the SEC in late April 2020 for “claims about COVID-19 tests” and now trades on the Grey Sheets. When we first wrote about the company less than a year earlier, it had a market cap of ~$1 billion. It has since lost ~90% of its value.
2020 (March): We wrote about HF Foods (NASDAQ:HFFG), specifically calling out the company’s misallocation of shareholder capital and massive undisclosed related party transactions, including a $509 million merger. In May of 2020, HFFG took a massive $338.2 million goodwill impairment, resulting in a $339.9 million quarterly loss. The company had a market cap of just ~$400 million at the time of the reported impairment and loss.
2019 (October): We wrote an article warning customers of SmileDirectClub’s questionable business practices and warning investors that negative press of the company could spread as a result of poor customer reviews, lawsuits, various regulatory investigations and allegations of practicing dentistry without proper licensing. Following our report, exposé were written by the Boston Globe, the New York Times, and NBC News (complete with hidden camera footage and customer testimonials) that supported red flags we originally raised in our report.
2019 (September): We wrote an article detailing why we thought Bloom Energy (NASDAQ:BE) had billions of dollars in undisclosed off-balance sheet liabilities. We specifically pointed out issues relating to the company’s accounting around its service agreements. About 5 months after our article, Bloom announced a massive restatement of nearly four years of its financials due to “material” accounting errors relating to its service agreements involving every quarter since it went public. Forbes published a corresponding expose on the company.
2018 (December): We wrote an article about Yangtze River Port & Logistics (NASDAQ:YRIV), a $2 billion market cap China-based logistics company. Our investigation found that the company’s key asset didn’t appear to exist, among other major anomalies. The company sued us, alleging defamation, so we redoubled our efforts with numerous additional findings. Multiple independent media outlets and a law firm corroborated our reporting (1, 2, 3). The company was delisted from NASDAQ 6 months later, lost over 98% of its market cap, and now has a “caveat emptor” warning on its OTC ticker. The lawsuit against us was subsequently dismissed.
2018 (December): We wrote an article about irregular acquisitions and dealings between Liberty Health Sciences (CSE:LHS) and Aphria. Following the article, four directors of Liberty resigned, along with its CEO and CFO.
2018 (December): We wrote an article identifying that Aphria (NYSE:APHA) made yet another series of highly irregular, overvalued acquisitions that had hallmarks of insider self-dealing. Once again, insiders later admitted to having undisclosed stakes in its own acquisitions, leading to the resignation of the company’s Chairman/CEO, a co-founder, and an executive/board shake-up. The company later wrote down the value of the questioned acquisitions 6 months later.
2018 (March): We wrote an article showing that $2 billion market cap cannabis company Aphria (NYSE:APHA) made a highly irregular, overvalued acquisition that had hallmarks of insider self-dealing. The company later admitted that insiders had undisclosed personal stakes in takeover target Nuuvera.
2017 (December): We wrote a series of articles about Riot Blockchain’s (NASDAQ:RIOT) suspicious acquisitions that appeared designed to benefit insiders. Later in February 2018 CNBC ran an exposé that corroborated and expounded on our findings. Riot’s then-CEO was charged with fraud by the SEC. Its former CEO is reportedly now under active criminal investigation.
2017 (December): We wrote an article about PolarityTE’s (NASDAQ:PTE) sketchy origin story and irregular financial disclosures. The company’s CFO later resigned and was charged by the SEC in 2018 for allegedly participating in pump & dump schemes.
2017 (November): We wrote an article about $3 billion market cap Opko Health’s (NASDAQ:OPK) nefarious criminal connections as well as its slate of product failures and irregular disclosures. In late 2018 the company’s Chairman/CEO and the company itself were all charged with fraud by the SEC. They later settled the charges.
2017 (November): We wrote an article about Pershing Gold (NASDAQ:PGLC) and identified a key individual behind a series of irregular company disclosures. That individual was later charged by the SEC as the “primary strategist” of a group alleged to have run multiple pump and dump schemes.
2016: Hindenburg founder Nate Anderson submitted a whistleblower report to the SEC relating to RD Legal, a hedge fund that was later charged by the commission for allegedly making material misstatements to its investors. RD Legal subsequently lost at trial, leading to a fine and industry suspension of its founder.
We view the Hindenburg as the epitome of a totally man-made, totally avoidable disaster. Almost 100 people were loaded onto a balloon filled with the most flammable element in the universe. This was despite dozens of earlier hydrogen-based aircraft meeting with similar fates. Nonetheless, the operators of the Hindenburg forged ahead, adopting the oft-cited Wall Street maxim of “this time is different”.
We look for similar man-made disasters floating around in the market and aim to shed light on them before they lure in more unsuspecting victims.
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