Some of the most exhaustive, publicly available research can be found on a few little-known blogs written by infamous investors called the Activist Short-Sellers.
Short selling is a fairly simple concept — it’s betting that the stock you sell today will drop in price in the future. To learn more about how this works, read this article on Investopedia, How short seller makes money?
Short-sellers like to go against the grain and think independently. This is why they back their bets with very solid research, and luckily, they like to share this research for free online.
As you continue reading, you will find links to well-documented research on some of the most prominent yet controversial stock market vigilantes.
What can you learn from them?
- Window-dressing techniques and how to spot the frauds 🔍
- How to reconcile cash balances with the balance sheet ⚖️
- Which accounting metrics 📊 are the most frequently manipulated
- Which extra-financial topics are the most sensitive 💹
#1 — Citron Research
Andrew Left, at the helm of Citron Research, has been actively publishing for 20+ years. With over 200 reports, Citron has amassed a track record of identifying fraud and terminal business models, second to none across any published source.
#2 — Muddy Waters
The firm has exposed accounting problems and frauds at several companies, primarily in China but also in other countries in Asia, Europe, and North America.
Muddy Waters is best known for spotting fraud at Sino-Forest Corp, a Canadian-listed Chinese company whose stock fell 74 percent before it eventually filed for bankruptcy protection in March 2012.
Most recently, it uncovered majors frauds at NMC Health or Burford Capital.
#3 — Kerrisdale Capital
Kerrisdale Capital is a private investment manager that focuses on value and special situations investments, renowned for its bets against Prothena, Allied Minds, and Bavarian Nordic between 2015 and 2017. The firm still keeps an active track record of short-selling bets that it regularly publishes on its blog.
#4 — Hindenburg Research
Founded by Nathan Anderson, Hindenburg Research is an investment research firm with a focus on activist short-selling. The firm generates public reports via its website that alleges fraud and malfeasance. Companies that have been the subjects of its reports include Nikola, Clover Health, Kandi, and Lordstown Motors.
#5 — Viceroy Research
Viceroy has published reports that raised red flags on many companies, but it was their work on German payment giant, Wirecard, that established the firm’s stature in the financial markets. Fraser Perring, one of their contributors, led the research along with Alphaville’s Dan McCrum.
#6 — White Diamond Research
Adam Gefert started writing independent investment research on Seeking Alpha before launching his firm, White Diamond Research, to become one of the most prolific short sellers in 2020.
#7 — Gotham City Research
Over the past years, Gotham City has struck on several occasions. It landed a killer blow in 2014 — when within days of alleging Gowex, a Spanish wi-fi provider, of cooking its books, the company admitted it was bankrupt with four years of worthless accounts. In 2017, they stroke again with Aurelius European Opportunities, the German Private Equity Fund, which made the stock plunged by 40% in a single day.
Gotham’s superhero image has been enhanced by its refusal to reveal any details about its identity, other than the name of its founder — Daniel Yu. The intrigue around the firm has been further fuelled by an assumption that its name is inspired by the fictional metropolis where Batman battles the city’s criminals.
#9 — Spruce Point Capital
Ben Axler’s Spruce Point Capital became one of the most impactful short-sellers by spotting problems and digging deeper on Dexcom. He’s recently become one of the most prolific short-sellers of US companies.
10# J Capital Research
J Capital Research was formed in late 2007 to provide research to financial institutions on high-alpha targets in China. An independent team within the firm conducts original, on-the-ground qualitative research on internationally listed companies that are active in China. This team provides in-depth analysis, each day, to a select group of overseas institutional investors directly. They have been campaigning against IP Group and Boohoo since 2017, which were challenged by institutional investors in 2020.
11# — Wolfpack Research
Dan David, an American investor, activist short-seller, and whistle-blower, is the founder of Wolfpack Research, a financial research and due diligence investigation firm that was founded in 2019 with support from short-seller, Muddy Waters Research. In the fall of 2017, David and his role as a whistle-blower and expert on China were the focus of the documentary film ‘The China Hustle’. The documentary reveals how fraudulent Chinese companies stole billions of dollars from U.S. investors and retirees.
#12 — Blue Orca
A prominent short-selling activist best known for exposing the fictitious doctorate of a former Samsonite luggage boss. After, the US, Asia, and Australia, for the first time now, the firm is targeting the UK for potential scalps.
#13 — Shadowfall
ShadowFall seeks the truth hidden behind aggressive corporate accounting, flawed business models, and unethical practices within companies listed in the UK and major European Equity Markets. They do so by identifying situations where the market value exceeds the intrinsic value. Some of their major successes include Burford Capital, NMC Health, Arcadis, First Derivatives, and IQE.
# 14 Quintessential Capital Management
Quintessential’s Managing Partner, Gabriel Grego, is the man behind the demise of Bio-on, the Italian, Bio-based plastic company. You can find his full investment thesis on Youtube. This is the same fund that was responsible for shorting the Greek jewelry retailer, Follie Follie, which eventually filed for bankruptcy a few months later…
15# Grizzly Research
Grizzly Research produces differentiated research insights on publicly traded companies through in-depth due diligence.
Honorable mentions
- The Foundation for Financial Journalism launched in 2012 in Wilmington, N.C. as the Southern Investigative Reporting Foundation (SIRF) with the goal of providing in-depth financial investigative reporting for the common good. After changing its name in early 2020, the organization remains solidly committed to the same mission
- Bronte capital’s John Hempton started to warn about accounting irregularities and sales malpractices at Valeant Pharmaceuticals between 2014 and 2017. In his blog “The sometimes eccentric views of John Hempton”, he shares his views on several global companies. He claims to have shorted over 1000 companies over the span of his career
- GMT Research’s Hall of Shame, where you can find information on frauds perpetrated by hundreds of Asian companies in public markets over the past few decades
- Alphaville’s Dan McCrum, an investigative reporter for the Financial Times, spent six years questioning the finances of Wirecard, Germany’s moneymaking payments processor. Fraudulent Wirecard stroke back against McCrum and his wife with smear campaigns, lawsuits, and surveillance. German banks and regulators targeted him. But his efforts paid off. Read about his crazy, weird investigation. If you can read the FT beyond the paywall, Alphaville is sometimes a great source of insights
- After gaining prominence while campaigning against Noble, Iceberg Research revealed financial manipulation and accounting frauds at EOS Energy. 👉 Twitter
- Geo Investing often tweets on fraud at micro-cap companies
- The Friendly Bear remains very active on Seeking Alpha on a number of US companies
- Alexander Stahel from Burggraben Holding shares some short, yet actionable insights on some public companies on Twitter
- You can follow 221B Capital’s Julian S McIntyre on Twitter, known for shorting satellite-operator Intelsat in 2018. Her presentation is still available here.
- Known for its campaign on Babcock Internationa, The Boatman Capital shares its latest short reports on its website. For more frequent updates, visit its Twitter account
- Edward Vranic is private investor based out of Toronto who regularly posts on Seeking Alpha
- Marc Cohodes, known for his short call on Mimedx, claims to have put a lot of people in jail, and exposed 50–70 frauds, mostly in biotech and sub-prime mortgages. He has been called, “the scourge of Wall Street,” and “Warren Buffett’s mosquito.”
- Edwin Dorsey writes a weekly newsletter for Wall Street Bears called the Bear Cave
- Spotlight Research, The Emperor Has No Clothes, Devonshire Research Turtle Street Capital, and Agloe Capital were once influential short-sellers that have been silent recently
