The long and SHORT of Hindenburg Research...
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00:00Is Hindenburg Research a force of good or an unscrupulous villain?
00:12We'll get to that in just a bit.
00:14The basics first.
00:15Hindenburg is a forensic financial research firm that looks for financial flaws and irregularities
00:20in companies.
00:21It is relatively small according to the Washington Post and at 5 years old, relatively young
00:26as well.
00:27It was named after the Hindenburg airship which caught fire and crashed over New Jersey
00:31in 1937.
00:32Slowly the big ship warps in and the ground crews rush for the mooring lines.
00:39In another 10 minutes or so, the great aircraft would have been snugly docked, but as the
00:43passengers crowded the windows to watch, a roar and a burst of inflammable hydrogen
00:48gas blazed up in less than a minute.
00:51The about us tab on the Hindenburg website says this air crash that came from 36 flights
00:56was a totally man-made, totally avoidable disaster.
00:59Several hydrogen-based aircraft had crashed leading up to the tragedy in New Jersey and
01:03yet the owners of the Hindenburg airship went ahead with their operation the website says.
01:08The hundreds of tons of fuel oil burns for an hour or more with its dense black smoke
01:14making a pall over the tragic scene.
01:16The Hindenburg website adds, we look for similar man-made disasters floating around in the
01:22market.
01:23Their goal is to shed light on them before these companies lure in more unsuspecting
01:28victims.
01:29Time to gather information.
01:30A young man named Nathan Anderson founded Hindenburg in 2017.
01:35He's just 38 years old.
01:37Anderson grew up in a small town in Connecticut, studied international business at a university
01:42there and volunteered as an ambulance medic in Jerusalem for some time.
01:46He told the Financial Times that he was seeking a more diverse set of life experiences back
01:51then.
01:52Before coming to the US, he worked in broker-dealer firms in New York and Washington before starting
01:56Hindenburg research.
01:57A 2021 article in the Financial Times said his team at Hindenburg comprised just five
02:03full-time employees and a handful of contractors.
02:08The FT article said Anderson had put his career on the line by doing critical research that
02:12had the power of influencing markets.
02:15A world-class digger.
02:17That's how Harry Markopolos, the investigator known for flagging Bernard Madoff's infamous
02:21Ponzi scheme, described him once.
02:23Anderson, according to the American press, has a gift for a type of stock trading known
02:27as short-selling.
02:29This has allowed Hindenburg to get very famous and very successful.
02:36Short-sellers bet against stocks or other assets.
02:38Some short-sellers simply bet on the fall in a company's stock price.
02:41But the ones who are known in the market as activist short-sellers release research about
02:47irregularities in a given company.
02:50These reports about alleged wrongdoing trigger a selling spree, allowing firms like Hindenburg
02:55to deploy their short-selling chops.
02:57So does that make them a force of good or corporate predators who not only hurt the
03:01companies they target, but also the small-time investors like you and me in the process?
03:06Well, according to the Washington Post, corporate executives see activist short-sellers as unsavory
03:12actors trying to profit by destroying companies.
03:15But then there are those who believe these guys are beneficial for the system overall
03:19since they expose alleged corporate irregularities.
03:22And that's that.