Hindenburg research has released a short report on $SEZL. The full content can be found on Twitter. Share price has been down 25% today.
Luffy
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Somewhat off topic, but anyway my experience has been that most short reports are malicious. They point to irrelevancies or out-of-date information with the implication that it is current, etc. I needn’t describe all the devious tactics that constitute the majority of the argument against a company thereby rapidly driving the stock price down. It’s an obvious ploy to exploit a short position of some kind and it is successful more often than not (though admittedly, I have no statistics to back that up).
It is unfortunate because a valid short report is beneficial for investors - mostly to those contemplating taking a position rather than those already in the stock. But even those who lose money still benefit by taking the loss and reinvesting the proceeds in a more promising company.
So how is one to discriminate between a valid report and one published with the primary motivation of exploiting the turmoil and sudden fall in the targeted stock price?
Good question and I have no reliable answer, but probably the easiest way is to keep tabs on those entities that have a track record of releasing short reports. Until the SMCI short report was released, I had never heard of Hindenburg, the same company that has just released this report on SEZL. They have probably been around for longer than these two publications, but these are the only two with which I am familiar. I am somewhat more familiar with Citron, IMO this entity has a track record of publishing exploitive short reports. The other thing that you need to consider is the company’s financial track record, and history of legal entanglements. And most importantly, research the management team and even the board of directors (I admit, I have not been very consistent with my own research in this regard).
This is a fairly time consuming activity (though with AI search it may be more easily done). And one usually doesn’t buy stock in a company in which you have reason to believe might be something less than candid with their reporting. It is easy to forego this effort. I have already confessed that even though I know I should do this, I often fail to do it. Is this helpful? I hope so. Just writing it down serves as a motivator for myself. Maybe reading it will serve the same purpose for you.
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Hindenburg got on my radar in 2020 with their very true short report on Nikola Motors, which eventually led to the CEO getting sentenced to jail time. A year later, they successfully targeted Clover Health. And Lordstown motors, which has since filed for bankrupcy. And Adani…
So while their reports almost always have too much hyperbole and go too far in suggesting bad things that really aren’t bad, overall I’ve learned to not ignore Hindenburg without investigating further.
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