An investment review: Why Hindenburg research analysts failed to bring down shares of Freedom Finance broker
What exactly is questionable in the report and what should be borne in mind when making an investment decision
Last week, a report on the operation of the Freedom Finance broker was published by Hindenburg Research. It included a whole bunch of accusations: circumvention of sanctions, falsification of income and reporting, manipulation of the securities market, misuse of client funds, and more.
The report had a transparent purpose (which its authors do not hide) – to profit from a nearing the shares of the subject of the assessment. This is Hindenburg's standard practice.
Mind's reference: Hindenburg Research was founded in 2017 by Nathan Anderson. It was named after the Hindenburg airship that crashed in 1937, as a symbolic reference to an "avoidable human-caused disaster". The company's activities include analysing the transparency of various businesses and publishing open reports on its website. The reports usually deal with corporate fraud, malfeasance in office, and other abuses.
Adani Group, Nikola Corp. (Nasdaq: NKLA), Clover Health (Nasdaq: CLOV), Block, Inc., Kandi, Lordstown Motors, etc. have already been the objects of "research". The reports are disseminated to Hindenburg's limited liability partners, who collectively hold a short position in the target company before the report is published. That is, shares of the target company are borrowed and sold, and after the report is published, they are bought back at a (expectedly) lower price. The margin becomes a profit.
If the target company does have a questionable market valuation, this tactic might
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