🐻The Bear Cave #22 + Interview With Carson Block🐻

Interview with Carson Block, New Activist Reports, Tweets of the Week, And More!

Jul 13, 2020

Welcome to The Bear Cave — your weekly source of short-seller news. Feedback and sharing are always appreciated. If you are new, you can join our email list here.

Carson Block Interview

This week I interviewed legendary short-activist Carson Block. Watch the interview on YouTube below:

Interview Timeline: Getting Interested In China (1:00), Fraud in U.S. Listed Chinese Companies (5:45), Regulatory Solutions (9:30), GSX Techedu (15:35), Stock Manipulation in Hong Kong (21:20), Coming Up With Ideas (23:35), Research Process (27:15), Tesla (31:20), Longest Short Position (36:20), Missed Opportunities (39:40), Lawyers and Private Investigators (44:15), What Carson Reads (51:20), Hardest Thing About Being a Short-Activist (54:20)

Follow Muddy Waters on Twitter and go to their website for email alerts on new reports. You can also read Carson’s great open letter to Jay Clayton on Chinese fraud here.

New Activist Reports

Grizzly Research shared a report on Chinese online education company GSX Techedu (NYSE: GSX — $20.9 billion) that concluded, “[GSX’s] enrollment count is heavily manipulated.”

GSX has been the target of multiple research firms including Muddy Waters Research, Citron Research, Grizzly Research, The Bear Cave, a Chinese YouTube channel, and a Chinese Fund. Despite allegations of widespread fraud GSX shares are up about 270% YTD.

Blue Orca Capital published a report on infant milk formula maker China Feihe Ltd. (HK: 6186 — HKD$140 billion).

Hindenburg Research published a Twitter thread on electric car maker Workhorse Group (NASDAQ: WKHS — $1.07 billion):

Hindenburg Research @HindenburgRes

We're short $WKHS because we think there's immediate 50% downside. The company has an astronomical valuation of ~$1.5B despite less than $100k in revenue last quarter. We see the chance of winning a material USPS contract as virtually zero. A reality check is on its way.

Meet Me in NYC

I am in New York City today through Saturday, July 18, and want to meet you! I am a recent college grad very passionate about investing and short-selling. If you would like to meet just reply to this email. (I am happy to do meetings outdoors and/or with masks.)

If you want to know more about me you can read some of my past research here and here.

What to Read

“From payments to armaments: the double life of Wirecard’s Jan Marsalek” (FT)

“It was early 2018 when Jan Marsalek, the young chief operating officer of German fintech champion Wirecard, held a meeting in his palatial home in Munich to talk about a new special project he was interested in: recruiting 15,000 Libyan militiamen…”

“Robinhood Has Lured Young Traders, Sometimes With Devastating Results” (NYT)

“As he repeatedly lost money, Mr. Dobatse took out two $30,000 home equity loans so he could buy and sell more speculative stocks and options, hoping to pay off his debts. His account value shot above $1 million this year — but almost all of that recently disappeared. This week, his balance was $6,956.”

“This California legislator is taking on SmileDirectClub” (MarketWatch)