Then there was a third set of sources he used: tips of no discernible origin. In March 2012, for instance, a package without a return address landed on his doorstep. Inside were 68 pages of research claiming that a Chinese real estate company, Evergrande, was perpetrating an accounting fraud and would collapse. An odd tone pervaded, as if a very strait-laced stock analyst were trying to loosen up and channel Left’s combative voice (“Chairman Hui’s pet projects are comically off-strategy ... the endgame is nearing ... a maze of Ponzi-esque debt”). Left hired a fact-checker, became convinced that the claims were accurate, updated some figures and published. The stock instantly dropped 7%. He covered a portion of his position two hours later, taking $280,000 in profit. But the profit was only the beginning of the story. In Hong Kong, the Securities and Futures Commission sued Left for “false and misleading claims,” a failure to adequately support his accusations with evidence. The judge found him guilty and barred him from trading on the Chinese markets for five years. (Left objects to the decision on free- speech grounds and is appealing the ruling.) He refused to give up the name of his fact- checker. As to the identity of the anonymous sender, there was nothing to give up: Left had no idea who it was, except someone who almost certainly had a short position in Evergrande and made a fortune off the publication without the hassle of appearing in court. That was the point of using physical paper. Courts can subpoena your emails, but good luck tracing the mail backward from your gated community in Beverly Hills.
Left also got tips as many journalists do, in large quantities, most of them useless. Business-school wannabes emailed him to get noticed. E-Trade cowboys offered schemes “for your eyes only.” Hedge funds sent him research and ideas, most often because they wanted him to catalyze a short position they already held, by taking it public. What many of these people failed to grasp was that a bad company wasn’t necessarily a good story. One morning, I watched him read his emails. “Gildan T-shirts,” he snorted. “That idea does nothing for me. Who gives a [expletive] about Gildan?”
American Consequences | 77
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