the money game

Last Sane Man on Wall Street

Nathan Anderson exposes — and bets against — corporate fraud. But short-selling a market this frothy can be ruinous.

Nathan Anderson. Photo: Philip Montgomery
Nathan Anderson. Photo: Philip Montgomery
Nathan Anderson. Photo: Philip Montgomery

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One day, a man with dreams of riches placed a truck on top of a hill. The vehicle was a big white tractor-trailer, a prototype built by an automotive start-up called Nikola. The company’s boastful founder, Trevor Milton, claimed it was the “holy grail” of the commercial-trucking industry, a semi that ran on hydrogen and was both green and powerful, capable of doing thousand-mile hauls with zero carbon emissions. In reality, the truck had no engine. It was towed up a straight two-lane road. Its driver released the brakes, and it rolled down the hill under the force of gravity, like a child’s wagon. The road had a 3 percent grade, gentle enough that with some creative camerawork, the prototype would appear to be barreling across a flat desert landscape.

On January 25, 2018, Nikola’s official Twitter account posted a swooshing 39-second video of the demonstration. “Behold,” it declared, “the Nikola One in motion.”

Four years and one federal criminal indictment later, the story of the engineless truck can be seen in many ways: as the high point of a scandal at an automaker that briefly had a market cap larger than Ford’s; as a manifestation of this era’s fake-it-till-you-make-it, flack-it-till-you-SPAC-it business ethos; as a cautionary tale of social media’s power to intoxicate the stock-trading masses; as yet another indicator that the market has become detached from reality; and maybe even as a big honking metaphor for an entire economy that is rolling down a hill, inflating, going deranged as crypto wizards conjure imaginary fortunes, companies without a hint of revenue reach multibillion-dollar valuations, and our richest men blast off into outer space.

On a practical level, though, the rolling truck was the killer detail — the spark that incinerated a high-flying stock to the career-making benefit of Nathan Anderson, the proprietor of Hindenburg Research.

Anderson belongs to a cranky cohort of “activist” short sellers. They make money by taking positions in the stocks of shaky or shady companies, which pay off if the price goes down — an outcome the shorts hasten with public attacks, publishing investigations on their web platforms and blasting away at their targets (and sometimes at one another) on Twitter. To their many powerful enemies, they are little more than internet trolls, a fun-house-mirror image of the day-trading dumbasses on Reddit who drive up meme stocks for the lolz. Anderson prefers to think of himself as a private detective, identifying mischief and malfeasance that might otherwise go undetected by snoozing regulators. He used to poke around in shadowy corners, but lately he has been seeing fraud sitting right in the blazing light of day.

“The scale of it is quite massive,” the lanky, bearded 37-year-old told me when we first met one sultry morning in August. “I don’t think any system can sustain itself with that scale of grifts happening.”

A hurricane was on the way, and we had arranged to meet up for breakfast at a café near his apartment on the Upper West Side. “The market’s crazy,” Anderson said laconically. “Dogecoin is worth, like, $40 billion. In this economy, a company, regardless of whether it is complete trash, can shoot up 1,000 percent.” Anderson said he was just back from a conference in San Francisco, a rare in-person gathering of around 30 short-selling activists — “the remaining survivors,” he joked, of a market that had been crushing contrarians.

It’s an axiom of short sellers that you can be right about the stock but ruined by the trade. If a stock ends up rising despite the evidence assembled against it, a short can end up taking huge losses — a danger that has led many otherwise risk-addicted financiers to forsake the practice. Every so often, though, a short bet pays off so well that the rest of the world takes notice. In Anderson’s case, that big score was Nikola. In 2020, Hindenburg released a devastating report on the truck-maker, alleging that the company — which at its peak was worth $34 billion — was “an intricate fraud built on dozens of lies.” The report sent Nikola’s stock price plummeting and prompted a criminal investigation that culminated in Milton’s indictment by federal prosecutors in Manhattan this past July. For Anderson, it was the highlight of an astonishing hot streak. Hindenburg had registered five of the top-ten short calls of 2020, according to the research firm Breakout Point.

Although those bets paid off well and Anderson says he’s “been able to make a very good living,” he’s still a small fry by Wall Street standards. He doesn’t manage a fund. He probably could be making more money trading muni bonds. But he’s had a lot more fun on his finance-world capers. Anderson has smoked out scammy cannabis operations. He has investigated alleged ties between a Colombian drug cartel and the owners of a glass company profiting from Miami’s pandemic building boom. For a report on a dubious biotech firm, he infiltrated a sales meeting by feigning a sports injury. He has delved into old-fashioned pump-and-dumps, COVID profiteers, and a do-it-yourself orthodontics scheme.

The recent craze in special-purpose acquisition companies — vehicles for businesses to go public via a merger without the usual regulatory oversight — has created a target-rich environment. Take the case of HF Foods Group, which owns warehouses that supply Chinese restaurants across the U.S. In 2020, Anderson published a report alleging that the company’s share price had been pushed up through questionable merger activity as well as a pattern of “highly irregular transactions.” One company subsidiary seemed to have been used to assemble a fleet of Ferraris. Some appeared to sport crude vanity tags (IPULL, DIKTAT0R, IMHUMBLE) and showed up in the Instagram feed of the chief executive’s son. (HF Foods later disclosed that it is under investigation by the Securities and Exchange Commission; the company did not respond to a request for comment.)

“Nate was the success story of last year,” Carson Block, another well-known activist short, tells me. That success was all the more remarkable in a market that has driven many other shorts, including Block, to the brink of despair. “We can find compelling stories all day long, things that we think are totally fucked up,” Block says. “But it’s a lot harder to get investors to think that it matters.”

After all, you have to be a little crazy to bet against a market that has proved impervious to inflation, supply-chain instability, and a plague that has killed millions of people. You have to be even crazier to do it in defiance of the stresses that come with being a short seller, which can include (in reverse order of annoyance) being yelled at by Jim Cramer, being doxed, being hacked, fending off shadowy private-intelligence firms, defamation lawsuits, and the distinct possibility that, rather than following up on your findings, government regulators will instead start investigating you. And after all that, your warnings may still be ignored or, even worse, trigger a counterreaction among bullish investors that could end up costing you everything.

“Yeah,” Anderson says. “That’s the torture.”

Photo: Philip Montgomery

Two months after our August meeting, I saw Anderson again, this time in a fifth-floor apartment he uses as an office. Children were playing down in the courtyard, and a brisk breeze carried a glistening bubble past his window. “A lot of investors prefer the market to be sort of this mass hallucination,” Anderson said. On the screen of his laptop, a ticker showed that bitcoin was trading at $63,682.60, heading toward an all-time high. “The market is designed to be a place where these scarce resources of society — capital, labor, materials — are allocated to their most efficient use,” he said. “But it has just become this otherworldly casino, which is disconnected from the real world.”

Anderson, wearing a dark T-shirt, jeans, and polka-dot socks, was fiddling with the wording of a new post to the Hindenburg website. Another researcher was nearby, one of eight full- and part-time employees who work for him. Besides serving as Hindenburg’s headquarters, the apartment is a storage space for three bicycles that belong to him, his fiancée, and his daughter.

Anderson was on the case of Tether Holdings, the company that created a cryptocurrency called tether. Tether is a stable-coin, or a unit of crypto that is pegged to something of real-world value — in this case, the U.S. dollar. In theory, each tether is backed by a real dollar held by Tether Holdings, which makes it a useful bit of the infrastructure undergirding the exchange of digital currencies, such as bitcoin and dogecoin. But a recent Bloomberg Businessweek investigation had raised serious questions about how tethered the coins really are, including speculation that a supposedly rock-solid portfolio of some $30 billion in short-term commercial loans might not be real.

Anderson said that Hindenburg had been looking into this possibly phantom portfolio. “From a research perspective, it’s hard to find something that may not exist,” Anderson said. “You have to canvass the world to find something that is not there.” The post on his screen was headlined “Hindenburg Research Announces $1,000,000 Bounty for Details on Tether’s Backing.” The bounty’s terms stated that the firm wanted to know whether tether’s “actual backing may have differed from its public disclosures.”

Short sellers usually play the stock market, but you can theoretically short almost anything that has a fluctuating value, including currencies. (George Soros famously made a fortune by betting against the British pound.) But Anderson said he did not have a direct profit motive for offering the bounty. He claimed he was acting out of curiosity and general principle. “It’s unclear whether it’s something that can be monetized,” he said. “But it’s definitely something we want to solve.” His cursor arrow hovered over the blue button that would publish the post. He clicked.

Anderson said he was anticipating an uproar on Twitter. “It’s going to be an absolute disaster,” he predicted with a note of relish. Sure enough, while the bounty has so far yielded no actionable information, it did trigger a vociferous response from Tether Holdings, which issued a statement calling it a “pathetic” attempt “to discredit not just Tether, but an entire movement.” The company’s CTO tweeted out a meme of “the Tether Truthooooor,” a red-eyed, stubble-bearded weirdo with Hindenburg’s logo superimposed on his forehead. For Anderson, that seemed to be the stunt’s most immediate payoff: eliciting a reaction from the cryptomaniacs on social media that aligned nicely with his firm’s chaotic-good brand identity.

Like many shorts, Anderson was drawn to the downside both by personality and by chance. He grew up in Connecticut, where his father was a professor and a family therapist and his mother was a nurse and a teacher. He went to UConn, served as an ambulance medic in Israel, then got into finance, working as an intermediary at boutique firms that connected hedge funds with wealthy individuals. It was in this capacity, around the end of 2014, that a contact asked him to check out a fund called Platinum Partners.

Platinum managed around $1.4 billion and claimed average returns of 17 percent a year — quite good. Anderson, impressed, started investigating. Platinum’s largest holding turned out to be an oil-exploration company that was under a criminal investigation related to a fatal platform explosion. It had also invested in a Florida Ponzi scheme and in an insurer that regulators had accused of seeking to “profit from the imminent deaths of terminally ill patients.”

Anderson thought Platinum looked fraudulent. He put together a 67-page document summarizing his analysis. “I was upset,” Anderson said. “I didn’t know what to do about it, but I knew I wanted to stop it.” His financial-industry clients didn’t really care, so he tried to interest journalists. He sought advice from Harry Markopolos, the analyst who first sounded alarms — to little avail — about Bernie Madoff. Markopolos introduced him to a lawyer who helped to prepare a submission to the SEC under the regulator’s whistleblower program. Within months, the FBI raided Platinum’s office, and two top executives were eventually convicted on securities-fraud charges. “Which was pretty cool,” Anderson said. “Because you don’t see any impact a lot of times.”

Under the SEC program, whistleblowers are eligible for a cut of up to 30 percent of any fines collected as a result of information they provide, which can amount to millions of dollars. But Anderson soon discovered that the SEC works at an inching pace. (He has yet to receive any award for his work exposing Platinum.) Anderson was now operating a small brokerage and a software firm that offered due-diligence services to hedge funds. He struggled to make a living. In 2017, his landlord filed suit to evict him from his Inwood apartment. His brokerage reported a net-capital balance of just $58,482 at the end of the year.

Anderson had hoped to make a business out of filing whistleblower claims, selling 5 or 10 percent stakes in the potential awards to investors to create short-term income. Short selling started as a secret side hustle. He would post anonymously on the crowdsourced website Seeking Alpha. He called himself Hindenburg Research to sound more authoritative, but it was just him.

In December 2017, early in Hindenburg’s existence, Anderson published a report on a Colorado biotech company that had abruptly pivoted into cryptocurrency, renaming itself Riot Blockchain. Barry Honig, a colorful Florida investor whom Anderson describes as the “LeBron James of pump-and-dumps,” was the company’s largest shareholder. (“What is the definition of a pump-and-dump?” Honig asked rhetorically when reached on his cell phone. In 2018, the SEC charged Honig and the CEO of Riot Blockchain with fraud. Both men later settled without admitting guilt and were barred from trading penny stocks. Riot Blockchain itself was not implicated.)

“I took a very big position” in Riot Blockchain, Anderson said. “And I had a very small account. I had a very, very young child at home, and I wasn’t doing that well. But I believed so strongly in this thesis, and the evidence was dead-on, unassailable. I published — and the stock went up, and it kept going up.”

Anderson’s analysis was sound, but no one was listening. He recalls that beneath one blog post about his report, a commenter wrote, “Who cares if it’s a scam? It’s blockchain, it’s going up.”

Short selling has been around, in one form or another, for as long as there have been speculators and dupes. The first truly famous short was probably Jesse Livermore, the “Boy Plunger,” an early-20th-century trader who made $100 million betting against stocks before the crash of 1929 but later lost it all and shot himself in the cloakroom of the Sherry-Netherland, leaving a note to his wife that concluded, “I am a failure.” The profession tends to attract volatile characters. “Shorting is just a notoriously difficult business,” says the former hedge-fund manager Whitney Tilson, who got out of the game. It involves taking a lot of risk for what is, by finance standards, relatively little upside. The people who do it often behave as if conflict were its own reward.

When it works, defying the foolish crowds can make you look like a genius, as it did for the traders who made billions betting against the mortgage bubble in 2008, some of whom ended up being immortalized in the book and movie The Big Short. But it’s a high-anxiety activity. The best thing that can happen is that a security becomes worthless, an outcome the shorts call “going to zero.” But if its price rises, traders can lose much more money than they stood to make from a victory. “Mathematically,” Tilson says, repeating a common adage, “shorting is a business where the most you can make is 100 percent, and your potential losses are infinity.”

A trader might have a portfolio of ten short positions. “You can be right on eight of them,” Tilson says, “but if one of them is Tesla, you’ve just been blown up.” This is not a hypothetical. A lot of shorts — including Tilson — have bet wrong on Tesla. Their skepticism could yet be vindicated. Plenty of reasonable people question the sanity of a market that assigns Elon Musk’s electric-car company a value greater than that of almost every other automaker in the world combined. But as somebody — maybe John Maynard Keynes, though the attribution is iffy — once said, the market can remain irrational longer than you can stay solvent. No wonder hedge-fund managers like Bill Ackman, who are famous for some of their big shorts, have decided there are easier ways to make their billions. “It’s not worth the brain damage,” Ackman once explained.

Their departure has opened the field to smaller predators with names like Scorpion Capital and Wolfpack Research. Rather than shorting stocks simply because they are overvalued, they focus on rooting out corporate wrongdoing. The model is not new. In its modern incarnation, it traces back at least three decades to Jim Chanos, the legendary founder of the fund Kynikos Associates. (It is named for the original Greek Cynics.) Chanos is best known for being the guy who drew attention to the shifty accounting at the energy-trading firm Enron, which generated a scandal that collapsed the company in 2001. A new generation of activists, however, has given the old method an extremely online twist. Instead of simply handing over their research to reporters and hoping for the worst, they publish on their own platforms and hound their targets on social media. They say they are meting out justice in a realm in which the authorities can be sluggish and easily outwitted.

“If the SEC isn’t going to take action and the DOJ isn’t going to take action against these bad actors,” says Christopher Carey, a former newspaper reporter who runs a firm called Sharesleuth, “really the only way is exposure to the market.”

A cynic might point out that this commitment to transparency can be inconsistent. Activist-research firms, including Hindenburg, tend to get evasive when it comes to some basic questions, like who supplies them with information and who, if anyone, backs their positions. (It takes serious money to make serious money as a short.) The activists hunt in packs, leading inevitably to allegations of conspiracy and stock manipulation. Adding to the murky atmosphere, some of them, like Anderson, start off by posting anonymously. He describes that as a practical defense: “You are just one guy with no assets, just doing research on your own, squaring off against incredibly well-resourced, powerful corporations and investment firms.”

Some critics of the activist approach contend that short-research firms do little of the actual detective work but rather act as fronts for investment firms that possess damaging information and an interest in maintaining a deniable distance. The loudest voice advancing this theory, Marc Cohodes, is a veteran short seller who says newcomers like Anderson are doing business the wrong way. Cohodes, a polarizing figure in the industry, ran a short-oriented hedge fund he shut down after the 2008 financial crisis and now tweets crankily from a ranch in Montana. “How are these nobodies with very little experience or training coming in and knocking the ball out of the park?” he asks. “Hedge funds, they do the deep work, and they have the money. In order for them to get the story out, they give it to these guys.”

There is little doubt that short researchers often have undisclosed relationships with interested parties — for example, angry ex-employees looking to take down their old firm. In one high-profile case this past summer, a researcher was compelled by litigation to admit that, in collaboration with a Dallas-based hedge fund, he had published an error-filled report that temporarily tanked a stock. In its most extreme form, Cohodes argues, the relationship allows sinister traders to take short positions and quickly cover them for a profit on the release of distorted negative reports, a strategy he calls “smash and grab.”

The claims made by Cohodes are echoed by other adversaries of the activist model and appear to have recently gotten the attention of the authorities. In December, Bloomberg News reported that the Department of Justice had initiated an “expansive criminal investigation” into allegations of “symbiotic relationships” between hedge funds and activist researchers and is examining prominent players in the industry, including Block’s firm, Muddy Waters Capital. (“We make enemies of powerful and wealthy people who propagate false narratives about our industry,” Block tells me via a spokesman, “which we assume led to this investigation.”)

The full scope of the inquiry is unknown, and Anderson says Hindenburg has received no indication it is a subject of the DOJ’s scrutiny. He declines to describe his stock-trading strategies in detail, except to say he collaborates with a group of roughly ten “investors” — presumably wealthy individuals or financial institutions, although he won’t name names. For each investigation, he may take on one backer. The investor gets an advance look at the report that allows that party to take a short position, and Hindenburg takes a cut of the profits on the trade. Anderson says his investors sometimes pass along tips about potential targets. “We develop our own leads, and sometimes market participants share leads with us,” he says. But he claims nothing is spoon-fed: “We do our own research.” And if a lead doesn’t pan out, he says, Hindenburg doesn’t publish anything.

“Color me skeptical,” says Cohodes, who refuses to believe that a modestly sized shop like Anderson’s could produce such a large volume of destructive information. “It is impossible to put out the research that Nate did in 2020 unless the shit was given to him.” When Anderson heard Cohodes was questioning his work, he reached out, offering to explain his methods, but got nowhere. Anderson then prepared a characteristically exhaustive 70-page document called “The Strangest Fight We Never Picked,” which laid out the evidence for what he believes is a “bizarre behind-the-scenes war” that Cohodes is waging against him. Cohodes denies having a vendetta, but he says he thinks Hindenburg and other activist researchers may sometimes be engaging in behavior that is damaging and potentially illegal. “I think that what these guys do is bad,” he says, “and if they were ever investigated, I think they’d be in a lot of trouble.”

From the beginning, Anderson has been defending Hindenburg against accusations of stock manipulation. His very first report, which identified fishy transactions at a publicly listed Bollywood production company called Eros International, led to a defamation lawsuit. Eros alleged that Hindenburg and a cabal of other short sellers were victimizing the company in a “short and distort” scheme. The lawsuit quickly revealed that Anderson was the man behind Hindenburg, but it was ultimately dismissed.

Years later, after he was more firmly established, Anderson got his revenge. Hindenburg hired a private investigator to check out an Indian production company that had received $153 million in payments from Eros. It had produced little, and it turned out to be run by an in-law of Eros’s chairman and CEO. Its tiny office was in an apartment building in a downscale neighborhood in Mumbai. In 2019, Hindenburg issued a follow-up report disclosing its findings and predicting the stock would “end up worthless.” Eros traded at around $12 on the NYSE at the time Anderson first started to investigate it. It is now down to 25 cents a share.

Trevor Milton at a presentation of Nikola’s new trucks in 2019. Photo: Reuters/Massimo Pinca

On February 9, 2020, as the S&P 500 index vaulted to an all-time high, Anderson was following the spread of a new coronavirus in China. “I said we’d leave New York when there were ten confirmed cases,” he recalls. “I think we left when there were seven.” He retreated to an Airbnb — a renovated barn — near his parents’ house in Connecticut and waited for the long-predicted market correction. Anderson says he was anticipating it would put a lot of overvalued companies out of business, “a healthy but painful process,” which he felt would be cleansing for the economy. On March 12, as the world locked down, the stock market suffered its worst one-day decline since the crash of 1987.

From the safety of the barn, Anderson took to Twitter, where his voice-of-doom persona (@ClarityToast) had developed a healthy following. “S&P hits new lows … as Trump and the Fed try to paper over everything,” he tweeted on March 13. “It’s not working anymore, folks.”

But then it did work. The federal government opened its macroeconomic sluices, printing trillions of dollars. The stock indexes stabilized and before long were ascending past their previous highs. Newbie investors, killing time during the lockdown, started playing with stocks on apps like Robinhood. “Getting the impression that a large portion of those stimulus checks went straight into Robinhood accounts to buy YOLO calls,” Anderson tweeted incredulously that April. “The Fed just turned around and reinflated the biggest asset bubble of all time,” he says now. “At that point, it was just a question of how crazy it could get.”

Then, on June 9, 2020, Anderson came across a tweet from Milton. His truck company, Nikola, had gone public on NASDAQ five days before: “I’ve wanted to say this my whole adult life; $NKLA is now worth more than Ford and [Fiat Chrysler]. Nipping on the heels of GM …”

“He basically was saying that, like, he had overcome two of the largest automobile-makers in history, which have collectively produced millions of vehicles,” Anderson says. “And I just remember looking at that and thinking how completely unearned that statement was.”

In press coverage, Milton was often described as a “serial entrepreneur,” a polite circumlocution. He had no engineering background and had gotten into electric vehicles after running a home-alarm-systems franchise and a classified-ad website in his home state of Utah. He launched his truck business in 2014, naming it Nikola in homage to Tesla and, it seems, in imitation of Musk. (“There’s two people in this world who know EVs better than anyone,” Milton once said, “and that’s Elon and myself.”) Unlike Tesla, though, Nikola had yet to sell or lease a single vehicle.

Milton had promised to revolutionize the carbon-spewing trucking industry by making hydrogen-fuel-cell vehicles that were as powerful as big diesel rigs, capable of hauling “80,000 pounds more than 1,000 miles” without stopping to refuel. An impressive roster of investors had bought into his vision. The most prominent was Jeff Ubben, a billionaire who had recently left his hedge fund after decades of pressuring companies to increase shareholder returns, saying he wanted to make investments that contributed to the greater good. (“I’m on a crusade,” Ubben said in 2020. “I’ve got five years to fix the harm I’ve done.”) Nikola raised more than $500 million in venture capital from Ubben and others. Then, in 2020, it went public via a SPAC, merging with a publicly traded shell company that was run by a former top executive at GM. The deal created a huge windfall for everyone involved. Milton received a $70 million cash payment and became the public company’s largest shareholder. The day he wrote his fateful tweet, he was worth more than $8 billion on paper.

Anderson started to poke around on the internet, where Milton had left a long trail of self-promoting bread crumbs. One reason that SPAC mergers have become so popular is that they dodge SEC regulations that require companies to observe a “quiet period” around the time of their IPO. Milton tweeted 2,283 times, an average of eight or nine posts a day, during the first nine months of 2020. Internal communications cited by the government in subsequent legal proceedings show that he was focused intensely on influencing Robinhood investors via social media.

On YouTube, Anderson watched a video of a stagy industry event Milton had held at his Salt Lake City headquarters in 2016. The chief executive whizzed onstage in an electric off-road vehicle, emanating booyah energy. Wearing a pair of low-slung jeans, he spoke in front of a semi, the Nikola One, which was covered with a huge white sheet. “For every doubter out there who said, ‘There’s no way this is true; how could that be possible?,’ we’ve done it,” Milton said. Often, prototypes presented at trade shows are dummies known as “pushers.” Milton invited the audience, which included the governor of Utah, to “see the truck, know it’s real, touch it, feel how sturdy it is. You’re going to see that this is a real truck. This is not a pusher.”

From the beginning, there had been skepticism about his claims within the automotive industry. “Trevor Milton Wants to Revolutionize Trucking, and He Doesn’t Care If You Don’t Believe Him,” read the headline of a 2016 profile in the trade magazine Commercial Carrier Journal. Four years later, shortly after Nikola went public, Bloomberg News published an anonymously sourced story reporting that the Nikola One prototype at the 2016 unveiling was not actually a functioning vehicle. Milton responded on Twitter, calling the reporter, Edward Ludlow, a “deceiver” and a “jackjob” and saying he should be fired. Then he texted one of his board members: “Share value went up after my response.”

It was around this time that Anderson talked with Mark Pugsley, an attorney he knew in Utah who specializes in representing whistleblowers. Pugsley told Anderson that he represented three people who were preparing to file a whistleblowing complaint against Nikola with the SEC. Milton “had left a trail of people in his wake who he had just screwed over,” Pugsley says. He wouldn’t identify his clients to me by name, but he says they were familiar with Nikola and its technology. During the pandemic, one of them had hunkered down in a garage filled with documents and whiteboards in an obsessive quest to prove Milton was a phony.

“They were all experts in the area that Nikola purported to be in,” Pugsley says. “They were watching the ridiculous statements and thinking, This is total bullshit.

Anderson evaluated the information the whistleblowers had compiled. Some claims were easy to fact-check. Milton had said that Nikola’s trucks were to be powered by batteries and hydrogen-fuel cells. A little research revealed that Nikola had filed a federal lawsuit against a battery manufacturer that it had agreed to acquire, claiming it had only recently discovered the company’s president, a former consultant to NASA, was under indictment for putting his visits to prostitutes on his government expense account. As for hydrogen, Anderson was able to confirm that Nikola’s director of hydrogen production was Milton’s brother, Travis. His job before joining Nikola? Paving driveways in Hawaii.

Despite Milton’s boasts that the Nikola One was “not a pusher,” it lacked basic components — including gears and motors — at the time of its unveiling. An inside source told Hindenburg that workers had scrambled to assemble it on the eve of the show with off-the-shelf parts from a hardware store. It had to be towed onto the stage for the event. Its electrical components, including systems in the cab that Milton demonstrated, were powered by an electrical cable running beneath the stage.

The pièce de résistance, though, was the video of the rolling truck. The company had shot the commercial in cooperation with one of its parts suppliers, and it was Milton who had insisted that it show the Nikola One “in motion,” company executives later told a law firm that conducted an internal investigation. Some insiders insist this was a common automotive-industry practice. (Every automobile company in the world is a liar, Nikola’s head of manufacturing told the internal investigation, “if rolling a truck down a hill is a fabrication.”) But Anderson immediately recognized the potency of the anecdote. “The truck had zero horsepower,” he says.

Acting on information from a former employee, Pugsley’s clients managed to pinpoint the road, a deserted stretch of the Mormon Trail. As a test, one of Hindenburg’s informants drove to the top of the hill, put his Honda SUV in neutral, and let it roll. The SUV reached a maximum speed of 56 miles per hour.

Meanwhile, Milton was obliviously tweeting away. He had recently announced an ambitious pivot into making consumer vehicles, posting a CGI rendering of a hybrid pickup truck called the Badger. He claimed to have “literally built the most badass pickup truck the world had ever seen,” a “fully functioning” prototype that could “whoop a Ford F-150.” Shortly after Nikola went public, Milton tweeted out a new feature: Water produced as a by-product of the hydrogen-fuel cells would feed into a fountain in the cab, producing “cold, clean, pure drinking water.” (A few days later, Milton allegedly Googled a question: “Can you drink water from a fuel cell?”)

In fact, there was no working pickup prototype. But in September 2020, Nikola announced a deal with GM. In return for $2 billion in Nikola stock, the Detroit automaker would engineer and manufacture the Badger using its own technology. Milton had faked it, and now GM was going to make it. Nikola’s share price shot up 30 percent after the deal was announced.

Two days later, Hindenburg published. Pugsley and his clients were waiting, tracking Nikola’s stock chart on their web browsers. They cheered as the line plunged. “It was a blast,” Pugsley says. “It was just a very rewarding experience to watch it come out and watch the stock tank.”

Afterward, everyone wanted to know how Hindenburg had done it. Anderson says that private investigators — hired by Milton, he assumed — went to elaborate lengths to identify his sources. A rumor went around the short-selling world that Musk, who also plans to make trucks, had somehow ordered up the Nikola hit.

Anderson laughs off the notion that he is a puppet and defends the motivations of his sources. “I don’t think most whistleblowers and even short sellers, for that matter,” he says, “start with the idea that, like, Wow, this can be a great business; all I need to do is pick fights with corporate sociopaths, and I can do really well.” In the Nikola case, he says, “it started, I think, just as abject horror that something this egregious and wrong could continue to fail forward and upward.”

Shorts see themselves as a force of correction restoring balance to the marketplace. But for every bet they win, there is a loser, someone who believed the stock was headed up. Over the past year, the eternal conflict between bulls and bears has turned into a social-media battle. “It’s not that different than the tribal warfare we see in the political sphere,” says Carey. The dynamic played out most dramatically in last year’s frenzy over GameStop. Rabblerousers on Reddit decided to coordinate what is known as a squeeze against traders who had shorted the beleaguered strip-mall retailer, driving up the price in order to force them to cover their positions at a loss. This was the first in a series of meme-stock rallies that seemed to be driven less by profit motives than by a mob mentality and a desire to strike a blow against predatory capitalism. After the GameStop squeeze, one of the best-known activists, who took heavy losses, announced he was giving up on publishing short research. It was just getting too dangerous to be a rationalist.

Anderson says it was a “bizarre period.” It was particularly agonizing because while he felt the anger was misdirected, he understood where it was coming from — it was the same thing that first drove him to become a whistleblower. “I think there was a very legitimate undercurrent of thinking that the elites or the wealthy had long manipulated the system to benefit themselves and disadvantage regular people,” he says. “And that’s something I strongly identify with because we spend most of our time trying to identify those people that manipulate the system.” The irony, in his view, was that “those guns were kind of trained on us, the short sellers.”

Lately, Anderson has been talking about taking Hindenburg in new directions that are not so clearly linked to stock speculation. He wants to turn its website into a platform for the kind of financial investigative journalism that the ailing news industry has largely abandoned. In recent months, he has kept me abreast of Hindenburg’s work on a forensic project involving an overseas conglomerate. “We just downloaded the entire Mauritius corporate registry,” he told me in late November. “It’s a pretty extensive web.” He was still figuring out how he would be able to profit from the investigation’s findings, whenever it ultimately came to completion.

Meanwhile, he has continued to watch Nikola’s stock, which remains one of his largest short positions. Milton resigned in the aftermath of Hindenburg’s report and an ensuing Me Too scandal — CNBC reported that two women had accused him of sexually abusing them as minors. GM scuttled the partnership deal, and the SEC began a fraud investigation of Nikola, which recently concluded with the company’s agreeing to pay a $125 million settlement, of which the whistleblowers in Utah are expecting a significant cut. (Nikola’s management and board members, including Ubben, declined to comment for this article, as did Milton, who has pleaded not guilty to the fraud charges. He has also denied the abuse allegations.) Milton’s indictment produced further damaging revelations about the state of the company’s technology, such as the allegation that, contrary to his claims to have discovered a way to produce hydrogen fuel at a quarter of the market price, “Nikola had never obtained a permit for, let alone constructed, a hydrogen production station, nor had it produced any hydrogen.”

Still, despite all that, Nikola’s stock had not gone to zero. Instead, it’s been hovering at around $10 a share, giving Nikola a capitalization of more than $4 billion. Milton has cashed out millions’ worth of stock, but he still owns enough of the company that he remains a billionaire, or close to it, on paper.

“I view that more as a reflection of the complete market insanity that we’re in now,” Anderson says. “Where pictures of digital tulips are trading for hundreds of thousands of dollars.”

This past fall, the electric-vehicle companies Lucid and Rivian, neither of which has sold more than a handful of automobiles, went public and instantly vaulted past GM in market value. Over just 12 trading days, Tesla gained nearly $400 billion in market capitalization in what Fortune declared to be the sharpest such jump in history. The S&P 500 has gained 40 percent since January 20, 2020, when the CDC identified the first case of COVID in the U.S. An average of three SPACs a day were going public in December, The Wall Street Journal reported, raising billions in capital from investors despite a dismal track record. (Three in four last year ended up trading below their initial offering price.) Donald Trump is getting in on the boom, naturally, striking a SPAC deal to raise money for his new media company, which was valued at roughly $2 billion in December. On January 6, the SPAC’s stock rose another 20 percent following the announcement that it will launch an app, Truth Social, on Presidents’ Day. And the truck just keeps rolling.

Last Sane Man on Wall Street