Form: Short-seller report

What it is

A published report alleging that a target company's equity is materially overvalued — typically because reality doesn't match disclosure. The report is simultaneous with (or shortly precedes) a short position. The expected outcome is a sharp equity drawdown, a regulatory investigation, a restatement, or a going-concern event.

Different animal from an activist deck. The activist speaks to the board; the short-seller speaks past the board, to the market and the regulators. The ask is not "change the strategy" — it is "reprice the equity" or "investigate this company".

Muddy Waters · Sino-Forest, Citron · Valeant, Hindenburg · Nikola, Kerrisdale · Straight Path, Spruce Point on dozens of small-caps — all use this form.

When to use it

✅ You have primary-document evidence (filings, customs data, satellite imagery, court records, named whistleblowers)
✅ The discrepancy between reported and actual is material (>20% of revenue, EBITDA, or asset base)
✅ Your fund has the capacity to absorb cover-induced volatility
✅ Legal counsel has reviewed the report pre-publication
❌ Don't rely on a single anonymous source for any load-bearing claim
❌ Avoid if the company has already restated and disclosed remediation
❌ Skip if you cannot cite primary documents (paraphrases lose credibility instantly)
❌ Do not use this form for generic "overvalued growth stock" critiques — that is a research note or activist thesis

The four forensic angles

Every strong short-report leads with one:

Primary document contradiction — government filings, court records, satellite imagery proving the company's claims false. Muddy Waters · Sino-Forest (forestry bureau records).
Structural / accounting anomaly — a quantitative pattern in reported financials that cannot be explained by legitimate operations. Citron · Valeant (Philidor revenue duplication).
Whistleblower / insider testimony — first-hand accounts of misrepresentation, corroborated by independent evidence. Hindenburg · Nikola (former employees + internal emails).
Business-model critique — unit economics that do not compute at the scale the company claims. Pershing Square · Herbalife (pyramid scheme mathematics).

Name your angle on the cover. A report that smears across all four reads as fishing, not forensics.

Architecture

Not the activist 8-block. A different sequence:

1  Cover                     1 page   — target, allegation, our position
2  Summary of allegations    2–4 pg   — the smoking gun + the asks
3  Bull-case steel-man       3–5 pg   — prove you're not strawmanning
4  The smoking gun           1 pg     — the single most damning evidence
5  Evidence stack            20–60 pg — each claim independently verified
6  Management response       5–10 pg  — anticipated rebuttals pre-rebutted
                             pre-empt
7  Valuation bridge          3–5 pg   — what the equity is worth if right
8  Regulatory ask            1 pg     — named agencies, specific statutes
9  Appendix                  30–100pg — primary documents, photocopies

Page 1: the cover

The cover must carry, in one read:

Target: name, ticker, current market cap
Allegation: one sentence, active voice. E.g. "Nikola is an intricate fraud built on dozens of lies told by its founder Trevor Milton."
Our position: "We are short [ticker]."
The fund's track record: one line with prior hits (optional but common; builds credibility)

Fund logo, report title, publication date, a URL for the full report hosted at the fund's domain.

The smoking gun

One slide. One image. One caption.

A photograph of the empty warehouse
A screenshot of the filing contradicting disclosure
A satellite image showing no factory where one is claimed
A bank statement contradicting reported cash
A court record naming the CEO as defendant

The smoking gun's purpose is visceral: the reader decides in this one page whether the rest of the report is worth reading. Do not bury it on slide 47.

The bull-case steel-man

3–5 slides summarising the bull case as a bull would argue it. Counter-intuitive, but essential:

It proves you understand the business
It inoculates against "you just don't get it" rebuttals
It lets you attack a position instead of a phantom
It earns the skeptical reader's trust early

Do not editorialise in this section. A bull reader should agree with every statement. Then you turn.

The evidence stack

20–60 individually verifiable claims. Each claim follows the same 4-part structure:

The company's disclosure (quote + source)
Our counter-evidence (document + source)
The gap (quantified in $, %, units)
Why this matters (materiality to equity value)

Number every claim. Cross-reference to the appendix. Assume every footnote will be checked by an SEC investigator.

The valuation bridge

Usually $0, or close to it:

If the core business is fraud: equity = $0
If the core business is real but materially impaired: equity = liquidation or asset value less liabilities
If the business is going concern but overstated: peer multiple on restated financials

Show the bridge: current price → impairment → restatement → valuation. Name the catalyst (restatement, enforcement, delisting, bankruptcy).

The regulatory ask

Short reports don't demand action from the company — the company is the adversary. Instead, name the regulator and the statute:

"We have shared this report with the SEC's Division of Enforcement under Section 10(b)-5…"
"We urge the PCAOB to inspect the issuer's auditor…"
"The Nasdaq Listing Qualifications Department should consider delisting…"

Voice

Forensic, not polemical. Emotion kills credibility in this form. "The company claims X. The filings show Y. The gap is Z."
Cite everything. Every number footnoted, every quote linked, every document reproduced in the appendix.
Let the documents testify. The report's power is not in your narration — it's in the primary sources you stack.
Name the villain, but let them hang themselves. Quote the executive's own prior statements before accusing them. See patterns/ceo-quote-contradiction.md.

Legal and operational discipline

Every load-bearing claim reviewed by securities counsel
Every primary document acquired lawfully and documented
Short position established in advance, disclosed on the cover
Hedging for the cover-induced rally (options, put spreads)
Prepared follow-up posts for when management responds
Media outreach coordinated to the hour of publication

Anti-patterns

Lead with the conclusion, bury the evidence. Cover says "FRAUD" but no smoking gun until page 30. Reader tunes out.
Over-rely on one source. Single anonymous whistleblower = fragile. Pair testimony with documents.
Conflate legitimate criticism with fraud. If the thesis is "the business model is weaker than disclosed", that is a research note, not a fraud report. Don't upsell.
Ignore the bull case. A short report that doesn't steel-man the bull is dismissed as hit piece.
Publish without legal review. The defamation exposure is real.
Rely on screenshots without URLs and timestamps. Anything the company can claim is fabricated must be independently archived.

Common companion thesis types

Short reports typically combine:

theses/fraud-exposure.md — the dominant argument
theses/governance-board.md — board complicity / oversight failure
theses/multiple-rerating.md — category discount follows the exposure
theses/management-change.md — exit the responsible executives

Exemplars

Greenlight · Allied Capital (Jun 2002) — foundational text for modern forensic short-selling
Muddy Waters · Sino-Forest (Jun 2011) — Angle 1 archetype
Pershing Square · Herbalife (Dec 2012) — Angle 4; the pyramid- scheme business-model report
Citron · Valeant (Oct 2015) — Angle 2; Philidor revenue anomaly
Muddy Waters · NMC Health (Dec 2019) — Angle 1; bank statements
Muddy Waters · Luckin Coffee (Jan 2020) — Angle 1; 11,000 hours of in-store recording
Hindenburg · Nikola (Sep 2020) — Angle 3 + 4; Trevor Milton resigned ten days later
Hindenburg · Adani Group (Jan 2023) — large-cap short on a conglomerate; primary-document intensive
Spruce Point on dozens of small-caps — business-model critique template at scale

Full list: examples/by_thesis.json → fraud_exposure

Find anything