ISAAC STONE FISH
A conversation with the mysterious Anonymous analysts who are exposing fraud and corruption in Chinese companies — and taking them down.
Anonymous Analytics (AA), a mysterious group claiming to be a faction of the global hacktivist organization Anonymous, just released its second short-selling report, this time about the multi-billion dollar Chinese company Huabao International.
Entitled “Smoke and Mirrors,” it’s a comprehensive unraveling of fraud in China’s biggest flavor and fragrance provider. It accuses Huabao of lying about its suppliers and grossly overstating its profit margins to enrich the chairwoman and her proxies, to the detriment of shareholders. Since short-seller Muddy Waters released its first report in 2010, many firms have investigated fraud in public Chinese companies, making millions by publishing information that caused companies’ stock price to fall. But this is the first time a group as murky as AA has entered the fray.
AA is cagey about most facets of its existence, including its motives. In its disclosure, the group says it holds “no direct or indirect position in any of the securities profiled in the report,” but adds that readers should “assume” certain contributors to the report are shorting the stock. They certainly did their homework. At one point, AA claims Huabao used Photoshop to blur the location of one of its facilities, but AA found it anyway — by travelling to Botswana, where the group says it learned that the base “is used for a different sort of business altogether” but declined to elaborate. Its anonymity allows AA to dangle information; it warns it will release more incriminating details if Huabao threatens anyone involved in producing the report.