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Comment by danielmarkbruce | Hacker News Reader

Out of interest - why didn't you start a hedge fund instead?

I think big part of a strategy like this is long term. If you want to short a stock you need to make sure the fraud is discovered by other investors. So you probably need to have a strong marketing department that basically thrashes other companies, this may not be a goal a lot of people aspire to. With a short you're also exposed to lose an infinite amount.

And finally "markets can stay irrational longer than you can stay solvent." -Keynes

What you are saying is true, but it's a little bit superficial. There are many successful long/short funds and even a few short only funds. The risks are largely manageable risks.

The upside to starting a hedge fund is astronomical. And if what they claim they can do they can in fact do, the best business model seems to be start a hedge fund and manage the risks doesn't it?

My guess is they also have plans to move in on other sorts of fraud detection, for example bond issues or privately held firms. That’s my good faith interpretation.

My bad faith interpretation is they don’t trust their algos enough to trade on it themselves.

I guess I'm not even saying it's bad/good faith. I just literally wonder - why not do the obvious thing? A number of years ago I ran into several people trying to sell services predicting stock movements via twitter sentiment. Same thing - if it works just make billions fast using it to take positions. It's not trivially easy to start a hedge fund, but it's not rocket science either. The key ingredient is finding a way to make good returns. These twitter people seemed to have good intent.. it was just strange.

See response above. And not just fraud detection. We plan to expand to other areas including credit/bankruptcy, ESG and tracking macro changes and trends

Right, and you can make money in most cases (and still publish). Buy credit default swaps for example.

I don't know if there is an opportunity related to ESG.

A few reasons but the primary one is impact. Our mission is corporate accountability through information transparency. Once you become a hedge fund your incentives for information dissemination become warped.

How would your incentives not be aligned? On the surface it seems the following would be true: assuming you are shorting companies who are "crooked", you'd do a write up as to what you found and publish it, just like people do with shorts now.

I could easily be missing something related to your specific goals or situation, but on the surface I don't see it? Have you seriously explored it? I mean, if this thing you have works, you might be leaving a billion dollars on the table...

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