A Second Look at the Hindenburg Report.
Let’s take a deeper look into Hindenburg Research’s fraudulently report on Ideanomics
Welcome back to another Smartick’s Pick
Now that you’ve read To the Moon? The Story of the Little Rocket that could you should have a better understanding of Ideanomics actually does. I think its as good of a time to revisit the comments by Hindenburg Research from back in June.
I will extend professional courtesy to Hindenburg’s work as their detective work may have uncovered some sloppy moves by the Ideanomics team. But in this report, I will address the Hindenburg’s report and the problems I have with it.
Dearest Hindenburg Research,
On June 25th you released a report that sent Ideanomics into a downward spiral (which was your point most likely) but investors like myself really didn’t appreciate this. Your claims sent law firm like Bronstein, Gewirtz & Grossman, LLC (see below) into a frenzy with claim after claim against IDEX. The management team to include CEO Alf Poor have returned fire against this report however I thought I’d take a stab at your report.
Bronstein, Gewirtz & Grossman, LLC’s address on google brings up a UPS store
Great reviews
Hindenburg Claim #1 Ideanomics Change in name and leadership
Smartrick Comment:
Yes, this company has had a lot of facelifts however You On Demand was a streaming service started by Shane McMahon which brought American films to China. Bruno Wu bought the distribution rights to those major Hollywood pictures when he invested $10 million into YOD. He transitioned the company into cloud technology. shortly thereafter. Ultimately this blossomed into a blockchain technology and a name change to WeCast (which still offered streaming services). Once they announced the company would become Seven Suns Cloud Group (SSC) they dropped streaming services to move strictly into blockchain.
(Wu still holds rights in his privately held Seven Suns Investment Group)
Ideanomics still run this same business model today. When they renamed the company to Ideanomics this was likely to attract investors to their new blockchain fundraising for EV vehicles.
IDEX has been doing blockchain tech since WeCast.
Hindenburg Claim #2 Photoshopped MEG photos
Smartick comment:
The MEG or Mobile Energy Group is a collective of companies based in Qingdao. These companies are signed under an umbrella deal with IDEX. IDEX will act as a clearinghouse giving these businesses new business by the structure of their blockchain funds (using Chinese Government subsidies) and continued upgrades to China’s energy sector. (See Below)
The MEG has never claimed to be an IDEX entity its has been announced as a partnership with Fu Da Automobile Trading Center and Ideanomics. (IDEX 51% ownership) As of May 25, MEG's Qingdao subsidiary has a large-scale presence onsite and includes car dealer services for new energy and used vehicles.
Smartrick Comment:
****Yes, these are photoshopped, this reflects on management directly. In the midst of Covid-19 IDEX should have postponed their announcement of the grand opening instead of forcing this PR. 100% photoshopped in my mind! 100% disappointed in management. ****
Video Hindenburg Posted about MEG
Alf Poor’s Twitter responding to Hindenburg’s investigation
Smartick Comment:
The employee referred to Fuda (Fu Da Automobile Trading Center) when speaking about the MEG. Which is actually called the Qingdao Fidelity International Trade City (or 富达国际商贸城 in Chinese)
If you search for Qingdao Fidelity International Trade City (or 富达国际商贸城) on Chinese search engines you find this from popular China rental site fang.com
https://(Fuda)guojishangmaochengqd.fang.com/esfshop/
This confirms IDEX’s plan to revitalize the Qingdao Center with its partnership with Fu Da Automobile Trading Center these plans were announced before IDEX even took an interest in the Center. With IDEX's main role in these transactions being financial and fundraising IDEX only helps the Qingdao Center move to complete these additions.
Hindenburg claim #3
Smartrick Note: This link discusses the State of China and their sharing of information (also see a screenshot from the article below)
Beijing Silk Road Group-
The JV between all of these state-owned manufactures (listed below) is again a fund started by Bruno Wu and co to address the electric bus need in Beijing. Being able to contact this holding company that was 1.) recently started 2.) related to State (China) related business operations would be difficult for a random investor to confirm as China keeps state own operations confidential.
Zhejiang CEMI group
Smartrick Comment:
Zhejiang CEMI group - is the combination of IDEX and the state-owned businesses that need new NEV & equipment for their businesses. They happen to be located in Qingdao and Chengyang (MEG’s location) Zhejian CEMI group is the agreement to use IDEX financial service in crowdfunding NEVs and related equipment.
Qingdao Chengyang Ainenju new energy sales and Service Co. is a business that operates at the MEG or Fu Da Automobile Trading Center. They agreed to start working with Qinou Group a state-owned battery company that:
Taxi ORDER for 130 vehicles from state-own company SAIC
PetroChina
BYD
The largest state-own and privately-owned auto manufacture in China (backed by Warren Buffet) is a huge company. To call customer service and get an answer about state-related operations is silly, also BYD is a massive conglomerate that sells or produces anything from cars, buses, semiconductors, 5G handset, etc
For a customer service representative to know Ideanomics who don’t sell their cars but acts as a clearinghouse to BYD auto LTD arranging transactions between providences and other municipalities. This is one sector of BYD’s business as they are the global powerhouse electric buses.
Dongfeng
Dongfeng falls under the same lines as BYD in terms of involvement with IDEX. This order for taxis stems from the creation of collective MEG and its companies involved. The municipality of China (Neijiang city) would be the customer, not IDEX.
About orders from large manufactures:
State-controlled municipalities will not give up the information of who they do business with China does business different than the US.
I feel it would be hard-pressed to get the information here in the US. Don’t believe me why don’t you call the transportation services of the Atlanta and ask who their clearinghouse is (in terms of their fleet orders). I’m sure the customer service rep will not know.
Smartrick Closing comments:
It’s not that Hindenburg’s research didn’t raise red flags about Ideanomics. However, if you think about where Ideanomics is doing business, what their business model is, and who they are serving. It’s quite easy to come to the conclusion that they are legit.
But that’s just my take, you need to make your own.