Inside the Baddest Hedge Fund in America with Sam Koppelman and Nathaniel Horwitz

24:19A lot of people we spoke to might think this is kind of crazy. Well, I was like scared for you. I was worried. I didn't think that it was a bad idea. I thought it was a very risky idea. It's a very scary idea. And a lot of people were like, what are people going to say about this? And then we launched and we told everyone what we were about, especially at a time when people are skeptical as a default about the news they read. They think, who's benefiting from this? What's the motive of the outlet? That's everyone's default. We were like, what if we're just super transparent? We tell you what we know.

24:45We tell you how we know it. And we tell you exactly how we stand to make money from it. And the only way we're going to prove to you that this is legit outlet is by being right again and again and again, publishing super rigorous reporting that speaks for itself. And I think that what's amazing is a year and a half into this thing, we've got the best reporters coming to us asking to work here. We have people taking our stories extremely seriously. Our investigation into the healthcare industry we released last month was entered into the congressional record and cited by both Republican and Democratic members of Congress at a hearing to insurance CEOs.

25:20Thank you, thank you, thank you. I'm bringing bipartisan shoot the pack. And now we're able to have a flywheel of great inbound stories. We're able to publish them with real credibility. And last year we were profitable in our second year as a media startup. And we're scaling and hiring reporters. And we're not hiring them to go aggregate headlines about Papa John's being acquired that came from some Dubai bullshit outlet. No, you're telling them, go do what you do. To do the best version of their journalism, the kind that Nathaniel's parents did. That's how we ended up doing this thing. Okay, so what were some of the things that you heard from people when you first were launching or you were like socializing the idea?

25:57Tell me some of the things that people on Wall Street said or people in journalism said. A lot of people on Wall Street say, well, you know, I'm invested in a hedge fund that's hired a journalist. They help out with the due diligence. What's the difference? And we'd say, that's a former journalist. the best journalists, the people who are really going to get to the truth, they're not willing to give up the byline. They're not willing to give up the public service mission that took them into journalism in the first place. Oh, they don't want to be just behind the scenes. They don't want to be behind the scenes.

26:32They want to be Bob Woodward. Yeah. And we are able to give them a platform where, as Sam said, they can come and do the highest caliber of business journalism. We're up there with the best business outlets in the world in terms of the caliber of the reporting. And you can read that reporting for yourself. Okay. Across the social media, the news. So was it that obvious to journalists that you talked to? Totally. They got it immediately? They would see the way that they would do really important reporting. And then other people would run with that and make the money, drive the impact. Yeah. And they were chasing clicks.

27:09Or their work was behind a subscriber paywall. Even their cousins and their friends couldn't read any of the work. So I want to be really clear about how it works in the newsroom at Hunterbrook Media. It's ad-free and free to read for everybody. There's no incentive to go out there and chase eyeballs. It's not walled off from access. It doesn't rely on donors or government funding. It relies on the truth. I'm an investor. I run the fund. I want accurate information about what's going on out there. We get that from Hunterbrook Media at Hunterbrook Capital. And then I can make better investments knowing that this is actually the truth and not some clickbait headline that flashed on the Bloomberg terminal.

27:54When you guys raised money from legendary investor Mark Lazzari early on, credit to you, was that, did he invest in the fund? Did he invest in the business? Like how, what funds the media part of it? I can speak high level, which is that we raised around publicly to get ourselves started. We raised 10 million bucks and we did that from Emerson Collective, from Nathaniel's former boss, Peter Kolchinsky at RA Capital, from David Fialko, our founder of General Catalyst and our close friend. A bunch of people who bet on this idea. And that's, and they're investing in the company. That was for the overall company.

28:29Are they investors in the fund or was that general purposes to spin up the media part? We got the company started first with that capital. Then we went out and raised$100 million as our launch fund. Which was harder. I think that as soon as people really scrutinize the logic of why this actually makes sense, both of them were actually pretty easy from a fundraising perspective. And that logic, I think, is pretty clear. once you strip away all the novelty of it. It's the same thing that people have been trying to do in this business for a really long time, which is just get an informational edge.

29:11Fair game, but through dedicated work, a differentiated perspective. In our case, the type of people you can recruit to an organization like this who wouldn't go work at a traditional hedge fund or due diligence firm. So that was my next question. There are people that would look at this and they would say, all right, obviously this makes perfect sense. You get the best reporters, you put them on a story, and once you learn what the truth is, you trade on it. What hedge fund doesn't use their analysts this way? But why do you have to publish? Because there's two things in this industry that regulators don't like, and people can point to something and say that it's one of those two things.

29:52short and distort is one pump and dump is the other. And I would imagine that was probably a point of hesitancy. You pitch this idea to people, people probably like, all right, but do you have to publish? Like, can you just find out the truth and let's trade on it like everybody else? But you're, you made the point. Yes, we have to publish. That's how we get Bethany McLean and amazing real journalists to want to be part of this. they don't want to be in the back room cranking out articles that 10 people read. And there's also a reason that Nathaniel and I didn't leave college and go work at a hedge fund.

30:29The reason we started this thing was to build - You guys actually care about the journalism. It's not just a means to an end. The house I was growing up in, my parents went into war zones across the world for the Wall Street Journal to get the truth. It was a core component of the identity I grew up with And then I then - I know in this room, it might not be a popular thing to say, but in his house, they also really didn't f***ing like hedge funds. Right, okay. This was not a house that was, you know, super capitalist or anything. And I think what people realized - Well, now you're in a metaphorical war zone.

31:01It's not quite what your parents experienced. An information war zone. An information war zone. But what I think people got from us is we're people with pretty good lives. We weren't going to be the kind of people trying to find some quick edge. We're trying to build a real institution here. It is a startup institution. You're not going to shortcut by being like, all right, let's write a hit piece on this and try to scalp it for three points because you can only do that two or three times before people realize what you're doing. Exactly. You have to basically build a reputation for being right as the atomic substructure of everything else.

31:34So let me ask you guys a dumb question. What is the difference in your eyes between the work, Joshua says, like the work that the analysts do at a traditional hedge fund, which is like reportive-ish versus like actual journalism? It's a great question. And this all obviously exists on a spectrum. Like a lot of the people who work at plaintiff's law firms are incredible investigators. And they know how to get people to talk and tell a story of how a company poisoned a river or poisoned the air. Aaron Brockovich, I think, is a journalist. And there's obviously people at the top of the best hedge funds in the world who operate like journalists.

32:11They go try to figure out base reality and are able to tune out the noise. For us, the big difference is just this obsession with not being biased by your priors and figuring out how to identify new facts about a situation that people previously didn't understand. There's obviously a lot of overlap. I think if you read our stories and you see the way that we attack various problems, I know we're going to get into a couple of examples. Yeah. It'll become clear that what we're doing is sort of categorically different. And then the other cool thing about being a publication is, as I mentioned, you then also get a bunch of inbound.

32:47One of the things that happens, obviously, on the street is people do talk their books and try to get other people to cover things. Josh, I'm sure people ask you to talk about names on CNBC all the time. But they also are often kind of possessive about their information and don't want to share it with other people. People really want to give the best information that they've got to us because they don't want their long blown up. They don't want their short squeezed. They don't want their options to expire worthless. And often they want the world to find out about something. You know how frustrating it was to be a Wirecard short before anyone wrote about that?

33:20Yeah. You're just in this name and it's going up and up and up and up. And by the way, after that was written about, it kept going up and up and up and up and up and remained very frustrating. Oh, the FT finally picked up the story. Exactly. But it still took years before the thing collapsed. Are you guys watching Industry? No. So in this season, Harper runs a hedge fund and she's short a name and she's using the newspapers to publish about her thesis and they're publishing. If only she worked at Hunterbrook. That's right. And it's fun hearing. Oh, Harper. Yeah. I was hunting. Okay. So anyway, the thesis is published by the newspaper and the market doesn't care.

33:53And it's going up in her face anyway. And I sort of wonder how that works with you guys, because this is sort of a post shame world. Nobody cares about anything. Nobody has the attention span for more than 30 seconds. You might lay out an incredible thesis. Maybe there's momentum traders in there. You guys are idiots. like how did i'm sure you've got you got people that like documented multiple trips to epstein island they're like on dancing with the stars like we're completely post shame look this is a really important question it's one we spend a ton of time on we think this is the time in recent history where if you're a bad actor you did something really bad you go to sleep the easiest you've gone to sleep in a very long time yeah you don't think there's going to be some journalists calling in the morning and if they do you think you're gonna be able to shrug it off you don't think your stock's going to be impacted.

34:40You don't think you're going to get sued over it. You definitely don't think the government's coming. If you're a bad actor. And we think that that is a great opportunity in this golden age of grift and graft to buy the dip on integrity, to buy the dip on doing business the right way. Like the wheel will turn and those things will come back into vogue. Hopefully. We just don't know when. Gravity has always existed. And I do think that what we found is, yes, on the order of a week or a month or three months, we can publish a story. And if the shareholder base is not good faith, like nobody actually owns this thing because they believe in it, then it's very hard to convince them in one way or another.

35:23That's not our mission. Our mission is to just inform people and then over time be proven right. Because eventually, when Hunter Brooks existed for 10 years, when we publish, the discount that's taking place over a long period of time before the market necessarily understands that we're going to be right, collapses because people know how the story ends. How good does that feel when you're right? I mean, you've been smiling this whole episode. I love your energy. You just got a big smile on your face. How good does it feel when the market agrees with you? It's extremely gratifying. It's also informative when it doesn't, right?

35:51It's a great feedback loop. You can get educated really quickly on how people perceive what you're saying about the world. and yeah, there have been times where we have not been cynical enough. Yeah, okay. But there have also been times where we've been too cynical. You know, there's been a couple of times where Hunterbrook Media has sent over to the fund really compelling investigative journalism about a company that they're planning to publish. And I read it and think, God, that's great journalism. Like my dad, he passed away a few years ago. My dad would have loved that. That was exactly his kind of thing.

36:32I'm not going to trade on that. I'm not going to short that name because I don't think these shareholders are good faith. I don't think people care about this type of situation. Oh, you think it'll just go over everyone's head and people won't care? I'll give you an example. We have incredible journalists, Sam recruited from the Crimson, who went to Danville, Illinois, factory town, and revealed that the factory of a multinational conglomerate was poisoning people in that town. And we had a bunch of reporting like this. We recruited a great reporter from the Wall Street Journal last year who's been running our beat on environmental reporting, scoop after scoop about just some terrible stuff that's happening with the class of the EPA, regulation around health and well-being.

37:19And some of those stocks just hadn't budged on that reporting. So this looked similar, Pat. This was a literal how the sausages made story. It was about a sausage casing factory. Okay. It was like over 100 years after Sinclair. Exactly the same thing. Exactly. Exactly the same thing going down. That stock absolutely collapsed upon publication. I didn't have a short on. It turned out that people do. It's based in Spain where people still care about shit. You're not allowed to poison people in Spain, I guess. Oh, it was the company was domiciled in Spain and the Spanish investors responded to that journalism by selling.

37:58And within 48 hours, local Spanish news outlets had found out the company was doing similar stuff in other places. The company itself had to engage in good faith with shareholders and regulators and clean up their act. They put out multiple press releases about their commitment to doubling down on safety and well-being at this factory and across their whole operation. Real accountability driven quickly because the share price moved. But I was too cynical as an investor because I thought, wow. Wow. You thought they'll just get away with it. There's no trade here. Exactly. Do you guys worry about people who are long a stock where you burst the bubble?

38:34And by the way, for the listener, we're going to get into some specific cases that Hunter Brook Media has been involved with. And they're not all shorts. I just want to put this out here. But you guys - That's a really important point. We ran a net long book in 2020. Yeah. So I don't want people to think that you guys are just like out there looking to destroy companies. No, a lot of the time you're digging into a company that sounds too good to be true. Yeah. Turns out it actually is as good as it sounds. Or you find, you know, one company is doing shady stuff, but another company is really high quality.

39:04And that scammy company has been taking all the oxygen out of the room, but there's a real gem there. So this is important because I do think that there is a popular image of the activist short seller, which is somebody that's out for blood and somebody that wants to right wrongs in the world and make people pay and then jump up and down on the corpse of a company that they deem to be morally inferior to what their own standards are. There is that. And I know that's not the truth because I do know people that are in the short selling world, but like that is sort of like what the popular perception is.

39:38But you guys are coming at it from the point of view where if this company needs to be exposed, we will expose them. But sometimes we will think one thing and then the other thing will be true. and that might be just as profitable. And that is, I think, where you guys might differ from traditional journalism. In real journalism, if there's no story there, then that's it. Let's move on. If it bleeds, it leads. And if it doesn't bleed, then why are we talking about it? Whereas you guys might say, hey, this is actually a bullish story and we thought it might be bearish or we didn't think anything.

40:12We just wanted to learn about it. So I think that's a really important distinction. That's exactly right. It's part of what makes it journalism too, is it's just curiosity. You're just trying to actually understand something. And by the way, some stories start as leads and they don't become stories at all. It's like this company is basically what people think. I think at anyone's fund, there's a lot of ideas that get circled around. Do you worry about the impact that you have on a stock price though, where there are a lot of investors and then you publish something that turns the market off to a stock?

40:43People like real people do lose money. I would imagine you might think of that as like, well, the truth is the truth. What do you want from us? But the people that are on the receiving end of that sort of street justice, they might not feel the same way about you. I actually think a lot of people save money. I'll give you a great example. Hunterbrook Media has been reporting for almost a couple of years now on this pipeline off Santa Barbara, California, which we can talk about a bit more. but uh you know if folks had read the early reporting and realized how shady the company trying to relaunch this pipeline actually was and they had sold their shares based on that reporting they would have saved a ton of money right because it did turn out that these guys were were sketchy and you were you were the first people to point it out and then everyone figures it out after.

41:34And look, I think this is one of the master strokes of the market that I have to give it credit for is that they make it seem like if a short seller writes a story about a company, let alone a journalistic outlet like Honerbrook, it's their fault when it turns out that the company's claims weren't true. It's your fault. Whereas when a company does pump after pump after pump, BS press release after BS press release after BS press release, does a guide that's super ambitious, cozies up with shareholders, does a meeting that's a little bit sketchy where they're telling people, you know, next quarter is going to be pretty good.

42:16They're sandbagging their guide, whatever it is, when a company's trying to pump its stock and then it collapses. People don't blame those companies in the same way. They think those companies were trying their best. They had an ambitious idea. They were super excited about it themselves. And I think that the wrongdoing there is the people putting froth and misinformation and BS into the market. And in a world where there's basically no journalists to even scrutinize whether companies' claims are real, it's a very useful counterbalance to have a couple people who are actually digging into companies' claims, particularly when the sell side, as you all know, is basically happy to gobble up whatever management tells them.

42:52The Mark Twain quote, it's easier to fool someone than to convince them that they've been fooled. People do not like being embarrassed that they fell for the bullshit. even if it's a lie. So I'm wondering, where do you see the lies? Like, where do the stories come from? Is it you're looking at the financials and you say, that's weird, and then you go digging? Or is it tips? Like, where do these stories come from? It really does run the gamut. A lot of stories come from someone telling us, this doesn't seem right. Other stories come from systematic identification of various flags. So for some of the environmental stories, that's us systematically figuring out what factories are emitting a lot of toxic chemicals and then using health data to figure out, are there cancer clusters near there?

43:32That's systematic and emergent. And you can build those kinds of signals all the time. But a lot of this stuff just comes to us as ideas where people are like, can this possibly be true? Because it doesn't seem like it. You must look at like, or maybe you don't, like look at the leaderboard for the day in the stock market and see a$200 million company go up like 3x in a day, right? Like, and just look at that, like, what the hell is going on here? You know, it's funny. Those aren't usually necessarily the good shorts, at least not right away. Not the first day. The first couple of days with those, you never know how long a pump is going to go.

44:11But that is often when we start scrutinizing a company because we're trying to understand if what they're saying is true and the market was mispricing this by 200 % because it should be updated. Well, that's a really interesting news story. And if it's BS, that's also pretty interesting. All right, so let's get into some of the case studies or the actual stories that you've done that worked out or were trades or – okay. So the first one we're going to talk about, Evolve. You guys know this is a company people thought was a fraud, but you realized it was a good business last year. When its numbers were suspended, it was – sorry.

44:46It was out of compliance with the SEC. So what is the story behind Evolve? And what can our listeners take away from a situation like this? Have you guys spent any time with Eric Adams? The mayor? Only at Zero Bond, which I think was his office while he was the mayor. It was also his home, I believe. His home and office. Because his real home was in New Jersey. He loved the private clubs. Like he was really into like anywhere there was a membership. I will say at least for the first couple of years, I don't think anyone ever had as much fun as mayor. Probably not. And so that's a funny question Nathaniel asks because Nathaniel had one meal with Eric Adams.

45:22Okay. That we'll get into shortly. Was he a vegetarian? Allegedly. Allegedly. Whoa. So that was red flag number one. He ordered the meatballs. So listen to this. So weird. Listen to this. Listen to this. So we see that this company evolved. You've probably walked through one of their metal detectors at a sports game. Those are the metal detectors you can just walk through and they can tell if you've got a knife or if it's just your wallet. Now they really can't tell anything, right? Well, this was our initial question as a newsroom. It sounded too good to be true. So we got this, they got this contract with New York.

45:58Eric Adams came out, showed Evolve, and he said, we're going to put Evolve in the subway. And I thought this was weird because as a newsroom, we dug up that Evolve CEO said in an interview that his devices don't work underground. Wait, why? So why would the city be paying to put these things on the subway? And so that's when Nathaniel's one experience with Eric Adams. Set off some red flags. Because Nathaniel, do you want to answer the vegetarian question? How did you get in front of Eric Adams to even? That's a longer story. But basically, we figured that keyed us off that maybe the mayor wasn't on the up and up.

46:35Maybe this company wasn't on the up and up. two things I've only done once is lunch with Eric Adams and lunch at Nobu. It's not exactly known as a vegetarian establishment. Yeah, yeah. So Sam and the newsroom start really digging into this company. And at first, I was really disappointed because the company sort of blew up before I even had an opportunity to trade on it. So we start digging in. Nathaniel tells me he went to a meal with Eric Adams. Eric Adams ate meat. And we saw that these guys claimed that their device worked underground, that it dealt with the subways. And we had the CEO saying it doesn't work underground.

47:06So we started out thinking this is a fraud. That was our baseline. And then as we're digging into our reporting, after I did like a quick little TikTok video being like, this thing doesn't work underground, what the hell? They suspend their financials. They're out of compliance with the SEC. CEO is fired. It looks like they're going to be delisted. Stock plummets. So this is a NASDAQ, EVLV. EVLV. That's right. And it's NASDAQ. Okay. And they just say, we're not going to, we can't stand by our quarterly. Our existing financials. there's some fraud in the system. So we started looking into this as a newsroom.

47:38Halt the stock, opens down. 45%. Yeah, yeah, yeah. But what the reporters start figuring out as they're digging into the story is, sure, maybe it turns out the numbers need some corrections. The management team was a mess. But people love this technology. It's the best in class by far. And we interviewed people who ran stadiums. And they said it used to be that in the first quarter, there were people out in line. And now they're butts in seats, beer in hands. We're like, okay, sounds pretty good. Kids. We need to go interview people from schools. That's one of Evolve's big markets because we live in a crazy f***ing country where they have to make sure that people aren't bringing guns into schools.

48:16And we would interview the superintendents who would start crying on the phone. This thing makes me know my kids are safe. I'm like, does Evolve pay on these guys? Like, what's going on? Wow. And kids were getting to class on time instead of getting held up at the entrance to the school. So that way they could read good. And by the way, Evolve, not to, I know this isn't necessarily the wokest audience, but it's pretty cool that evolves technology means you don't have to go pat down all these kids like they have in metal detectives around the country. So anyway, we start digging into this. People love the technology.

48:46Time out though. Are you in contact with anyone at the company yet? No, no. You don't do that yet? No, we're just digging in. We don't want to get biased by what the company is telling people. You don't want to like the CEO and then it's like, oh shit. And look, anyone on Wall Street with a few bucks to invest can get on a call with a management team. There's no differentiation. But by the way, here, they were also in a long, long, quiet period because their financials were out of date. So anyway, we figure out that Evolve actually has amazing tech. And despite being investigated by the SEC, the FTC, all these other people, these customers are not leaving.

49:14In fact, Evolve is a growing business, penetrating these huge markets from schools to hospitals. You can see it all across New York to sporting events. And we're like, OK, this is a pretty interesting story. So we end up publishing a story that this very sketchy seaming company, Evolve, actually has this amazing product. and this growing business. And I don't know what the exact details - You wrote a bullish article about a company that hadn't reported earnings in a while. Correct, in a really long time. And then - To be clear - These guys are crazy. The kind of company, sell-side doesn't even write about.

49:45They just suspend coverage. Yeah, yeah, yeah. So there's an information vacuum, and we realize, oh shit, this is a real business. And the thing goes down to like two bucks, $2.20 or something. And we also tried to figure out when they would restate earnings, and that involves a guy with a bald spot who you could see from a garage across the street, which is kind of neither here nor there. But it became clear that they were working on weekends and that seemed like a good sign. You saw like an accountant coming and going from their headquarters. Correct. I don't want to creep anybody out. It's like a stakeout though.

50:15Yeah, I don't want to creep anybody out, but that's reporting. We were trying to figure out what's actually going on with this company. They restained earnings. We were also doing open source intelligence about where these devices were all over the country. You can see them. Tracking each time a school signed up and put some new ones at the entrance. So you bought the stock? So the story disclosed that Hunterbrook Capital was long the stock. They restate their financials. Turns out that they did have an accounting error, but it was de minimis. Like$4 million. The stock had lost hundreds of millions of dollars in market cap.

50:42So did they overreact? No, they needed to clean house. They had accounting issues. They had management issues. They had this great technology, great business that was not being properly appreciated. They did need to do a turnaround. Okay. But they restate their financials. They release these growth numbers, which are incredible. They settle with the FTC. The SEC wraps up its investigation and Evolve thrives from there. Okay. So they get in compliance. They're reporting numbers again. Sell side resumes coverage. What did the stock do? It went up to something like eight and a half bucks last year.

51:15So two to eight. Amazing story. Yeah. And then by the way, Evolve now. That was a while ago. You could have read the article on the website. I could have invested too. But listen to this. This is kind of fun because it ties into everything you're talking about. Evolve is pretty interesting, again, as a story to me, and can't comment on ongoing reporting, obviously. But it's gotten caught up in the software sell-off because Axon, you know, the big security company, has sold off. And Evolve just has a lot of flows with Axon and is down a bunch of - Even though they're totally different businesses.

51:45Correct. Axon does tasers and it does body cams and all that stuff. Right. Anyway, Evolve is obviously not a software company. It's hardware in the world in these security systems. But it's in all of these same baskets. Right. How would AI disrupt a physical metal detector? In fact, they use AI to make the detection better. Right. Which is just a fun situation because the market's, again, sort of indiscriminately selling this name. And I think a lot of what's going to happen over time is it's going to become clear to people that this selling is automated. No, don't do it. Involve us in play. All right.

52:20No, no, no, no, no. But it's pretty funny. All right. Let's talk about Phil Mickelson So what was the Eric Adams He's just made a dumb deal for the city Or he made a good deal That was the prior management team They had all kinds of weird things going on But the new management team seems solid Why is Phil Mickelson pumping an energy stock? It's such a good question, isn't it? I still haven't figured out the exact answer to that question I will say that Phil Mickelson did tweet That he was on the board of a different company With the CEO of the energy stock Then he deleted that tweet because I think that tweet raised some questions.

52:54I'll start from the beginning. Sable Offshore, what is this? I'll tell you about Sable Offshore. Okay. Nathaniel alluded to it earlier. Sable Offshore is kind of a very exciting and crazy premise for a company. Here's what it is. There was a pipeline in California and it led to one of the biggest oil spills in American history. And Exxon took over that pipeline and spent seven years trying to get it online. And Exxon ran into the gauntlet of California politics in oil and gas, trying to restart a pipeline in a place that's obviously very hostile to oil and gas in general. And particularly if your pipeline led to this giant spike.

53:29It was already a problematic piece of infrastructure. So then there's this guy named Jim Flores, better known as Big Jim Flores, on account of his size. He makes a deal with Exxon. Exxon doesn't want to have to retire this pipeline. It costs billions and billions of dollars to get rid of the project. So Big Jim says, give me a huge loan. He gets a massive loan from Exxon. I'll take it over. And let's f***ing restart this thing. And if it works, what does Exxon get out of this? Exxon doesn't have to retire the pipeline. They probably get bought out of the loan. Okay. And so they get to walk away without having to retire the asset.

54:02Who is big Jim Flores, though, to even have the ability to get Exxon to say yes? He's had kind of a wild up and down career in oil and gas. Worked at Freeport. The bit of the Hellraiser. There were some wins, some losses. All right. You know, I think he probably watches There Will Be Blood aspirationally. Okay. Got it. Got it. And his past oil and gas company went bankrupt. Also, Sable in the name, he's always been trying to do basically the same scheme. And so it's this big sort of quixotic mission to restart this project. And Phil Mickelson gets really excited about it. And we wrote about the company in 2024 when they said they were going to be online in October of 2024, after having originally, when they were SPACing, saying they were going to be online at the beginning of 2024.

54:44And we wrote a story about all of the various regulatory hurdles. and we were like, everyone should know. Two red flags, A, celebrity, B, former SPAC. Correct, correct. Though at that time, Phil Mickelson wasn't involved. And so they said, we're going to be live in October. And we said, there's no way you're going to be live in October. Anyway, they delay it from October to November, November to the new year. 2025, they start getting excitement and then Phil Mickelson starts tweeting about this company. And everyone's saying, if this thing's live, it's going to just print money. It's going to print oil.

55:14It's going to be this incredible, incredible story. pump oil print money. Anyway, we keep digging in and it becomes clear to us that the company is still not telling the truth to anybody. And eventually Sable hit$30 and they kept hitting these California regulatory hurdles. So then it'd fall to 25 and it'd fall to 18. And then eventually it falls to like 10 bucks. And at this point, people are pretty mad at Phil Mickelson, right? Because he like became the face of this. He was the face of this thing telling everyone that they should buy it. And so that's when people started leaking me their chats with Phil Mickelson, including a group chat that Phil Mickelson was in where everyone was pumping the stock, but they were also saying things like, Phil said this in one of the messages, just got off the phone with Jim, the CEO.

56:02There's going to be an announcement later today. Oh, that's a no, no. They don't like that. The regulators don't like that. You're not really supposed to be saying that. I'm not a lawyer. I'm not casting aspersions on anybody. But we had those group chat messages. And then we had this audio recording of the CEO of the company talking to investors. By the way, Sable called this audio recording AI in its first response to it. And then it became clear it was true. But you can imagine that becoming a better excuse going forward. Kind of scary from a journalistic perspective. And in the call, Sable basically admits it needs to do a big capital raise, which it hadn't told the market it needed to do.

56:33Anyway, we published that story on Phil Mickelson's messages and on the fact that Sable needed to do a raise. And pretty quickly, everything starts spiraling for Sable. And last week, they just disclosed publicly that they received subpoenas from both the SEC and SDNY related to Hunter Brooks articles. So we'll see how the story turns out. Will your journalist get called in as like a witness, potentially? Who knows? You have to imagine how bad you have to mess up as an oil and gas company in a fight with California for the current DOJ to send you a subpoena. Especially given that the guy doing the, I will just call it positive information sharing about the company, was a golfer.

57:22I mean, I didn't have the Trump administration subpoenaing a golfer who's trying to help out an oil and gas company. That's how bad the facts were here. So, guys, what would you say to the listeners who are picking their own stocks building, because these are like very off the beaten path types of stocks. So I would imagine they're not widely held by retail until they start to pump. Right. And I think people, retail investors intuitively understand a stock that goes from like five to 30, either they have done something technologically remarkable or there is some bullshit. Like, I think people get it, but they still want to sort of be involved and be along for the ride.

58:04what would you tell people about just the current climate and how careful they need to be about being involved in those types of situations? I wouldn't want to give anyone specific advice. I'll be clear, you know, not providing investment advice, not providing legal advice. We hope people do their own research and we hope that Hunterbrook Media is an open source. But they're not equipped to do the level of research. Here's what I say on just a very human level. If you're looking at your left and your right and the guy you're playing your basketball game with is checking his crypto app. Yeah. Which happens to me all the time.

58:38Yeah. Or you start hearing from your cousin that it's really time to buy silver. Yeah. My cousin's actually a very smart investor. I want to be clear. This was one. No, this is the other cousin. This is the other cousin. All of them wanted to buy silver. That's right. But if you start hearing those things, people in your life, and it seems like shit, it's so easy. Everyone's making so much money buying this stuff. I would just say take a breath. Yeah. It's probably not that easy. My brother-in-law asked me about Akla right there. Perfect. Yes. It's very helpful if you have some people in your life.

59:04And Michael said, I said, I'm all in. You didn't hear this from me, but I got the nod. You said that was your sell signal? I got the nod. No, of course I gave him sober advice like you gentlemen would. Totally, totally. What's your number one contra? Like you see something happening and you're like, uh-oh, gotta go the other way. I am of the opinion right now that almost everybody knows almost everything. So there's nothing that I would see publicly. But when my brother-in-law is asking me about a stock, and he's a musician, he's an artist, like, that's it. It just means that it's already gone up a lot.

59:37No, it doesn't mean that it's a bad investment. He's the last person to know. Right, right. And we all have someone like that in our life. For sure. So where are we going next with the media company, the fund, or both? Well, we're always on the hunt for news stories. So I won't share any advice with the audience, but we would certainly love to hear from the audience. Yeah, ideas at hunterbrook.com. The website is with no vowels. H-N-T-R-B-R-K.com. Let's not gloss over that. So ideas at Hunterbrook.com. Correct. Whoever, and if you own the domain name Hunterbrook spelled out dot com, please call me back.

1:00:09I've been trying for like two years. But ideas at Hunterbrook.com, anything you think is just off about the world. Like you think there's some idea you're really excited about, you think people don't understand it, or there's something that you think seems too good to be true. Duncan's going to email you guys four times a week. And to be clear, just so you know, the reach of the show is really big. To be clear, you guys are not looking for such and such stock is overvalued on next year's earnings. Definitely not. It has to be a real story. And by the way, to be clear, compliance reads through all of our emails.

1:00:38Right. So Fitz, our general counsel, is going to have a very long day if you send me bad ideas. Send me your good ideas. No, you guys are looking for bullshit. Like this, there's something going on here. Correct. Or uncovered gems. I think every great trade. No, but on this podcast, we're going to get 10 ,000 emails. No, but that's such, but so I love, I thought the - Josh is going to cut this out of that episode. I'm actually scared for you. The volume of emails. We're going to have Claude Code read all the emails. The story about the technology with the booths is such a cool one. What gets you guys more excited?

1:01:07Is it ideas like that where people have discarded the company for illegitimate reasons or for reasons that are overblown? Or this is total bullshit. I'd love to tell you that I feel equally excited about both. It's the bullshit, right? The truth is it's really fun to call out bullshit. And it does feel like a big part of the mission for journalism. but really the excitement around a story is almost always measured in the delta between other people's understanding of it and mine. Like that feeling of like, you have a secret. Yeah. That's the best feeling. Like I figured something out about the world people didn't understand.

1:01:41Let's talk about another longer than you guys had. I don't know how much you could say, but the sphere. So I remember like a year ago, people, somebody, a friend of mine was like, do you see how much money they're losing? So how do you look at a story like that and look past the current financials. So I'll say we didn't get to publish that story. To be clear, Sphere is up like 4X in the last year or something. So here's the issue with Sphere. I hate James Dolan. I'm a huge Knicks fan. I remember the Eddie Curry trade. No, no, no. He's doing good now. He's doing good now. Now you love James Dolan.

1:02:09You want to be invited to the game. I definitely don't want to alienate James Dolan if he's a listener to this podcast. But what I'll say is you hate him. You will never be allowed to go to the Sway Garden again. was a childhood trauma. It's in the past. It was a childhood trauma. It's in the past. And so anyway, we start figuring out, we have some data people sent us that the Wizard of Oz show just worked. Yeah. It's kind of like a clinical trial. Like, we weren't sure if this IP thing was going to work. And then everybody started coming to Sphere for it. And they were making so much money on the down days, the days where there weren't concerts.

1:02:44Anyway, because I - A newsroom source had come up with a really clever way to figure out, based on online information, basically exactly what Sphere's sales were before maybe even the company itself really knew what those sales were. And that was clearly a huge edge. And that's the kind of thing folks often will just send to the newsroom because they think it's a really interesting story. So in year one, the Sphere, basically they have like Dead & Co. They have U2 and they have the Eagles, but it's unclear like, okay, what do you do the other 250 nights a year? And then they have this sort of futuristic science documentary, which I went and saw too.

1:03:22I'm so into the sphere, by the way. So I saw that one too, and I liked it. But then it's like, all right, it's a novelty. You went, you saw you too. Are you going back? And then the Wizard of Oz thing, it's a revelation. It's like, wait a minute. They could take an 80-year-old movie. They could do some magic with the sound and the environment and the sphere, put it back out and sell more tickets than a brand new blockbuster film. And that's - And they can do it day after day after day. And think of all of the possibilities. Think of your hundred favorite movies ever. How much would you love to go see it at the Sphere reimagined?

1:03:59It's unbelievable. It's crazy. And by the way, I just want to be clear. The reason I mentioned the Knicks was not personal. It was that I put it as kind of a low priority in the newsroom. We didn't rush out the story because I was like just dispositionally disinclined to believe that Jim Dolan had figured out how to get people to a live event in a way nobody else had. Yeah. So anyway, Hunterbrook Capital, thankfully, had built a bit of a position based on this. But Bloomberg ended up scooping us on that story. They published a story about the blockbuster Wizard of Oz. But you made the money. So you didn't get the credit for the story, but you made the money.

1:04:27Yeah, I want to credit Bloomberg for that particular story. They did have it. All right. Guys, do you have fun on the show today? This is the best. Thank you guys for having us. All right. So we're going to have a brief intermission, and then we come back and do another hour and a half. I love what you guys are doing. It's so cool. I think it's one of the coolest stories. Thanks for having us. I love listening to you guys, too. Thank you. And I'm not afraid for you anymore. I actually think that people are going to now start to imitate what you're doing because it works. It's explicable. It seems like you're having fun.

1:04:55Oh, my God. We're having the most fun. And people, journalists, are getting paid. And I mean, who doesn't look at that industry and say? I have to say, I wouldn't promise this every year, but journalists got bonuses last year. It's not a thing that even exists. So thank you, guys. Josh, I'm flattered. Do you think people are going to imitate you? I think they're going to imitate you. I think they're going to try. All right. There. I'm not saying they can. I have to say, I actually hope that they do because there's a lot more talented journalists out there than there are jobs for them. And so if there were 10 Hunter Brooks, what an amazing thing that would be.

1:05:23Can I ask you one last thing? Sure. Who is like the coolest, most unexpected inbound phone call? Somebody saying like, I see what you guys are doing and I wanted to let you know. Like, did you have one of those yet? I have to say it was pretty fun that after our big healthcare investigation, Mark Cuban started sharing our stories far and wide, came on our podcast and thought that we told a story in the healthcare industry that most people had overlooked. That's cool. That was pretty fun. Talk about someone who knows how to own a basketball team. Yes. Shouts of Cubes. All right. We want to tell people, so we gave them the email address.

1:05:57What is the URL? Where can people go to learn more and read your stories? People should go to newsletter.hntrbrk.com. Newsletter.hntrbrk. So the vowels cost extra? I'm telling you I can't get this guy to respond to my email we'll put the link in the description of the show but please subscribe to the newsletter you can also obviously check out our website hunterbrook.com follow us on social media all the stuff people are supposed to say at the end of podcasts that's right thank you guys alright follow Nathaniel and Sam and read about Hunterbrook guys thank you so much for listening we appreciate you we will see you we'll see you next time thank you

1:06:41Thank you.