Heed The Warning

Last week served up another lesson on why short sellers should be read carefully, taken seriously, and provide immense benefit to investors and the market.

In case you missed it on Friday, Federal prosecutors in the Southern District of New York have charged individuals tied to Super Micro (SMCI) with orchestrating a scheme to illegally route billions of dollars’ worth of Nvidia-powered servers into China, in violation of U.S. export controls. The result, other than an arrest and board resignation, was SMCI stock getting porked royally, to the tune of -33.2% during Friday’s trading.

The stock is now down about -56% over the last 6 months.

According to the indictment, the accused allegedly worked together to bypass restrictions designed to prevent advanced AI hardware from reaching China without proper authorization—rules that are central to U.S. national security policy. Authorities have been increasingly focused on how such high-performance chips continue to make their way into China amid intensifying technological competition. One of the individuals named in the indictment is Wally Liaw, a co-founder and now-former board member of Super Micro Computer.

What makes this development particularly notable is that Liaw—and broader governance concerns at Super Micro—had already been highlighted by short sellers well before this indictment. In 2024, Hindenburg Research published a detailed report clearly laying out multiple red flags about Super Micro’s internal...(READ THIS FULL COLUMN HERE).

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