Stock market scams exposed: that’s the mission of Edwin Dorsey, founder of The Bear Cave, one of the most widely followed investigative newsletters in finance. Edwin specializes in uncovering corporate misconduct, financial fraud, and market manipulation, digging deep into SEC filings, FOI requests, and regulatory data to reveal what most investors miss. His work has moved markets and sparked accountability, from exposing safety failures at Care.com to tracking Chinese pump-and-dump scams through his platform StopNasdaqChinaFraud.com. With a sharp eye for red flags and a reputation for fearless reporting, Edwin has become a trusted voice in financial journalism and short-selling research.

What You’ll Learn in This Episode

In this episode, Edwin Dorsey and Two Blokes Trading expose the mechanics of Chinese pump-and-dump scams that continue to infiltrate U.S. stock markets. Dorsey explains how promoters manipulate share prices through WhatsApp groups, inflated IPOs, and coordinated hype campaigns—often targeting unsuspecting retail traders. He shares how he infiltrated over 50 chat groups, created a public fraud-tracking platform, and why these schemes move billions despite regulatory scrutiny. Listeners will also gain insight into Dorsey’s broader research process, from leveraging AI tools and SEC filings to filing FOI requests that reveal misconduct in billion-dollar companies. With lessons on identifying red flags, understanding market manipulation, and balancing skepticism with opportunity, this episode arms traders with practical knowledge to avoid scams and sharpen their edge.

This episode is brought to you in partnership with Forex.com, a leading provider of online trading services.

Remember, Trading Forex and CFDs carries risk and isn't suitable for everyone.

I became a little obsessed with these Chinese pump and dump Chinese companies would list on the US markets.

It used to be through reverse takeovers, now it's through IPOs.

I found their websites, I found, I joined 50 of the WhatsApp groups and I became good.

At least I thought good.

I'm interested in how people are getting scammed time and time again, why people are falling for it.

Is there potentially opportunities within this.

Hello and welcome back to another episode of Two Blokes Trading Today.

I'm delighted to be joined by Edwin Dorsey, the founder of the Bearcave, one of the most widely

followed investigative research platforms in finance.

Edwin has built a reputation for exposing corporate misconduct, digging through filings, FOIA

requests and executive shakeups to uncover red flags most investors miss.

His work doesn't just inform traders, it moves markets and foreign forces companies to face the truth.

These companies typically perform horribly, typically are having your share price manipulated

and historically have lied about their financials, although that that's become less important.

A lot of this manipulation occurs over WhatsApp.

I even made a website, stopnasdackchinafraud.com if you're publishing information, the scammers

like to punish those who publish on them.

So if you criticize publicly, those will be the ones they just decide to manipulate even higher.

It's really, really bizarre and there's this kind of total underworld that is like very targeting

very unsophisticated investors, but it's huge and it's like moving tens of billions of dollars

a year to these US listed Chinese companies. But it's terrible.

In this episode, we're going to dive into Edwin's journey and the lessons every trader can take from his investigative approach.

This is going to be a good one.

Edwin, thanks for joining us today.

It's a real pleasure to have you on our podcast.

It's going to be a good one.

I know it's, I'm not a massive, you know, short player in, in terms of the stocks, but certainly

going to learn a lot from you today.

So thanks for joining us today.

Jonathan, thanks for having me on. Two Blokes trading.

I'm really excited to be here.

Yeah. Look, I want to find out more about the Bear Cave, obviously. Right.

But before we jump into that, let me know a bit, a bit about your background.

So I believe you, you kind of, you wanted to get a job in trading. It never happened.

Yeah, I.

Look, I've done some research, but tell me about where it started.

So, Jonathan, I've been passionate about stocks from a really young age. Like second grade.

I was all about the stock market and very obsessed with it.

My transition to the short side happened the freshman year of college when by coincidence I

got introduced to two of the big short sellers out there.

One is named Mark Cohotes and he's an independent short seller who used to run a big short only fund. The.

The other early mentor was Jim Carruthers who ran a billion dollar short only fund called Sophos.

I met him beginning of freshman year because he was reading an anonymous blog I was writing

and I started interning for his fund and I interned for him on and off all four years of college.

That kind of provided a baseline for me to get into this type of research.

I also briefly interned in the SEC enforcement division.

I started writing about companies a little bit on my own.

Funny enough, one of your past guests, Gregory Zuckerman, played a big influence in my career

because you wrote a story about safety issues at care.com, which was a angle I was exploring as a college student.

And his story gave me a lot of credibility for highlighting these issues early on.

And ultimately I decided to launch this newsletter my senior year of college mainly as a way

to get attention and get hired because the fund I'd interned for so folks, was in the process of shutting down.

So I started this newsletter February 2020.

Your year is a way to like show people I'm smart and hopefully have someone hire me.

But it quickly big on its own.

And now it's my full time job writing this newsletter that's read by a lot of the short.

Awesome. So basically you started the Bear Cave ultimately to kind of create a bit of a portfolio

so you can kind of showcase.

And then all of a sudden it kind of scaled into really a huge publication now.

I mean, like, I believe that happened somewhere around Covid. Is that right?

Yeah. So I started IT senior year, February 2020, and I really lucked out on the time.

The best time ever to be writing an email newsletter in human history is right before the pandemic.

People were online, people were bored, people were looking for stuff to read.

They had so much time.

People were on Twitter, which was my like early way of getting people to check out the publication.

People had extra money to spend on newsletters.

So the best time ever to be launching an email newsletter was during the pandemic.

And Substack had just started to take off.

So I, I really kind of lucked out with the timing there.

Originally, it wasn't, it originally was less me doing proprietary research and me just organizing

and recapping that week's news.

Because there's a lot of activist short sellers and it's tough to track all of them and there's

a lot of like, news on companies.

So it started really as an amalgamation of the week's news and summarizing activist short reports.

Because I just remember when I was interning at hedge funds, it was tough to track all these

and that kind of just took off and then that kind of became the free product.

And I say, hey, if you like my recaps of the week's news, you might like my own independent research into public companies.

And that's more the paid tier today.

So it's kind of evolved, right?

But in terms of how it's evolved and how your systems have obviously evolved, I mean, clearly

you're good at what you do because you've got a big following, right?

I mean, how did it get to a point where you, you get to actually identify pump dump schemes?

And I also want to ask you, like, why is there so many companies from China coming on that likes the nasdaq?

How is this all happening?

Again, I'm not a short seller in that case, so I'm kind of new and fresh to this myself.

So I'm interested in how there's no regulations, how people are getting scammed time and time

again, why people are falling for it.

Is there potentially opportunities within this?

Lots of questions around this.

Awesome. So that's a very broad question. A lot of angles.

Let me like maybe say a few things.

So it's not all pump and dumps that I write about.

In fact, I would say the vast majority of what I write about is not pump and dumps.

Typically, I like to stay above a billion dollar market cap.

My sweet spot, I like to say, is 1 to 10 billion dollars.

Public companies below a billion dollars, there's a lot of great shorts and there's a lot of misconduct. It's just my readership.

And hedge funds tend not to care because there's not enough liquidity or there's not borrow above $10 billion. Hedge funds love those.

But typically those type of companies, if you've been around a long time, if you pass the 10

billion dollar market cap threshold, I think your problems tend to be less egregious or might

be in a division, but not applying to the whole company.

So 1 to $10 billion is kind of my sweet spot to look at for companies because it's big enough

that hedge funds will care, but small enough that there can be real issues.

And you still see like big share price movements and they can fall 80% if there's real issues.

So that tends to be my sweet spot.

And I say I tend to focus on three types of companies, companies that are harming consumers.

And typically what I'm doing there is I'm sending a lot of FOIA requests to state regulators

to show how companies are harming consumers.

Maybe it's over billing, maybe it's making it tough to cancel.

There's some issue that's relevant to the business, companies that are misleading investors.

And that can be a little bit like a pump and dump.

Or sometimes you just see these spacs go public and the companies have no substance, it's just overly promotional.

And then the third, which is a major focus for me now, is companies that are on the wrong end

of disruption during the Trump administration.

These consumer protection issues are a little less relevant.

So I'm really trying to think who's going to be hurt by disruption.

So Signet might be hurt by lab grown diamonds, call centers are going to be hurt by the growth of AI.

DraftKings might be hurt by the growth of prediction markets.

Thinking like that and trying to be a little ahead of the curve, that's a big focus.

Now I have had a little bit of a detour in which I became a little obsessed with these Chinese pump and dumps.

And basically for a long time Chinese companies would list on the US markets.

It used to be through reverse takeovers, now it's through IPOs.

And these companies typically perform horribly, typically are having their share price manipulated

and historically have lied about their financials, although that's become less important.

And a lot of this manipulation occurs over WhatsApp groups.

And I kind of read a Wall Street Journal story about it and an Herb Greenberg story it, and

I said, let me like figure this out and try to join all these WhatsApp groups.

So I kind of figured out how the scammers operated.

I found their websites, I found, I joined 50 of the WhatsApp groups and I became good, at least

I thought good at tracking these pump and dump schemes in which they tell people to buy legit

stocks, then they'd say everybody buy this manipulated stock and then it would collapse.

I, I even made a website stop, nasdaq, chinafraud.com which is up today, which has like 800

screenshots from these WhatsApp groups where anybody can upload screenshots, we can track what

all the WhatsApp groups are promoting and close to real time.

Now, unfortunately, I think these stocks are so manipulated that it can be even tough for me

to like accurately predict when these will collapse.

So for the first three I wrote about, they collapsed 90% plus a week after I wrote about them.

And then for one, I have a ton of egg on my face because I criticized it and it went up something

like 10x2 weeks after I wrote about it because I just continued to manipulate it and it saved

me get something so wrong that I think I had, you know, time correctly.

It just made me feel very embarrassed and ashamed.

So I'm kind of, I'm kind of moving on from that or saying, you know, these things are just so dangerous.

Maybe traders shouldn't be touching them because even though you know they're going to collapse,

it's just the timing is so difficult.

Even if you're in these WhatsApp groups, I think at least publishing on them is not a smart idea.

Is that the allure though, right? That's the allure.

It's the potential upside, right?

It's the potential how much you can make from these kind of trades.

And that's what keeps bringing new traders or inexperienced traders to the, to the forefront of this.

And that's why people keep getting scammed, right?

I mean it's, it's wolf for Wall street all over. It's not going away.

It's, it's just incredible that people are still falling for these scams.

And it's an incredible that these Chinese companies, and it's not just Chinese companies, there's

other companies, countries as well coming in and doing this.

But how there hasn't been a set of regulations in place to protect the consumer.

There isn't so many other areas of trading, but yet this side of trading just seems to be like

a gray area that these guys are getting through the trap still.

And how there hasn't been more oversight on this to me is just incredible.

So we're seeing with this Trump administration that they're actually really trying to focus on it.

They announced, announced a task force which is like, who knows how effective that will be.

But they are prosecuting the executives of one of these pump, pump dumps ost they are asking

for more victims to come forward with information.

I know they have started interviewing some victims who've also reached out to me.

So it definitely seems like they're trying to care a little I think partly because all the people

sending these scam text messages are based in China or Cambodia.

It's tough to track them and the money goes overseas.

So it's tough to like bring the enforcement there.

But yeah, it's crazy egregious.

And what I found is there's a lot of small ones in which you're just manipulating, saying the

share price is going to go up and down or whatever.

But for the bigger ones, which tend to reach, let's say, 500 million to a billion dollar market

cap, these essentially non substantive small businesses that list and then get promoted up in these WhatsApp groups.

What the WhatsApp groups will do is they'll say, hey, buy this stock.

Because we essentially have some inside info that a big US Company is going to either invest

or merge or acquire them.

And what they'll do is they'll say this, the merger date, the acquisition date is going to happen

on August 31st and it's going to happen at $55 a share.

So if you know that information, you kind of know how to trade it because it's going to collapse

before August 31st and it's not going to hit $55 a share and it might be intense.

You know, it's probably going to go to about 30 and it's probably going to collapse a week before

the merger date or up to the day before the merger date.

But after the fake merger date, they just lose all credibility and everybody would sell on their own.

So you know it's going to collapse before then and you know it's not going to hit the target

price because if it does, everybody will.

If I think if you can get this information, it can be, you know, possible to trade around it.

It's just tough with the smaller ones.

And I think if you're publishing information, the scammers like to punish those who publish on them.

So if you criticize publicly, those will be the ones they just decide to manipulate even higher.

I mean, speculation is what drives price first and foremost.

That's, that's potentially where the upside is.

But like you say, it's just how do you identify when it's going to collapse?

It's, this is where the trap comes and this is why so many people lose. Right.

It's just like they're holding on for more gains. More gains.

And the key is for these people to try and hold you into that position. Right.

Because they really control liquidity.

They control the market essentially. Right.

If they're controlling, let's say 90% of it, you know that they're controlling volatility.

Once they dump that, it's gone, it's over. Right?

I mean, like that, that's, that's.

You think that once they dump it, it's over.

What often happens is, you see, it pumps and it dumps, and then one year later, they issue a

ton of shares to themselves again at like 10 cents a share, and then they'll pump it and they'll dump it again.

So sometimes they do it a third time, like just every year they're like reusing the same tickers

because their ability to pump and dump is only limited by the amount of tickers they kind of have under their control.

And these are like huge operations.

And the last thing I would say is it's really important for them to control the float.

And once they start dumping it on people, like, how do you control what they do with the stock?

And typically when you're in the WhatsApp groups, they'll, they'll.

First, they'll only allow people to get in these operations if you've followed their trade picks

in the past and done exactly what they said.

And what they'll do is they'll make you send daily screenshots to confirm you still own the stock.

And if you, if you don't do that, you'll be kicked out of the group and not part of the scheme going forward.

And if you don't do the screenshots, they'll threaten to report you to a regulator, say you're

working with short sellers or.

It's really bizarre and there's this kind of total underworld that it's like very.

Targeting very unsophisticated investors, but it's huge.

It operates through Facebook and Instagram ads, but it's like moving tens of billions of dollars

a year through these US listed Chinese companies.

So I, I'm optimistic it'll be shut down in the next year, or at least curtailed. But it's terrible.

It's. It's similar to the meme.

Meme coin type idea that's going on at the moment.

It's pretty much the same thing, pretty much identical, but within a different marketplace. Right.

I mean, it's the exact same thing.

It's groups, it's channels, it's whatsapps.

It's getting people to, to buy into meme coins that, you know, 90, like someone owns 90 of that,

you know, and they control the. The market.

It's the exact same thing. Right?

Yeah. I'm not too familiar with the Meme coins.

I'm more familiar with like you know, whatever mean stocks.

I, I would argue that the, the, the level of sophistication here in the U S listed Chinese companies

is perhaps basically anywhere else in terms of the investor base.

Because with meme coins there might be a little bit of information asymmetry with the US Listed Chinese companies.

You can look at the filings.

There's, there's a stock Caprina Holdings Cupr.

I think it's dumped already.

If you just look at the filings it does, it had a 200 million dollar market cap.

It does $50,000 in annual revenue.

Most of these businesses are really small.

They're like just small businesses based in Singapore or east Asia and $50,000 a year.

And I kid you not, they did maggot based health care.

The idea is that they'd sell you maggots you could introduce into wounds and the maggots would

like eat up like 30 bacteria. It's just crazy.

All these are like revenue declining, not profitable, few employees, just.

And you can get those from the filing.

But with the meme coins there's probably like there's not a clear SEC filing you can read and

some of them do work.

I, I think there's, the level of sophistication in the US Listed Chinese companies is, it's,

it's got to be worse than whatever's going on with the meme stock.

Sometimes there is at least what seems like a reasonable case.

Like you know, GameStop did have a real turnaround aspect in partners probably underpriced the

$3 a share with these.

It's just, it just, I read it and it's crazy.

I, I literally have people who lost money buying one stock and what these scammers do is they'll

pump and dump one stock on you.

Okay, you know, collapse 90 in a day and then you lose all your money.

And they'll say we were attacked by short sellers, we got a second stock to make your money back.

And then they'll recommend the second stock and people will literally email me and say is this stock a scam?

And I'm like I can't give you investment advice but here's the 10k, 50,000 in revenue, 3 employees,

never profitable and 200 million dollar market cap.

Like, you know, and tell me like, do you use any AI to do any of your research at the moment?

Have you kind of, are you utilizing AI for that at a moment?

Is that helping you to identify this or is it all kind of manual?

So Jonathan, I love that question because I want to be as tech focused and future leading as

possible in every part of my research process.

Your your past guest, Gregory Zuckerman, you asked him a similar question and he said he uses

AI a lot to help edit his writing.

And that resonated with me because I do the exact same thing before I publish any article.

Now I will upload the draft of my article to ChatGPT and I'll say please read through this and

critique the three or four worst paragraphs and tell me why they're bad and how to improve them.

So AI isn't writing it, but it will always zone in on three or four paragraphs where I'm clearly

being too wordy or you know, and help suggest edits.

And I don't always agree, but sometimes it does find useful things.

So that's kind of on the back end with the editing and then in terms of research process all the time.

So one of my favorite things to do now is on a monthly basis I'll go to ChatGPT.

I pay $200 a month for the pro plan.

I only use O3 and I try to use deep research as much as possible.

And I'll say please look through a list of all IPOs and SPAC mergers done in the last month

or two months and find ones for me that have high levels of consumer complaints or pattern of consumer complaints.

And maybe I'll tell it a few websites to look at, you know, and look at Reddit and whatever

and we'll think for like 20, 30 minutes and come back to me with a list of 10 companies that

have high levels of consumer complaints.

And a lot of the time it's just not relevant.

Some companies just naturally have high levels of consumer complaints or in industries with high level consumer complaints.

But usually three or four will stick out to me and I'll do a little research and two will really

be interesting and then I'll start filing FOIA requests on to, you know.

And it has led to me this like this early stage idea generation finding companies I probably would have not followed.

So now I can kind of get eyes on or do a little bit of research on basically all companies that

are going public with high levels of consumer complaints.

So I love that for AI.

I just find myself asking it a ton of questions.

So I use it a ton in the research process.

I don't use it to write anything for me and I'm typically not using it at the end stages, but

just early stages asking a lot of questions and trying to find companies that I might not have otherwise found very useful.

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It's incredible what you can do.

I mean we've been, I mean me personally, really pushing towards AI over the last 12 months with

our software developers and so on, and we're really pushing it out towards our app Trovesto

now basically even like you're saying you kind of, it helps you in that early stages, but you

can even identify like do bottom to top, top to bottom company profiles and actually get that information like so quickly.

You know, I mean we're pulling data from everywhere, whether it's like top news outlets, coming

from top voices on, on, on, on Twitter for instance.

And also we go into the charts as well and actually identifying like what's happening in the

charts, creating that information and you know, creating that summary.

Now we're not saying that this is like the, this is just purely identifying, it's purely helping

people not spend hours and hours trying to do their own research.

But it's more just kind of like, okay, justification.

Okay, yeah, this also, I agree with that.

My bias is this, this also suits that same bias that's strong and it does, it's just an additional

help for, for traders and investors and I think that's, that's key especially because people

are becoming more time poor all the time. Right.

Everybody kind of wants answers and things happening right now.

I think you have to stay ahead with AI, otherwise we're all going to get left behind.

I, I, Jonathan. So I talked about using it for editing, I talked about using it for idea generation.

You're talking about using it more in like research process and evaluating information.

I think maybe the last subset where I see AI being really useful is helping build out like a

suite of tools that can help people do invested research.

So I'm more known for the newsletter now, but I hope to use the money I'm earning with the newsletter

to build a bunch of software products to help people do research better.

One of which I'm working on is called stockpromotiontracker.com which essentially tracks all

the paid stock promotions, promotions going on in the US and makes it into a database so people

can see what's being promoted, what's moving on promotions.

And the way that works in part is I hook it up to an email inbox.

I sign up for all the stock promotion newsletters and then I have a web developer I'm working

with that has an AI agent scan every email in my dummy email inbox for stock promotions.

And it's scanning to see, you know, which stocks are being promoted.

It's reading the entire email, it's reading the disclosures in the email and taking out the

context that's relevant to, you know, summarize.

And it's, you know, it seems like AI is like the very important step here where it'd be tough

to do with web scraping alone.

And it's a lot easier to have an AI agent tracking all the stock promotions.

So I'm extremely bullish on the way that it can just unlock information.

I think AI is huge.

It is. And I think the key is not just to fit it into one, have it feeding into two or three,

and then it working it out with the other agents and then getting the real data and little things

like that will make a huge improvements in your process because sometimes you just find AI going

off on its own tangent and hallucinating and coming back with some strange answers.

And that's why the key is just to like keep refining, refining, refining.

You know, that's the key behind.

Yeah. I've also found it's weirdly bad at certain things.

So I read tons of glassdoor reviews and I think there's a good way to do it in a bad way to do it.

But you know, I read so many and I would have chat GPT just, hey, can you look through every

company in the Russell 2000 and find the 50 for me with the lowest glass door Review use simple task, right?

Unable to do it lies about everything.

And I think it's partly because the information stay walled or there's anti web Scraping stuff.

So when there's like difficulty getting like scraping information from these sites or visiting

a lot, Chachi PT can't do it and then I'll just start lying.

So I thought it really smart at some things and just absolutely atrocious at others.

Yeah, yeah, I agree. And I tell you I'm actually really interested. Right.

Because you obviously focus on exposing. Right.

But you've never really gone into the trading side of things.

And tell me why first of all, that you've never gone into that side because surely there must be temptation.

So I don't bet against the companies I write about in the Bear Cave newsletter.

I only make money from reader subscriptions.

Now I do trade my money a little bit like in micro cap stocks and I have shorted some really

like sub $100 million micro cap companies just, just to get a little bit of experience doing it.

But I'm not writing about it.

So there's a kind of bright line.

I, I don't short the companies I write about in the Bear Cave.

There's a few reasons for it.

One, I think there's a lack of regulatory clarity around the rules of trading around, you know,

short reports or you know, even just research you're publishing on companies or journalistic

articles you're publishing on companies you.

And that's kind of how I felt four or five years ago.

And it's kind of been proven true today where you have the SEC and DOJ criminally charging Andrew

left one of the big activist short traders for really his trading around short reports and in

theory, you know, incomplete disclosures around doing it.

So I think it's from a legal perspective it's a lot easier just to say like, hey, I'm a guy

with the blog, you know, this is my journalism or attempts to understand the world of people pay for it.

That's very defendable from a legal and regulatory perspective.

I think it makes you less likely to get sued and it's a good defense if you do get suede.

A lot of activist short sellers try to say, oh we're journalists and I don't think that's hollow up in court. So.

Well, partly because they don't have a consistent publishing schedule, partly because they're taking positions.

And to be fair, if you're like taking huge intraday trades or short term trades around a report,

I don't know if that counts as journalism. So I.

But if you're not and it really is journalism and you just have reader subscriptions, that then

I think it bolsters the Defense from a legal and regulatory perspective.

I also think there's the incentive as soon as you start taking positions is to create stock price movements.

And that's like a very slippery slope because if you're going to take a position then, you know,

why not also take a short term options position, why not work with the balance sheet partner.

Then it all becomes like what is the biggest single day stock move you can create?

Because that's what drives the profits for a lot of activist short sellers.

And then you're encouraged to exaggerate or use big red letters or, you know, and I, I really

try to do the opposite, which is I hope to gain a lot of reader trust over time.

I really hope I can be kind understated in a source of credibility.

The final thing I'd say is I'm very documents based.

I read SEC filings, I read lawsuits.

I'm really good with foia.

I'm less, you know, investigative.

Talking to sources and former employees and hiring a P.I. and you know, and that, that kind

of lends itself to really like trying to create stock movements while mine is really the kind of early stage research.

So I don't think like you can, you know, I think you do well.

I think I do well running a short fund that held positions for a year.

But it's toug to short.

It's a lot easier to make money on the long side.

And I think just the model I have is easier from a legal and regulatory perspective.

It works for me, it builds trust with readers.

You know, it's, I'm not saying I'll never maybe pivot to activist short selling in the future,

but I like my model a lot now and it suits the type of more early stage idea generation type

research I do rather than this extremely deep source based research for the short sellers tended.

Sure, sure. I mean we had one on the podcast before they traveled to Colombia, rented a car,

a motorbike, went up the hills and was met by like guys with armed guns, you know, and they

were like, okay, turn around and back. You know, it's, it's.

Yeah, I mean there's some crazy stuff going on, but it's how deep can you go?

And that kind of pushes me towards the challenges that you face. Even writing about.

You might not be like activist in that way, but you must get pushback from, from companies. Right?

When you're, when you're writing about, you.

Know, I, I've done this about a hundred times now, you know, criticized around 100 companies

in the Barricade newsletter over the last five years I've never been sued.

I have gotten cease and desist.

But honestly the only really like tough one was the first time.

And maybe I can go back and tell that story if that's okay. John.

Absolutely.

Which was in college. You know, my friends knew I was really into stocks and a friend of mine

said, you should look into care.com, which is a babysitting platform where babysitters advertise

their services to parents and parents can find babysitters.

And it was at the time of a billion dollar public company.

And my friend said like, they claim to be running background checks, but it doesn't seem like they're doing it.

So I decided to test out the process myself by applying on care.com to become a babysitter as Harvey Weinstein.

I used a photo of Harvey Weinstein, I made up all the info and at the end I consented to their background check.

And they're like, we'll get back to you in 48 hours.

And 48 hours later, hello Harvey, you've been approved.

They said I was CPR certified.

I'm applying to all these babysitting jobs as Harvey Weinstein.

I made a different account as like Donald Trump or something.

And I like really proved that they weren't running the background checks they claimed to be doing.

And I wrote a little report, it went kind of viral and the company got really upset and the

co founder called Stanford to try to get me in trouble.

I think there were some donors like pressuring the university and the dean of students met with

me, the chief technology officer met with me.

They said you need to take it down.

They said you should email the general counsel and all this.

And it's really intimidating because I was, I was 19, I had no idea what I was doing.

My parents were livid and I was getting in trouble.

And so you know, but I decided not to take it down and keep working.

And I think that the company sent a private investigator to my parents house because my dad's

like somebody with the body cam just showed up at our house.

He's not asking questions about you.

And it was, it was extremely wacky.

And long story short, I, I cold emailed a hundred journalists about this company and the safety

issues and the only one to get back to me initially was Gregory Zuckerman.

And then he spent a year working on it and he had a huge front page story with I think two other

co authors, but he was the lead author about care.com safety issues.

And I got a small mention in it, but it, it really like boosted my credibility.

So that one was the scariest kind of because I didn't know what I was doing.

It was the transformative one and it really led to the bear cave.

After that though, I, I think I have a really good sense of, you know, if the people most likely

to sue you or apply pressure are the ones who have sued others in the past and I just tend to avoid them.

Typically smaller companies are more litigious than larger companies and that's counterintuitive

to most people but also makes sense when you think about it because large companies can just avoid you.

Like if you're legit or semi legit, you're kind of like avoid the criticism.

While the small truly bad actors, the $100 million micro cap guy who's a complete like fraud

and in the wrong circles, he's the one who's going to really target you and like the penny stock

pump and dump guys, they'd love to sue.

And then finally, foreign companies are a lot more litigious than domestic companies.

The one cease and desist I got was from a non US listed company because I think just culturally

it's not as accepted to criticize those empowered.

It's just seen as ridiculous when you're doing it outside the US on the US it's broadly accepted

that you can do reasonable evidence based criticism of large public companies.

And as long as you tend to be understated, which I do, and I really focus on being understated

and not exaggerating, as long as you just kind of lay out the evidence, try to have a neutral

tone of voice, you're not trading it.

I think all of those like, like lead to my favor of being able to do this on a sustainable basis

without being sued and you know, killed or something.

And I would say finally, another thing that helps is I tend to write these articles and I might

revisit it once in the future, but I largely move on.

I think you know where the biggest risk comes from a legal perspective and from a safety perspective

is if you say I know you're a fraud and I'm going to spend the next five years of my life making

sure you go to jail and exposing you out.

Like Mark Cohotes does do that and he does get a ton of pushback and he seems to love it. It's not my approach. So that's.

If you're respectful, you're reasonable, you're understated, you're laying out evidence, you're

focusing on larger US Companies, you can do this in a sustainable way.

And I think it can work over the long run.

Sure, fair play. Without people like yourself out there doing this.

I mean, like, to me, that's incredible.

I mean, first of all, like the risks and dangers, putting somebody that's going to mind your child, number one.

And for it to be. That's just. For me, that's just. That's crazy. I mean, there's this.

I really hope Whatever happened to that story that I did get, they got it right now.

Because that's really like safety.

I mean, your kids safety are at risk here.

I mean, as funny as the story is, you told it.

It's incredibly dangerous for this kind of behavior to go on.

And how that's not regulated is. It's crazy.

You know Gregory Zuckerman's Wall Street Journal article, Everybody should go check it out and read it.

Maybe you can link to it in the notes.

But it led to a lot of follow on effects like the CEO, CFO and general counsel of care.com all resigned.

The company fell, I think roughly 50%.

And then it was acquired by IAC.

And then IAC in theory has fixed a lot of the safety issues and put in more professional processes into place.

So like, and that was really exciting, not just from a stock perspective, but from a societal perspective.

You know, the Wall Street Journal had a huge positive effect on society.

And I like to say, you know, the way I can have an effect is if I highlight issues.

And I know a lot of journalists read the Bear Cave and I talk to a lot of them.

So if I can highlight issues and then get a mainstream media person to write about the issues,

and then it has a big societal effect.

It's not just moving stocks.

It's actually, you know, in a small way changing society for the better when done. Right.

For sure. And that's why you'll continue to grow and have huge success, I'm sure, into the, into your future.

But, but just going back to kind of your checklist, obviously you have that checklist. Right.

But there's, there's a big balance knack between, okay, I've got this information now, but then

to actually releasing that information because there's, there's time between finding that information

out, verifying that information and getting it out before the move happens. Right.

So tell me how that kind of plays out.

Typically, I'm looking at a lot of different companies at any point in time.

You know, there's so many times I started looking into a company and I'm not saying there's

no problems, it's just not egregious as I think think so it's a lot of times it's, it's, you

know, it plays out by not going anywhere or I just have this folder and like all these notes

on a company and then decide not to do it and revisit a year later and still decide it's not egregious.

There's one company I've been broadly tracking for five years and I, I just keep coming to the

thing that it's not the time now but I hope the future.

What Mark the Hotis says is the with short selling is you want to wait till the Jaguars out of the tree.

So if you see a stock going up like this, you wait after the first break and then it's the time to talk.

I, I don't necessarily always follow that philosophy.

Like I, I published a few times on companies that were trading at all time highs like the Joint,

which is a chiropractic clinic.

Typically for me the thing that will move me in a direction of deciding to write on a company

or deciding not to write on a company is if it's more of a consumer protection thing is the

results I get from FOIA requests.

So the thing that I think I'm uniquely good at, maybe world class at is going to state regulators

and filing FOIA requests, the Freedom of Information act to get consumer complaints people are

filing against companies because anybody can write a complaint online.

I think once you put it in writing and send it to a state regulator and the company as an opportunity

to respond, it becomes a lot more real and you get a much better sense of how egregious the issues are.

So the biggest thing in moving me from researching something to actually deciding to publish

is the results I get from FOIA requests.

Now if it seems like the issues are really egregious, I want to kind of as publish as soon as possible.

I sometimes will look to see when a company's next earnings report is and decide I typically

want to publish before then because I don't want the earnings to come out and then to tank and

then to come out after and say look at all these issues.

Typically though, the issues that I'm writing about, it's not oh they're going to miss earnings

or overvalued by 20, it's like I expect them to underperform over the next five years.

These are long term relevant issues.

The relationships you have with your customers and the integrity of your business will affect

you for a long Period of time, not a short period of time.

So these aren't short term trades, they aren't as time sensitive as you might think.

A lot of it is trying to figure out like, is this actually one of the most egregious situations in the market?

Am I cherry picking issues?

And I think that can be honestly like a weak spot for me where, you know, I might just see a

lot of issues but it's not relevant or there's a different part of the business that's growing.

But that's your credibility at stake. Right.

Every time that you're going to publish something, you're ultimately in the back of your head

thinking, well this has to stack up because if it doesn't, you know that's going to hurt, you

know that kind of way.

And look, it doesn't matter.

All journalists are going to get things wrong and it's just a part of the process.

But it's like you've just got to minimize them wrongs as much as possible, right?

Yeah. And I, I mean it really like haunts me, you know, I.

The worst article I did was Problems at Palantir and I said that when it's probably up 5x or something.

Since then it's like you, I just, it really hurts me.

It's like I really was a little bit ignorant.

You know, I talked to a lot of people, I talked to customers I thought I had and it's like, darn.

I think maybe that was a little more out of my wheelhouse and it didn't involve foil, which

is a real strength of mine.

And it's just, you know, it really haunts me to get this stuff, you know, a little wrong.

I've also found though is anytime you're publishing and have an audience, there's a lot of people

who want to give you ideas. Right.

And I think it's especially true for activist short sellers.

Less true for me, but still to a certain extent people are like, check out this, check out that.

And I've really found that my best work is always stuff I do independently or with the aid slightly of chat GPT.

And the ones where I get it wrong a little can be if somebody gives me the initial, you know,

genesis of the idea and it kind of like clouds my thinking or makes me think in too, too narrow of a way.

So I really tried to, in order to not get stuff wrong.

I think it's good to be as independent as humanly possible and just the entire funnel of the

research process I would say also I've really Tried to focus on disruption as the angle because

we've seen so many of these.

Like I think a big problem with all the short sellers today is this is the golden age of stock promotion.

You got tons of retail, you have all these stocks going up and to the right on no revenue and profits and nonsense.

I'm really, really, really trying to think just disruption are always the best shorts because

if a business model is being disrupted, the downside is going to be huge.

It's like a, that is within your analysis and kind of control, for lack of a better word.

And if you're right about the disruption, you're going to be right about the stock and it's

going to like impact the stock if there's a real business that's being disrupted.

So I would say like my publication has evolved to the point that I'm now just constantly thinking

about which companies are going to be disrupted from AI or you know, other, you know, changes in technology.

I suppose before we do start wrapping things up, I just want to know as well, like the current market climate, right.

We kind of have to touch upon it like we're seeing all time highs being hit.

I mean, but on the same vein, we know that that debt has continues to grow.

We're seeing some big voices come out and say look, I'm getting out.

You know, some big head funds are saying look, I'm just getting out.

I think three years time we're at breaking point but yet we're still seeing stocks climb.

I mean like what's your take on that?

You know, I tend to not be a macro guy.

I really want to tune out all the noise, avoid the stocks that everybody is talking about and

like me, like go to the basics.

And I think sometimes when everything's hitting all time highs and it's crazy promotional environment,

it's like maybe avoid the like there's all these quantum stocks that my, my layman's view is

are probably way overvalued and promotional.

But I'm not going to even spend time, you know, doing that because a stock that's overvalued

can become 10 times overvalued.

I think that's the Einhard quote.

Instead, you know, one company I wrote about that I'm proud about is Akko Brands.

And they're just, they make a bunch of and the tickers acco and they must make a bunch of just

really simple paper based products like notebooks and calendars, physical calendars and all

these things that are just secular decliners. Right.

And I just know that business is going to be a little smaller a year from now than it is now and two years.

And if I could find little things like that that nobody's talking about that are clearly trouble,

that are clearly against the secular headwind, you know, and just try to keep my wits about

it me and try to focus on companies that are just, just have fundamental issues I, I, I think

that'll do well over the long run.

So I try not to propy size too much or say markets are at all time highs are going to go.

That's just not who I am.

I'm very, very company specific.

I want to do company specific diligence.

I want to focus on businesses where it's just being harmed by this disruption factor that's going to get worse.

I just really want to just kind of stay sane and not talk about the Teslas of the world, not

talk about the Carvanas, not complain about the market environment or say things are broken.

And I, I think I need to avoid companies with you know, tightly controlled floats like the China

ones because I thought I could be great at predicting them but then it turned out to be a little harder than I thought.

But focus on, you know, companies that are liquid above a billion dollar market cap, have some

structural issue, are being ignored by the rest of the market.

And I think if I can do that and try to keep my wits about me, it'll be good for readers.

I love that. I mean like for traders, investors, you know, it's all about finding your niche,

you know, and, and that's, that's a great niche.

You know, it's about finding the disruptors or it's finding the distribution line or finding,

you know, like these things are just key to getting your niche in trading and, and just having

a slight edge over the markets.

And it's awesome to kind of get your take on that and see how you slightly have a different

perspective than mainstream and that's very cool.

But I suppose lastly, what is the future of Bear Cave? What's next for yourself?

Out. So I've loved writing the newsletter.

I'm grateful for every free or paid reader of the publication.

It really means a ton to me and I, I care so much about the publication, I want to do it for

the rest of my life.

So I think I want the barricade to continue to be the dominant source of news for people following the short world.

I want anybody who's you know, doing type of critical research on stocks to be a paid subscriber

to the Bear Cave and just Continue to grow it.

I want to build up a great track record and I think I had a great track record when I started.

I had a few, you know, slight screw ups later, but still an overall very good track record compared to the market.

I want to have an amazing track record of identifying companies that underperform.

And I think the second act here is continue to do the Bear Cave.

Do a great job with it.

But take the money I make from Bear Cave to invest in software tools and basic research tools

to help everyone do research better.

I have one website, FOIA search.com which lets anybody search the SEC's FOIA logs which can

help you detect undisposed SEC investigations early.

I mentioned earlier stockpromotiontracker.com which I'm building out right now, which is becoming

the biggest database tracking paid stock promotions in public companies.

Stop NASDAQ, chinafraud.com, an open source database of these WhatsApp groups promoting stocks.

I really want to take the money from Bear Cave and my knowledge from writing Bear Cave to invest

in technology and technology tools to help everybody do research better.

So the long run ambitions is let me build out a suite of tools to help everyone do research better. Currently all free.

In the future there's going to be some monetization somehow, but that's the long term vision.

I love that, that's awesome and we should certainly connect on that in the future.

But it's been so good to have you on, Edwin.

It's been a slightly different conversation we have most of the time but it's been a real pleasure

and hopefully our listeners would have enjoyed that and took some snippets of information and

some golden nuggets as they say, just to maybe help their own edge in the markets.

But it's been a real pleasure, Edwin.

Make sure guys to check out the links in the BIOS and you'll see all of Edwin's links there as well.

Thank you so much for coming on.

Thank you Jonathan and thank you for your thoughtful questions.

Not at all. It's a pleasure.

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