A Bear Raid

In 2022, Sinch was shorted by about 15% of its stock, one of the highest values in Europe for a company of this size. In absolute numbers that meant that the short sellers would have to buy Sinch stock for several 100 million Euros to get out of their short positions. In Europe, short sellers have to publicly disclose their shorts once they exceed 0.5% of the company’s outstanding shares (=overall number of shares).

Registries for that can be found for Sinch at the following websites:



So, let’s look who showed up in those short seller lists:

Let’s take a closer look at some of the more interesting ones:

Marshall Wace: Lost more than €200m in 2020 on Sinch when they shorted Sinch heavily and were squeezed out completely by a rapidly rising stock price.

They were the first who started to short Sinch again in 2022 (in March) and they shorted Sinch typically between 0.5% and 1% with tactical buying/selling around the quarterly reports. In Sep 2022 they optimistically increased their short position to over 1.5% and were possibly disappointed by Sinch’s good Q3/22 report. After that they decreased their short to 0.5% in late November, but started to increase their short again in Dec 2022 to 0.9%.

We could call Marshall Wace the most faithful Bear Raider for Sinch, they short in good times and bad times, at any cost. Their overall result up to now is still at more than €200m losses.

BlackRock Investment Management: They are currently the most successful short seller with a profit of about €25m. They were the first ones to join Marshall Wace in March 2022 when they could still sell their borrowed short stock for a share price between €80 and €40 (and maybe some even earlier at a higher price, before they reached the 0.5% disclosure threshold).

They did a bit of tactical trading around the Sinch Q1/2022 report, but always maintained about 0.5%.

It seems they had a very good emphatic sense of the upcoming ASS Liar research, as they increased their short percentage after weeks of no trading just in the 3 days before the “research” was published and conveniently sent the stock price down.

Afterwards they waited a bit and then got out of (all or most of) their 0.75% short percentage when the Sinch stock price was around its low.

That explains the €25m profit, as they sold around 6m shares with an average profit of €4. Basically the difference between their short start around €6 per share and their exit at around €2 per share.

They are below the 0.5% where they need to disclose and from the math it looks as if they ended their short selling.

Kintbury Capital: they are #2 in profits with currently about €15m.

They did very few trades that were disclosed above 0.5%, which they first reached in June 2022 and they increased just before the ASS Liar “research” was published. The other registered trades happened just  before the Sinch founders took over the 5% stock from Softbank in September.

So, perfect understanding of the two major key events that sent the stock down (ASS Liar research) and up (Softbank exit). Surgical precision that was rewarded with €15m profits.

Point 72: It seems they made a profit of about €9m. Came in early when the stock price they realized from their borrowed stock was still higher (€4+ per share) and went out in mid Oct 2022 (2 weeks before the positive Sinch Q3/22 report) when the share price was below €2.

Enough to make €9m profit with 0.7% short.

Gladstone: They are also listed with about €9m in profits, but they were one of the very active long-term shorters through good and bad times.

They exceeded the 0.5% for the first time on the day before the Sinch Q1/22 report.

Then they continuously increased their short position until end Sep 2022 to 1,8% (that was when the Softbank exit was announced).

In the following 8 weeks they got out all their short stock. The €9m profit is a result of the early shorting in May/June, when the stock price was still above €4.

Kuvari: they are currently at a loss of about €12m.

They joined the Raid late in June, when the stock price was already below €4 per share. They stayed faithful between 0.5% and 1% until Sep 2022.

They were somewhat unique, as they increased their short position to 1.3% at the period where it was worst for them, before the good Q3/22 report, when the stock price was low.

After this report, they seem to plan to get out, as they constantly decreased to now 0.6%.

Arrowstreet: They are currently around break-even, but still short actively with 1.2%.

They were among the early raiders in May 2022 and stayed active throughout the year with a peak of 1.3%.

They have the highest squeeze risk if the stock price continues to go up and can quickly accumulate losses of €5m and (much) more.

Various others: there are 7 other short sellers in the list above and probably 10-20 more who never reached the 0.5% disclosure threshold. They are all between €1m profit and €4m losses.

Success Summary of the Bear Raid:

Winners: Blackrock and Kintbury. Started their Raid early when they still got a good amount of cash for their borrowed stock. And they sold it in the low period after the ASS Liar “research” came out and Sinch had two bad quarters. But before the Softbank exit and the good Q3/22 report.

Losers: Marshall Wace (primarily from their huge flop in 2020) and Kuvari, who failed to end the Raid when the stock was around its low and who are still trying to raid, but with decreasing support from others.

Still Active Raiders: Marshall Wace, Kuvari, Arrowstreet, and Voleon; who are the only ones who still short with more than 0.5%. The overall short ratio went down from a peak of 15% to currently 8.2%, which is still high. The 4 disclosed Raiders together short 3.4%, the other 4.8% are spread among a large number of smaller short sellers.

Squeeze Potential: Sinch stock currently trades around €4 per share. All stock that was newly shorted by Raiders since late April 2022 was at this price or below (i.e. loss-making for the Raiders). Only short positions that were started before April 2022 are currently profitable. If the stock price continues to go up (as it did with almost 200% in the past 10 weeks) all active short sellers will quickly get into red numbers. Kuvari and Arrowstreet will likely lose the most. For Marshall Wace, the incremental losses to the €200m+ from 2020 will be marginal in relative numbers.

Interim Conclusion: Coming from a stock ratio of 15% and now “only” 8%, it looks as if the Bear Raid is largely over. But 8% is still very high and a few very committed Raiders do not seem to give up. Especially Marshall Wace seems on a crusade, maybe due to the €200m losses in 2020. But since there were good reasons for the stock price decline of Sinch (coming from a strong bull market, negative macro-economic trends, slow exit of the 10% shareholder Softbank, increasing Bear Raid, two weaker quarters)  and since these reasons are now either “priced in” or they are obsolete, it can be safely assumed that the share price will continue to recover from its ridiculous low.

So, some short sellers won, some lost. Softbank lost a ton of money, the Sinch founders were the big winners here, as they took over 5% stock from Softbank at the absolute low point.

But the real damaging thing of such a Raid is that

  • A lot of management attention is diverted from the business to the stock price trouble
  • Companies start “cost control” programs, i.e. fire employees who were recruited through expensive headhunters, receive severance packages, and will have to be replaced in the next upturn – not very efficient use of resources
  • Employee stock option programs are “under water”, leading to de-motivation of key staff
  • The company is not 100% optimized to serve the customers, but distracted

PS: How comes that short sellers seem to know so much about confidential info about the near future of a targeted company? And then increase/reduce their short positions just at the perfect moments?

A few weeks after I left MessengerPeople (acquired in 2021 by Sinch), I received the following message on LinkedIn (in German). I know from ex-colleagues that I was not the only one. Might be pure co-incidence, of course.

Here the Google translation into English:

Hello Mr. Buchenberger,

I hope you are doing well!

I am very pleased to be in contact with you for the first time. During my research, I came across your profile on LinkedIn and given your extensive experience in the area of ​​conversational commerce, I think that you would be an excellent candidate for a paid consulting mandate with my client.

Specifically, I work on behalf of an investment client who analyzes the general market, as well as trends and different providers. This one hopes to speak specifically to people who have experience with MessageBird, Sinch, Infobip, Superchat or similar.
The consultation engagement would consist of a paid and confidential 60 minute interview between you and the client.
There can also be longer engagements and mutual exchange with the client.

Would you have a few minutes today or tomorrow to discuss this opportunity? Let me know the best number and time to reach you.
You are also welcome to reserve 15 minutes in my calendar:

Best regards from London,