Hedge fund to profit from 'market-moving' scoops

By running its own publication and newsroom and employing its own journalists, Hunterbrook Capital wants to get the stories first, then place market bets.

Apr 05, 2024

Two investors want to re-invent news. And it’s the worst journalism idea I’ve heard in a long time.

Nathaniel Brooks Horwitz and Sam Koppelman — both 27 years old — are creating a newsroom that will be monetized by investments based on “scoops” produced by the newsroom, according to exclusive reporting by the Financial Times.

In other words, their investment firm, the $100 million hedge fund Hunterbrook Capital, is using journalists to write stories designed to affect the stock market. They’ll buy or sell stock based on those “market-moving” stories before the market moves — before other investors know about the stories — thereby profiting.

If this feels wrong, it clearly is. Imagine them doing the same thing, hiring journalists, gathering the information, then not publishing the “stories.” This practice — hiring journalists to do investment research — is somewhat common. That would be similar to current investment, where information is gathered, research is done, then investments made based on what was learned. That would be ethical.

The cheat-code here is that that profit-taking results not from knowledge, but action that changes prices. They are placing bets on market changes, then actively and deliberately changing the market themselves.

The investors hawk their scam with virtue signaling about funding journalism. But their model isn’t about funding journalism for an informed democracy. It’s about funding journalism to change stock prices. (They claim journalists will not be directed by the investment arm and will be free to write other stories that won’t be traded on. But reporters will know their purpose and will be given bonuses when their stories result in profitable trades. Their incentives are not journalistic incentives.)

Journalists will be tasked with investigating companies and writing “scoops,” but without using any information that isn’t already public. In other words, Hunterbrook doesn’t know what a “scoop” is.

The reason they’ll use only publicly available information is that trading on non-public information is against the law.

So-called “compliance officers” will check stories to make sure all the information in them is publically available.

Which is why they shouldn’t call “journalism” designed for investors to profit from advanced knowledge of the “stories” “journalism,” nor should they refer to their market-manipulating content as “scoops.”

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