Is it a news organization, or a hedge fund?

Clare Malone of The New York writes about Hunterbrook, which is using reporting from journalists to trade in the market.

Malone writes, “Hunterbrook employs three full-time ‘investigators,’ two of whom have backgrounds not as journalists but as intelligence analysts. Murray, the former Wall Street Journal editor, runs a weekly editorial meeting. But it is Reid who lies at the heart of Hunterbrook’s business model. Under S.E.C. rules, many of the traditional tools of journalism—such as cultivating insider sources and conducting off-the-record interviews to learn non-public information—could constitute evidence of insider trading. At Hunterbrook, where reporting is being used to inform market trading, there is no seeking out of leakers or classified documents. The company prefers e-mails to phone calls, since the paper trail is easier to track. Screenshots of text messages must be posted in a Google Drive. Every detail in a story must be annotated with a source so that Reid can insure its provenance isn’t non-public information. Hunterbrook monitors the Slack messages and e-mails of its employees. ‘I still have lots of friends at the S.E.C.,’ Reid told me. ‘So they’re well aware of this.’

“Charges of insider trading are by no means unheard of in the world of journalism. In 1985, a Wall Street Journal columnist was convicted of participating in a scheme that made nearly seven hundred thousand dollars in trades that were based on his reporting; as recently as 2021, the indictment of a trader who pleaded guilty to securities fraud noted that some of his trades were made in coördination with stories that ran on Bloomberg News. If Reid determines that a story contains no compromising non-public information, Hunterbrook Media shares the reporting with Hunterbrook Capital, which, for now, has a single trader, an alum of Morgan Stanley. In the case of the U.W.M. investigation, the hedge-fund side of Hunterbrook was informed about the reporting nearly two weeks before publication. If the fund does well, journalists get a slice of the firm’s profits at the end of the year. ‘There are so many people and organizations that benefit from the work of good media, who are capturing a lot of financial value from it, except for the people in the organizations who are actually doing it,’ Horwitz told me. ‘I think there’s an opportunity to reinvest that value in the people who are actually doing the work.'”