Hormuz analyst and horror predictions: the research company that shakes up the market

While global markets latched onto the official reports of the Strait of Hormuz being blocked, a small, anonymous research firm decided to send an analyst into the field to observe the shipping lanes first hand. This is not the first time this year that Citrini Research has managed to shake up the markets. Last February, billions were wiped off the market value of technology giants following its report, which dealt with a particularly provocative question: “What if artificial intelligence is actually bad news for the economy?”.

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Now, as its influence grows, there are growing voices wondering whether it is an objective analysis – or an incredibly sophisticated way to mask the interests of large financial entities.

The humble newsletter has become one of the most talked about in the market

The independent research company was founded in New York in 2023, and since then it has gained close to a quarter of a million followers on the Substack newsletter platform – where it usually publishes its research. Alongside this, it operates a model of paid monthly subscriptions that receive special analyzes on “super trends” in the markets.

The company’s business model is not exposed to the public, nor are data such as the number of employees, the scope and source of revenues or the number of paying subscribers. The subscription plan costs $125 per month, and as mentioned provides in response a number of in-depth analyzes that are not published to the general public.

What is known about Citrini is that she does not have a traditional background in Wall Street like other research bodies. On its social media pages, it presents itself as a research company that offers insights and thematic studies on the stock market alongside global macro analysis. “Our promise is simple: you won’t have to ask ‘what’s the deal?'” the company description reads.

The one who founded the company and is one of the authors of its main reports is James Van Gillen. According to the Wall Street Journal, Van Geelen began focusing on investing after selling a health care company he founded. He started publishing stock research, macro and other specific topics, and managed to attract attention and gain a following after time and time again ahead of the market and identifying investment opportunities related to artificial intelligence and medicine.

In an interview with Bloomberg in 2023, Van Gillen said that Citrini started out as a modest newsletter, where they mainly wrote about stocks and “good things”. He said they had a good streak of spotting market trends, which boosted its popularity.

7,000 gloomy words about the effects of AI

“During the last century, 40% of the returns in the capital market came from one percent of the companies,” is how the company’s about page opens. “The identification of these companies often depends on the early discovery of issues and narratives in the market – the ‘super trends’ that affect not only individual companies or sectors, but the entire economy. This is the type of investment approach we use at Citrini.”

This early detection, which Shawn Gillen has been bragging about for a long time, managed to greatly worry the market last February. Citrini published a report about artificial intelligence that went viral, in which the question arose, what if artificial intelligence is so bullish for the economy – that it is actually bearish? In the report, the company described a situation of spending cuts in various industries, which would cause mass unemployment of white-collar workers and eventually a financial crisis. According to the company, unemployment rates may climb to the 10% level.

Over about 7,000 words, a gloomy hypothetical scenario is described that has been dubbed “the global intelligence crisis”, and it may break out as early as June 2028. “The more the capabilities of artificial intelligence improve, the less workers will be needed and the layoffs among the white-collar workers will expand,” the report says. “The workers who will be laid off will reduce consumption, the drop in profit margins will cause companies to invest more in artificial intelligence – and the cycle will continue.”

The report emphasized that this was a “thought exercise” and not a forecast, but the description of how AI bites into almost every sector of the market managed to worry investors. Wall Street’s stock indexes fell more than 1% after its publication, and major companies such as Blackstone, Crowdstrike, IBM and Zyscaler fell. In the end, the report received millions of views online.

Citrini didn’t stop in the AI ​​market, and caused panic with another warning she issued about an oil-driven slowdown that could lower stocks. The company said that the ongoing high energy prices could burden consumers and the companies’ profitability, when they act as a “tax on growth”, erode purchasing power and worsen financial conditions, according to a CNBC report.

The company continued to make headlines in April as well, when at the beginning of the month it published a report by an analyst who was sent to the Strait of Hormuz at the height of the war, to observe the shipping activity firsthand. According to Citrini, the analyst was sent to the Musandam Peninsula in Oman, and from there continued by boat to the Hormuz region.

The analyst, who remains anonymous due to the sensitivity, found that vessels were still moving in the strait and that the disruptions were not complete. He described the movement of about 15 ships a day – a flow much lower than normal levels – but according to Sitrini the actual shipment volume is higher than the reported figures, as many ships turned off their tracking systems while transiting Egypt. In any case, it was a significant discovery that challenged the dominant narrative in the global markets, according to which the strait is completely closed.

The analyst described interviews he conducted with fishermen, smugglers and regional officials, which mainly indicated that the passage of ships in the Strait is selective, with the tankers required to obtain permission from Iran before transiting.

It is important to note that there is difficulty in verifying the findings, which are based on a single field trip and anecdotal reports in an area where transparency is particularly limited anyway. At the same time, they are consistent with other reports according to which Iran at the time allowed the passage of ships and tankers of certain countries, usually for a fee.

Counter reviews: “Feels like manipulation”

With Citrini’s success, there are more and more voices criticizing her conduct, and even questioning her credibility. Surfers reported that after following the textual changes made in the reports, they found that the viral report, especially on artificial intelligence, had been substantially edited in relation to the person behind the report.

In the original message that accompanied the study, subscribers were told that the report was compiled by Citrini and the Lotus hedge fund, “for the sole purpose of simulating an insufficiently researched scenario.” Later, the introduction was amended so that it read “Our friend Alap Shah (Managing Partner of Bluetooth, NT) asked the question, and together we brainstormed the answer. Citrini wrote this part, and he wrote two others.”

The amendments caused a slight uproar online, with one question floating in the air: Is this an attempt to disguise the activity of institutional financial bodies in order to use a personal platform with the aim of disseminating research that affects the market?

“It feels close to manipulation,” wrote a Reddit user. He emphasized that there is no evidence of this or any other deception, but warned: “The fact that a newsletter company can disrupt the markets is something that should be paid attention to.”