Introduction

This chapter introduces the concept of a proactive corporate fraud investment strategy, drawing parallels between avalanche triggering and exposing fraudulent companies. Both involve identifying hidden instabilities in seemingly normal systems and taking proactive measures to destabilize the systems, and eventually either protecting the cliffside community from a catastrophe, or safeguarding market integrity, while profiting the fraud short investor. The strategy involves a step-by-step process of detecting, assessing, investigating, and executing a short campaign against fraudulent companies. Various methods, models, and tools, ranging from basic financial metrics to advanced AI, can be used to detect anomalies and suspicious patterns. However, these screenings must be followed by in-depth investigations to verify potential corporate fraud and build a strong case for the investment campaign. The chapter emphasizes the complexity of the process and the need for careful selection and adaptation of models and methods to suit individual investors’ situations and investment universes.