Providing insight to the world's premier financial publications
Hudson Labs regularly provides cutting edge intelligence to financial publications in their research and reporting. We have lent our expertise in applied AI, as well as facilitated investigative reporting using our unique, proprietary datasets.
How Hudson Labs uncovered red flags at Super Micro years before its auditor stepped down
By CNBC's Fast Money
November 7, 2024
Financial AI platform Hudson Labs first flagged risks at $SMCI in 2022 and again in January 2024. Our CEO Kris Bennatti discussed how the software detects risks and what it found out about the company.
Auditor-Hopping Is Rare, but 13 Small Companies Defy the Trend
By Nicole M. White
September 12, 2024
"High auditor turnover correlates with other financial reporting red flags, Hudson Labs CEO Kris Bennatti said. Take electric vehicle company Ideanomics Inc., which was previously an artificial intelligence startup, a fintech and a video-on-demand outfit. The company churned through five auditors - including BF Borgers - since 2014, but analysts had long noted cash flow problems."
AI Spotted Super Micro Risks Two Years Before Filing Fiasco
By Noah Barsky
Aug 30, 2024
"Super Micro Computer (SMCI) shares nosedived 20% Wednesday on news of its missed 10-K filing and a scathing report by short firm Hindenburg Research alleging related-party accounting manipulation. The real story is that AI detected escalating financial reporting risk signals again by 2022 — all of which were permitted to 'hide in plain view.'
One of the many valuable routine screens identifies related party disclosures placed SMCI in the top 100 companies with highest risk. Hudson Labs found 'related party risk isn't the only red flag at SMCI.' Super Micro’s forensic risk score has been elevated since 2019. Hudson Labs showed existing AI advancements can readily accelerate financial risk signal detection."
Not Enough Accountants? The CFO’s Tenure Might Get a Little Shakier
By Mark Maurer
Aug 2, 2024
"Nearly 640 U.S.-listed companies cited insufficient accounting personnel for a material weakness during a 12-month period through June, up 1% over an average of the previous three years, according to Hudson Labs, an investment research software company previously known as Bedrock AI.
Of those companies, roughly 180, or 28%, replaced their CFO at least once in the 12 months through June, the Hudson Labs data showed. In contrast, of more than 5,900 U.S.-listed companies with no material weakness in that period, around 1,300, or 22%, had any CFO turnover."
Heavy lifting: Why using AI for data extraction is still no easy task
By Max Bowie
May 30, 2024
"It's so easy to go from zero to 80% with almost no effort using a generative model, but people don't realize it's not easy to overcome the 80% hurdle and get to a place where you can use it in an enterprise context," says Kris Bennatti, CEO of Hudson Labs (formerly Bedrock AI), which focuses on helping firms get LLMs to function in capital markets environments.
"We'll see teams get excited about AI, rely on GenAI, and make a RAG (retrieval automated generation, which is used to optimize the output of LLMs), then they find they can't get to 100%, so they decide AI doesn't work and shouldn't be implemented-and that's the wrong conclusion," Bennatti says. "GenAI is a very exciting tool, but it's being used for too many things and not the right things.
"She says there are many reasons why generic LLMs have higher failure rates in capital markets use cases. For example, there are nuances such as how well or badly LLMs deal with negatives, and reasoning errors because generic LLMs contain so much irrelevant noise that nevertheless contains linguistic overlaps with information that is relevant.
Hudson Labs Solves Finance AI Data Overload Puzzle
By Noah Barsky
December 11, 2023
"Equity research provides an ideal setting to examine those challenges. Last year, the SEC received nearly 800,000 regulatory filings. That translates into millions of pages, billions of words and countless figures for analysts’ perusal and dissection.
To address that growing market need, Hudson Labs (formerly known as Bedrock AI), founded in 2019, developed innovative software powered by finance-specific large-language models (LLMs) to automate equity research workflows and extract actionable insights. The firm now serves a client list with over $600 billion in assets under management, including large financial institutions and funds."
SPAC Mania’s Ugly End Yields $46 Billion of Investor Losses
By Jonathan Randles and Amelia Pollard
December 27, 2023
"SPAC companies were also more likely than their corporate peers to raise doubts about their future, according to Hudson Labs, an investment research software firm that analyzes regulatory filings. Nearly 44% of SPAC companies that filedannual reports in 2023 have reported going-concern warnings compared to roughly 22% of non-SPAC companies, Hudson Labs said."
Rite Aid Didn’t Flag Going Concern Risk Before Bankruptcy Filing
By Nicola M. White
October 16, 2023
"Rite Aid in its May 7 10-K highlighted the company's "substantial indebtedness and limited cash flow," which signals there were tough conversations going on within management and potentially with the auditors, said Kris Bennatti, CEO of Bedrock Al..."
Why Boards Need To Invest In Finance AI's Success
By Noah Barsky
August 23, 2023
"Research firm Bedrock AI astonishingly found that almost 600 U.S.-listed companies disclosed material internal control weaknesses arising from accounting and IT personnel needs. The deficiencies are likely far more pervasive and pernicious than the self-reports."
WeWork SPAC Meltdown Adds to Co-Working Company’s Litany of Woes
By Bailey Lipschultsz
August 10, 2023
"WeWork joins the 127 de-SPACs — which are companies that merged with a blank check firm — to flag questions about their own viability as going concerns this year, a signal they could go out of business. That’s according to Bedrock AI, an investment research company that scours regulatory documents. The firm says the percentage of de-SPACs raising concerns over the past four years was nearly double those that went public via more traditional vehicles."
The Accountant Shortage Is Showing Up in Financial Statements
By Mark Maurer
July 11, 2023
"Nearly 600 U.S.-listed companies of a total 7,359 reported material weaknesses related to personnel, typically in accounting or information technology, this year through June, down 5.2% from the prior-year period, but up 40.6% from the 2019 period, according to a review of filings by research firm Bedrock AI."
Companies Unveil Details About Supply-Chain Financing Under New Rule
By Mark Maurer
May 23, 2023
"Among the companies that made their first disclosures of supply-chain-finance data in the latest quarter, according to a review of filings by Bedrock AI, were paint maker PPG Industries, Dutch chemical company LyondellBasell Industries, electric-services firm Fluence Energy and pharmaceutical company Viatris. "
How AI Enables Equity Research
With Amber Kanwar
May 10, 2023
"Kris Bennatti, CEO and founder of Bedrock AI, joins BNN Bloomberg to discuss how hedge funds use AI to detect internal errors, how Credit Suisse and Coinbase were flashing red flags, and what companies are showing errors internally, now."
Big Tech Expects Some Assets to Last Longer. But the Boost to Profit Is Temporary
By Mark Maurer
May 4, 2023
"A growing number of tech companies expect their servers and network equipment to last longer, an accounting change that reflects the slower pace of developments in certain chips while also boosting profits at a difficult time for the industry...You’re going to see a boost in net income in current quarters that isn’t a sustainable growth mechanism,” said Kris Bennatti, chief executive at investment research firm Bedrock AI, referring to quarter-over-quarter comparisons of companies’ financial information."
More firms drop LIFO amid inflation, low taxes
By Steven I. Weiss
May 4, 2023
"Accounting matters. Case in point: Dozens of companies have switched from a last-in, first-out, method, or LIFO, to the more common approach of first-in, first-out, or FIFO, model of accounting for their inventory amid high inflation that could affect the appearance of the bottom line in financial reporting, according to research from investment research software company Bedrock AI."
Inflation Has More U.S. Companies Ditching ‘Last-In, First-Out’ Accounting
By Mark Maurer
March 23, 2023
"About 30 U.S. companies total in 2021 and 2022 switched their inventory accounting method to FIFO from LIFO, according to a review of public filings from investment research firm Bedrock AI. That is up from a combined 13 companies in 2019 and 2020, when inflation was less of a concern. No companies have switched to LIFO from FIFO since 2019, Bedrock AI found."
Accounting Red Flags Are Common Among Public Crypto Companies
By Ben Foldy and Jean Eaglesham
December 7, 2022
"A look at 19 of the publicly traded crypto miners showed that 16 disclosed significant internal-control weaknesses in the past four years, some of which were “alarming,” according to Bedrock AI, which makes software that analyzes financial filings."
Spacs confess to accounting weaknesses as year-end audits loom
By Stephen Foley
December 6, 2022
"A lot of people were caught up in the glow of, ‘Hey I can go public now, it’s a bull market, everyone’s really excited about my company and my vision’,” said Kris Bennatti, a former auditor who now runs the investment research firm Bedrock AI. “The glow is gone. Reality has come to bite us."
Why More Than 40% of Ex-SPACs Are Running Out of Cash
By Bailey Lipschultz
October 5, 2022
"Bedrock AI, an investment research company that scours regulatory documents, pored through filings issued by hundreds of de-SPACs -- which are SPACs, or blank-check firms, that found companies to merge with -- and determined that more than 40% of them flagged questions about their own viability as going concerns, signaling a risk they could go out of business. (A few of them have since filed for bankruptcy.)"
Short Sellers and Hedge Funds Sign On to Fintech Company Whose Algos Sniff Out Corporate Fraud
By Michelle Celarier
July 14, 2021
"What we do is find impactful information in Securities and Exchange Commission filings that our models have learned are associated with downside outcomes specifically earnings quality risk, governance risk, and malfeasance," Kris Bennatti, a CPA and programmer who founded the company, told Institutional Investor.