When Sahm Adrangi makes a short-sale investment, he isn’t hoping that the company does well. In fact, his investments are into companies with poor business practices and ethics that are doing well by dishonesty and skewed fact reporting. A value investor, Sahm Adrangi invests into companies that he just does not like. A short sale attack is relatively simple but extremely risky if done incorrectly. In order to complete one, the investor must borrow stocks of the company they are interested in and immediately sell them. In theory, when the stock price drops enough they will purchase them at the much lower price and sell them back to the lender. A lot of investors have executed their attacks improperly by predicting stock price drops that just never happened, or sometimes they just gave up too soon. It’s definitely not a short-term investment in most cases.
Sahm Adrangi is a very talented investor with many years of experience despite being young. He has shorted biotech companies pushing ineffective drugs to investors during their trial stages, fraudulent companies based in China but trading on the stock market in the United States, and even mining companies to name just a few. He specializes in certain areas and he is very good at it. This is why people are paying very close attention to Kerrisdale Capital’s negative report that was issued about the company QuinTech that specializes in marketing online.
The report indicates some rather concerning problems with their recent rise in revenue. Mainly that it is all completely bogus and is only coming from fake web traffic. QuinTech caught the attention of Sahm Adrangi when their stock rose by around 400% based on this increased revenue, but most of it only came from one of their customers. There is a lot of evidence that was found by Sahm Adrangi’s research that was conducted by Kerrisdale Capital that the traffic that their clients paid them to generate to their site was mostly done by bots on the internet instead of actual real-life humans. If this is true, not only has QuinTech misled their investors, they are ripping off their customers.