Sahm Adrangi and Kerrisdale Capital have released findings on several different companies before, some of the most recent include Eastman Kodak and a handful of pharmaceutical companies. While most investors decide to put money into companies that they believe will succeed, Sahm Adrangi takes things a different way. He engages in what is known as shorting a company, which banks on the fact that the company in question will fail or that their stock will at least drop a considerable amount.
In April, Sahm Adrangi and Kerrisdale Capital released another report on a company that Kerrisdale Capital suspects are a sham. This time it is the internet marketing company QuinStreet Inc. whose stocks have risen dramatically in recent months. In fact, the price has quadrupled from just a few months ago and there is no real evidence that the company has done anything to deserve the faith and money of its investors. Over the last few months, the internet traffic for QuinStreet has increased dramatically, which is why investors have been putting their money into QuinStreet.
Unfortunately, according to Kerrisdale Capital’s negative report on the company, the traffic may not be legitimate whatsoever. Sahm Adrangi believes that this traffic is all computer-generated and phony that is being used to fraudulently make revenue for the company. This generated revenue comes at the cost of the clients of QuinStreet. QuinStreet earns revenue by generating traffic to the websites of their affiliates through the submission of user forms and clicks on links. By generating fake clicks and form submissions, QuinStreet appears to be more profitable and effective than they actually are. What makes QuinStreet’s activity look even more suspicious is the fact that almost all of the revenue that they have received has only come from one client. This fact appears to have been overlooked by the investors who jumped on board to the company when their stock prices started to rise.
Sahm Adrangi is the Chief Investment Officer of Kerrisdale Capital Management. The firm was launched in 2009 Adrangi. They specialize in long investments and special situations.