In New York City there is a financial firm called Kerrisdale Capital Management. It was formed by Sahm Adrangi and he as the chief investment officer he ultimately determines what his company invests in. He graduated from Yale University and then entered the financial industry. His company manages a hedge fund which is worth about $30 million. He is a value investor for the most part. However, he also likes to invest in special situation investments when he spots an opportunity to make money off a company that is overvalued by the market.
This latter situation occurred after Eastman Kodak Company did a press release which caused their stock to soar. What they announced was that they were entering the digital currency industry. They have two new initiatives which are called KODAKOne and KODAKCoin. The first one of these is a new online platform for the purchase of photographs. The second is how people will buy photographs on KODAKOne and how the rights holder will be paid.
As soon as Sahm Adrangi saw this press release he and his analysts went to work. They concluded that all this press release was about was Eastman Kodak trying to move into the hot new thing of having IPOs (initial coin offerings). There was nothing of substance and he believes that shareholders will never receive any value from this move. Because of this belief, Sahm Adrangi shorted their stock and released his own press release about why he had done so.
Sahm Adrangi made the case in his negative report, and during a subsequent conference call, that this announcement changed absolutely nothing about what Eastman Kodak is. And that is a company that has been in serious decline for the past decade. He says their revenues are falling each year and soon they might not be able to pay their debt. He said KODAKOne and KODAKCoin will never work out because it is based on an imaginary currency with nothing backing it except a company with shaky fundamentals. As it turns out he was right and their stock has been quickly descending in value.