Founded and managed by Sahm Adrangi, with less than $1 million in startup capital, Kerrisdale Capital Management is a New York-based private investment firm that specializes in managing unique hedge fund investment opportunities.
Adrangi combines detailed investment reports, short selling and long positions on equities that Kerrisdale research assesses as being priced incongruently with market valuations to create fund strategies.
When researching a short investment candidate, Sahm Adrangi evaluates a set of key red flag indicators that have proven to be excellent indicators of businesses that are defrauding investors and violating security regulations, such as whether the business has a working website, functional operation facilities and are even acknowledged by their competitors.
Several Chinese companies that went public in the U.S. through reverse mergers, avoiding due diligence and costs in their native Hong Kong turned out to be extremely overvalued. Adrangi was able to benefit his firm’s funds by taking short positions on Chinese firms that fell within this category and publishing his research into these companies’ operations, revealing the disparity between the internal operations at these firms and what these companies were reporting in their financial documents.
Kerrisdale disclosed that several of these firms shared a number of suspicious practices such as frequent changes in auditors and CFO’s, excessive margins, acquisitions providing dubious benefits and other suspect and fraud suggesting conduct patterns in their business transactions.
The SEC took enforcement actions against several Chinese companies as a result of Adrangi’s published findings of 2010 – 2011. Additionally, the Reverse Merger Index for Chinese companies published by Bloomberg fell more than 60 percent during this period, as these revelations became public.
About Sahm Adrangi
Sahm Adrangi earned his B.A. in Economics from Yale University in 2003. He began his career in 2004 as an Analyst in the leveraged finance group at Deutsche Bank. Adrangi has also worked as an Analyst in the bankruptcy restructuring group at Chanin Capital Partners between 2005 and 2007. He began working for Longacre Fund Managment as an Analyst overseeing a $2 billion distressed debt fund between 2007 and 2009 before founding Kerrisdale Capital Managment, LLC where he manages as the company’s Chief Investment Officer. Via twitter