Investments

Allied Minds (LSE:ALM) is a London-listed, US-based firm that operates like a specialized venture capitalist, investing in early-stage technologies created by academic researchers and attempting to bring them to market. Trading at 7x book value and 3x net asset value – using the company’s own valuations of its subsidiaries, which we believe are baselessly optimistic – Allied Minds enjoys tremendous benefit of the doubt on the part of…

Bavarian Nordic A/S (OMX: BAVA, OTC: BVNRY) is a $1.3B Danish vaccine-maker whose stock price has recently surged (up 63% YTD) thanks to excitement over its putative prostate-cancer treatment, Prostvac-VF, a therapeutic vaccine currently undergoing a Phase III clinical trial. Bavarian Nordic touts its earlier Phase II study of Prostvac as showing the “most pronounced survival to date in prostate cancer,” with an 8.5-month…

We are short shares of Globalstar, Inc. (GSAT). We believe its shares are worth zero.

Our slide presentation is available here and our report is available here.

Sahm Adrangi, Chief Investment Officer of Kerrisdale Capital, will make a live presentation on the company at the AXA Event & Production Center at 787 7th Ave. between 51st/52nd Streets (*please note venue location change*) in New York City today at 11:30am ET. Please arrive 15 minutes in advance to sign in.

A webcast of the presentation can also be accessed here.

We have also set up a website at www.factsaboutglobalstar.com with our report and slides.

Globalstar’s proposed Terrestrial Low Power Service (“TLPS”) will never be commercially viable and its spectrum is worthless under any other use case. The company is heavily indebted, with a more than 20x debt-to-ebitda ratio, and is likely to violate financial covenants in the near future.

Our slide presentation explaining our short thesis on Cardtronics, Inc. is available here and our 41-page report is available here.

We are short shares of Cardtronics (CATM), the largest non-bank owner and operator of ATMs, primarily in the US and UK. CATM’s core business is installing ATMs inside brick-and-mortar retailers like 7-Eleven and CVS, where high foot traffic generates withdrawals that in turn generate surcharge fees (paid by consumers) and interchange fees (paid by card-issuing banks). In addition, banks sometimes pay CATM to put their brands on its devices or to offer surcharge-free withdrawals to their customers…

Our slide presentation explaining our short thesis on BofI Holding, Inc. is available here and our 35-page full report is available here.

We are short shares of BofI Holding, Inc. (BOFI), a bank holding company that owns several online-only banking brands, including Bank of Internet USA and Bank X. At almost 3.5x tangible book value, BOFI is significantly overvalued, pricing in not only a long-term continuation of its rapid balance-sheet growth but also an extraordinarily strong net interest margin (NIM) and return on equity (ROE) in perpetuity. But BOFI’s margins have been inflated in recent years by well-timed purchases of distressed securities, aggressive expansion in long-duration lending, and a drastic shift toward short-term deposits…

We believe that shares of Unilife (UNIS) are more than 75% overvalued as investors have once again over-reacted to deal announcements heavy on lofty potentials but light on detail. In a sequence reminiscent of the 2003 and 2009 episodic pops in Unilife’s price, shares climbed by over 50% following the announcement of a new supply agreement with Hikma. The stock appreciated a further 17% on December 3^rd after Unilife reported a nebulous supply arrangement with Novartis. While the Novartis arrangement offers nothing in guaranteed revenue, the Hikma agreement promises $5m of upfront cash. Unilife is also eligible for a $15m payment in 2014, assuming certain milestones are met, and another $20m from Hikma in 2015. At a discount rate of 10%, the present value of these payments is just $35m. This is just one-sixth of the $210m market capitalization gain Unilife has realized in the days following the announcement…

We believe that shares of Sourcefire, Inc. (FIRE) are highly overvalued.

Our full report is available here.

Note that Sourcefire reports earnings on April 30th, and if it beats analyst estimates, the stock could rise. We’re short regardless.

Following a 55% rally since the start of 2012, FIRE shares now imply a 5.4x 2013E revenue multiple and a 204x 2013E GAAP P/E. With valuation multiples as rich as these, it might sound strange to hear that Sourcefire added only 452 new customers in 2012, the exact same amount they added in 2011. Yet FIRE’s revenue growth expanded from 27% to 35% in 2012, masking the slowing momentum in new customer adds. We can attribute this mismatch to the…

We believe that shares of EZchip Semiconductor Ltd. (EZCH) are highly overvalued.

Our full report is available here.

EZCH shares currently trade at $23.97, implying an egregious 7.5x 2013E EV/Revenue and a 32.5x GAAP P/E, surprising multiples for a business that has repeatedly demonstrated its inability to grow. As we frequently see in mispriced businesses, a high-level sector story – in this case the need for greater bandwidth on capacity constrained carrier networks – has steered investors into an overpriced stock with many idiosyncratic risks. We believe that investors are not properly assessing the competitive risks posed to EZchip’s business or the limits of the addressable market, especially in light of the EZCH’s astronomical valuation…

We believe that ServiceNow, Inc. (“NOW” or the “Company”) is highly overvalued. We are short the stock.

Our full report is available here.

The Company was taken public earlier this year at $18/share and has since ridden the cloud computing wave to a price of $30/share, implying an eye-popping 18.3x 2012E revenue multiple. Even if ServiceNow becomes the market leader and grows its share of the $1.5bn IT Help Desk market from the current 10%-15% to 30%, we believe the stock is still worth less than half of its current trading price…

We believe that ParkerVision, Inc. (PRKR) is highly overvalued. We are short the stock and stand to benefit in the event of a price decline.

Our 30-page report explaining our short thesis for PRKR is available here.

ParkerVision generates no revenue, dilutes shareholders at a breathtaking pace, and boasts one of the longest and most consistent track records of equity value destruction that we have ever come across. In his two-decade tenure as ParkerVision’s CEO, Jeffrey Parker has raised and squandered more shareholder capital than any Chinese reverse-merger CEO we can think of. As such, he deserves a place alongside Xiqun Yu, Zhiguo Fu, and Ron Chan, other ignominious targets of our firm’s detailed ‘short sale’ reports…

We believe that shares of Mellanox Technologies, Ltd. (MLNX) are highly overvalued, not only because it is a semiconductor company operating in a small and technologically fast-changing niche trading at an absurdly high valuation, but, equally as important, the Intel CPU chip upgrade cycle which fueled its past few quarters of atypical growth is about to plateau, and then sharply decline.

We are short and own put options on shares of MLNX.

Investors apparently misunderstand the cyclical nature of Mellanox’s 56 GB/s “FDR” Infiniband business and have mistakenly extrapolated the recent uptick in Q1/Q2 growth into a long-term trend. As the upgrade cycle for Intel’s…

We believe that ChinaCast Education Corp. (CAST) is misrepresenting itself in its SEC financial statements.

Our 40-page report explaining our short thesis for CAST is available here.

We have also written a letter to Deloitte LLP expressing our concerns. The letter is available here.

Kerrrisdale Capital and our clients are short and own options on the shares of ChinaCast. We stand to benefit in the event of a price decline in CAST shares, and will transact in the securities subsequent to this post. Please read our full disclaimer at the end of the report…