As the founder, owner, and chief investment officer of Kerrisdale Capital Management Sahm Adrangi directs how this firm’s hedge fund money is allocated. He generally focuses on long-term value investments but when he sees an opportunity to make money from a special situation he takes action. How this generally works is if he and his analysts see a company whose stock is very overvalued in their opinion he will short this company’s stock, meaning his hedge fund will make money if that stock tanks. He then releases a report about the company and what is wrong with it followed up by a telephone conference call where he explains in more detail what the team at Kerrisdale Capital Management has uncovered.
One of the special opportunities arose in February 2018 when Eastman Kodak Company (NYSE: KODK) made a big splashy announcement that they were entering the world of cryptocurrencies. They unveiled KODAKOne which is their new platform for buying and selling photographs. The way to buy photos from this platform is to use Eastman Kodak’s new cryptocurrency called KODAKCoin. In exchange, the person who sold the photograph is paid in KODAKCoin.
Sahm Adrangi said this entire plan is doomed to failure and investors in this company will never earn and dividends from it. He pointed out that Eastman Kodak has been on shaky ground for years and has far too much debt, perhaps too much to keep servicing which puts them at risk of default. He said this is a poorly run company where the fundamentals are poor and their leaping onto the cryptocurrency bandwagon is just a smoke and mirrors game to hide this fact. Sahm Adrangi also questioned why anyone would want to be paid in KODAKCoin which has nothing backing its value and its value can change dramatically very quickly, like all cryptocurrencies do.
Having been in the investing business for 14 years Sahm Adrangi has experienced the highs and lows of the financial industry. He earned an economics degree in 2003 from Yale University and was soon working for Deutsche Bank. He started Kerrisdale in 2009 and has earned a reputation as a savvy investor.