Whtiney Tilson’s email on Jefferies finally downgrading Unilife from buy to hold. Excerpted from an email Tilson sent to investors.

Also see Tilson upset with Jefferies over UNIS rating

Unilife UNIS Whitney Tilson

I really need to write a follow-up article here – this is so disgusting. As I wrote in an article on May 20th (below), Jefferies has been shamelessly pumping Unilife, which is one of my half dozen remaining shorts because it’s an obvious promotion and likely total fraud. The reason? UNIS burns cash like crazy, so to raise the cash it needs to avoid bankruptcy, it hires – I hope you’re sitting down – Jefferies! (SURPRISE!)

Thus, the Jefferies “analyst” (I use that term generously) kept pumping the stock and had an $8 price target on it, despite trading recently well below $2.

So get this: just a few days ago, on July 30th, UNIS announced a financing deal that will likely raise enough cash to keep the company afloat for at least another year (though I expect the stock to continue spiraling downward because it’s highly dilutive).

And guess who was NOT in on the financing deal? Jefferies!

So guess what the Jefferies analyst did today? (Again, I hope you’re sitting down.)

He FINALLY downgraded the stock – and took his price target from $8 to $1.50 (see attached).

Folks, ya can’t make this stuff up.

It’s so unbelievably corrupt…yet so ordinary and routine…


How Wall Street Enables Stock Promotions: A Case Study Of Jefferies And Unilife

Whitney Tilson

May 20, 2015 7:22 PM ET

Disclosure: The author is short UNIS. (More…)



  • Unilife, which I believe is a pure promotion and likely a total fraud, continues to miss guidance and expectations.
  • The analysts at Jefferies, however, continue to rate the stock a “Buy” and urge investors to have “continued patience.”
  • This isn’t surprising, as the analysts are deeply conflicted due to Unilife’s ongoing need to raise capital.
  • I believe these conflicts are widespread on Wall Street and lead even reputable firms like Jefferies to sully themselves.

It’s well known to experienced observers that much of the research published by Wall Street firms is corrupted by their desire to do banking business for the companies their analysts are rating. If a particular firm’s analysts write negative research reports on a company and slap a “Hold” (or, heaven forbid, “Sell”) rating on its stock, then the company is likely retaliate by looking elsewhere the next time it hires an investment bank to, say, lead a debt or equity offering. Thus, it’s little wonder that analysts generally pump stocks and rarely issue sell ratings.

In fairness, after the crackdowns by Eliot Spitzer and again after the Great Recession, I suppose that Wall Street research has become slightly less corrupt than it used to be (or at least analysts are more careful in what they put in emails!). But the conflicts of interest haven’t gone away so investors would be well advised to view analyst reports with a great deal of skepticism, especially in the seedy underbelly of the market where the diciest, most fraudulent and promotional companies are.

Sadly, in many cases, the analysts of reputable firms ignore countless warning flags and promote companies like this for a simple reason: greed. The worst companies are, by definition, almost always losing a lot of money and thus need to regularly issue debt and equity, making them lucrative banking clients.

A case in point is the pumping by the analysts at Jefferies of a stock I’m short, Unilife (NASDAQ:UNIS), which I think is an obvious promotion and likely a total fraud. It’s so egregious that I did something last October that I’ve never done before: I wrote to the analysts, calling them out, and sent a copy to the CEO of Jefferies, Richard Handler.

Three quarters have now elapsed since then (the company just reported earnings a week ago Monday) and everything I predicted has come true, as the company burns through cash at an incredible rate and spirals toward what I believe is inevitable bankruptcy – yet the Jefferies analysts are still pumping the stock, maintaining a Buy rating and continuing to preach the mantra of “continued patience” to investors. (Click here to read their report from last October and here for last week’s update.)

I’m sharing the emails I sent to Jefferies last October plus one on Tuesday because I’m disgusted with this kind of behavior (which is by no means limited to Jefferies) and I think shining a light on it might do some good.

Background on Unilife

Unilife describes itself this way:

Unilife Corporation is a U.S.-based developer and commercial supplier of injectable drug delivery systems. Unilife’s broad portfolio of proprietary technologies includes prefilled syringes with automatic needle retraction, drug reconstitution delivery systems, auto-injectors, wearable injectors, ocular delivery systems and novel systems. Each of these innovative and highly differentiated platforms can be customized to address specific customer, drug and patient requirements. Unilife’s global headquarters and state-of-the-art manufacturing facilities are located in York, PA.

While this sounds great, and there’s a thin veneer of legitimacy in the form of numerous deals with brand-name firms, they never seem to amount to anything, as the company hasn’t had a single dollar of product sales in years, despite endless promises.

In my view, Unilife is a pure promotion and likely a total fraud. I don’t have space here to make the full argument for why I believe this, so here are links to various articles that lay it out quite well:

Emails to Jefferies Analysts Last October

After Unilife reported yet another quarter of dismal results and endless hype last October, the Jefferies analysts, Raj Denhoy, Anthony Petrone and Imron Zafar, reiterated their “Buy” rating, which led me to send this email to them on October 9th:

Subject line: UNIS a buy — really???

Dear Raj, Anthony and Imron,

I normally don’t waste my time writing to analysts, but your report this morning on Unilife really takes the cake.

Let me get this straight… the company just reported the following:

*$8.4 million in unrestricted cash

*$55.4 million in debt

*Not a single dollar in product sales (that’s right, when costs of goods sold is zero, that means they didn’t sell a single syringe (and it’s not just last quarter – this has been true for the entire trailing 12 months)

*Net debt skyrocketed from $18 million to $47 million in three months

*By your own projections, they will continue to burn $12-15M/quarter for the foreseeable future (I promise it will be a lot higher)

It is blindingly obvious that this company is teetering on bankruptcy and, barring a miracle, the equity will soon be worthless.

Yet you have a BUY rating on the stock,

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