Marc Cohodes Badger Daylighting Short Thesis

Marc Cohodes the shrewd Canadian short seller and chicken farmer who called the collapse of Valeant, Concordia and Home Capital Group among others has a new report out on another Canadian company in sight –  Badger Daylighting – news that he was short Badger Daylighting sent the company down around 25% in Friday’s trading session. He has just released slides on his short thesis which can be found below.

First some text on Badger Daylighting followed by full PDF

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Check Out The Management, Directors & Auditor Departures!
q May 2014 : CFO Greg Kelly departs after 15 years at Badger despite not having another job
q June 2014: Accounting Manager, Lynn Quiding, is fired a month after her boss is no longer with company
q November 2014: Chairman George Watson departs
q March 2015: Director (and Audit Committee Member) Richard Couillard chooses not to stand for re-election
q April 2015: Ernst & Young steps down as Badger’s Auditor
q June 2015: VP of Ops (#3 Exec in Co) Derek Dillon leaves. The same month, a jury enters a US$13.7mn verdict in favor of a former
franchisee in Oklahoma.
q March 2016: CEO Tor Wilson announces plan to retire after 13 years at company (last day is August 2016) due to health reasons yet
maintains aggressive workouts?
q March 2016: Midwest Director of Operations Dan Hutchison, who helped operate and build Badger’s U.S. finance and operations, is
demoted and eventually leaves the company in November 2016 to join Remax.
q June 2016: Credit & Collection Manager James Mink, a former colleague of Dan Hutchison responsible for over $40mn A/R portfolio
at Badger, leaves to become an assistant at a golf pro shop in Florida.

Voss Capital is betting on a housing market boom

Housing MarketThe Voss Value Fund was up 4.09% net for the second quarter, while the Voss Value Offshore Fund was up 3.93%. The Russell 2000 returned 25.42%, the Russell 2000 Value returned 18.24%, and the S&P 500 gained 20.54%. In July, the funds did much better with a return of 15.25% for the Voss Value Fund Read More

Paul Vanderberg, CEO, Motto: I know nothing about Hydrovac
• Paul Vanderberg, CEO of Badger since July 2016 – here is what he had to say on his first conference call:
• 2Q:16 Earnings Call - Paul Vanderberg, Chief Executive Officer…”I've been in the construction business for 35 years and very
involved in commercial construction activity, not as much on the infrastructure side, but a lot of things are related. And I know very
little about hydrovac”.
• Paul Vanderberg was employed as Director of Operations from January 18, 2016 to June 20, 2016 at Gypsum Gator, a subsidiary of
GMS Inc.. We weren’t familiar with his bio included in release so reached out to his former company, Gypsum Gator, for background
checks and got the following responses:
• From GMS (Parent of Gypsum Gator) Investor Relations: “We had a discussion with the GMS and the local team today. This is
a complete non-event. (He) joined a local subsidiary of GMS earlier this year in a training capacity with no direct reports. He
was far removed from GMS corporate, reporting to the local Vice President.”
• The Badger press release doesn’t include dates to show the ~6 mos. stint at Gator Gypsum and has the wrong title. In addition, it shows
he was President of Winroc SPI from 2000 to 2014, but not providing dates avoids showing there is a gap from November 2014 to
January 2016 in his CV (the time he left Winroc SPI “to pursue other interests” until he started to train to be a VP of operations for
Florida subsidiary of GMS).

Schielfbein, CFO, Motto: Don’t mind my background
• Jerry Schiefelbein, CFO of Badger since June 2014
• Appointed CFO of Ivanhoe Energy Nov 13, 2009
• Resigned May 16, 2014
• On February 20th 2015, Ivanhoe Energy filed a Notice of Intention to make a proposal under the Bankruptcy and Insolvency Act Canada
• Not an accountant. Not a CPA.

Badger Daylighting  Full PDF below