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The Art Of Short-Selling – Notes From The Conference

Below are some notes from The Art Of Short-selling conference which took place on May 3rd 2018.  There were a total of 22? speakers who each pitched a short idea. We have pretty good notes (6147 words right now before a few redactions), but will have more extensive notes soon. Additionally, our full note presentation now and upcoming will only be for Premium Subscribers. Finally, some speakers were off the record we will not be posting notes of that anywhere. See below for more right now.

Also check out our notes from Sohn 2018 NY and the Graham Ivey Conference both from a few weeks ago.

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  • Ad Fraud, Sahm
  • Ad Fraud Opportunities
  • Social good with activism
  • What is ad fraud
  • Fraudulently representing online advertisement (bad traffic like computers and bots)
  • Not actual buyers
  • More fraud, less likely people will pay for online ads
  • Why is ad fraud so pervasive?
  • The intermediaries benefit, the exchanges
  • They become slow to detect because no incentive for them to improve, they also benefit from the fraud
  • Click fraud, fake sites, ad stacking (types)
  • Selling fake impressions
  • The ultimate loser is buyer of ads
  • Very difficult to detect if it is seen buy bots or actual humans (preferably the right audience, quality impressions)
  • Why is this an opportunity?
  • Many bad actors who are sophisticated to fraud
  • Longs don’t recognize this opportunity
  • QuinStreet
  • Hard to tell where the revenue comes from? What is their business?
  • Finding exactly where revenue comes from
  • Insurance branch
  • Why is insurance branch receiving so much traffic?
  • Not much presence on google, you have to really search for it, foreign posts say go there for swagbucks gaming the system
  • Phony trafficking because not actual buyers of insurance
  • Not in disclosures
  • Where does the referral traffic come from?
  • Is the traffic from actual buyers rather than from swagbucks kind of people?
  • Criteo published by gotham city research
  • Less than 5% of users responsible for 25% clicks
  • Attractive space
  • Disclosures are scant on revenue and where the revenue comes from each business line

Social distortion Enrique abeyta

  • The wave of digitally enabled sruptors that will humble industry giants
  • BUD short
  • We are not that deep compared to operators as investors
  • 200 bill market cap
  • adtv 220 million
  • 20x p/e
  • ev/ebitda 13x 2018
  • net debt/ebitda 4.2x 2018
  • div 4%+
  • No squeeze on bud
  • Extremely liquid stock
  • Bought by 3G in 2008
  • Stable low growth business, acquire with leverage, cut costs aggressive to generate high equity returns
  • Was done in newspapers
  • Reality was not that it was a stable low growth industry
  • Digitally enabled economy
  • Contract brewing
  • Have another brew their beer
  • Minimal costs to start your own beer, fundamentally lower barriers of entry
  • Same with video
  • White label manufacturing
  • Google, facebook, amazon figured out distribution for the small players
  • White label combined with the new digital media allows anyone to make it
  • Amazon allows outsource fulfillment, allow us to direct create and make minimal investments on the typical high costs aspects of the business
  • Unique view of digital world
  • Amazon allows physical distribution with whole foods
  • We are in a new technology environment
  • Growth of Craft brewing look at association for more info
  • 20% operating profit in north America
  • Can launch a beer in 50 k investment
  • Happening in media, products, media and more than beer
  • Minute as a consumer is very different to the money spent by advertisers
  • Negative eps revisions, stable ebitda revisions, stock price
  • There is a disruptive force that not many people recognize
  • High margin of safety from short perspective
  • Fundamental reset in earnings power
  • Rich greenfield

Chris brown Aristides capital

  • Fermilab vs magic kingdom
  • Fermilab or Disney world
  • How much would you pay for this business
  • Energous corporation a worthless equity hyped to 500 million
  • Traded 5x float in two days
  • Low institutional
  • CEo lies often
  • Partners who provide validation, apple
  • Stock promotion – mdb capital group, warrants
  • Fakenews false and unsketpical media coverage
  • Why did apple partner with them
  • Big tech companies like almost free call options
  • Energous cant compete with apple competitors
  • Locked up for years
  • Energous promised rf-based wireless charging at distance
  • Novel approach
  • 1.5 watts at 30ft, very difficult to do
  • 10k as much power to get 3 meters
  • Large directional antennas can overcome this limitation (26m transmitting atenna, 17 sq meters receiving) that is where it is possible
  • Energous is not using antennas
  • What is their secret sauce
  • Pocket forming
  • Made up the term
  • Constructive interference pocket forming
  • 1+1 = 2, wave a + wave b = wave c cant be done, but that is what they are advertising
  • Cant cranked up the power because living things will die
  • FCC approval and false hype and misunderstood
  • CEO very rosy
  • How much power did it actually generate
  • How much energy did the energous product deliver in FCC tests?
  • The MS 300 did not establish charging signal at any angle when r =95cm
  • 480 mW – 9”
  • How long would it take your product to charge
  • If 9” it would take 1 day
  • This prototype to get FCC approval the can add power right
  • 50 cm it would not work if you are near
  • Failed FCC safety standards and not been approved
  • Focused pockets are a lie
  • Massive energy sent where the device is not is
  • Microwaves everywhere and tiny amount towards your device
  • Insider sales up
  • No viable commercial niche and never will
  • Powercast is a clone to this company
  • But at least energous has perfected invisibility
  • Products never existed, 5 consumer and 1 medical never came to be
  • The pocket rf energy is constructive interference
  • Safety limitations, poor efficiency, high costs
  • Fraud and burning a bunch of cash
  • Sell long dated calls to play it

Vitalogy capital partners

  • Sourcing and originating alpha shorts from the corporate action universe
  • Jonathan Tunick
  • Corporate dislocations, white hat activism, alpha shorts
  • We see a robust alpha short not to be confused with a bearish macro pitch
  • Why this opportunity
  • Dynamic corporate action universe

Continues on ValueWalk PRemium