Hear New Investment Ideas From Two Of The Top Shortsellers This Friday
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ValueWalk will co-host the next Contrarian Conference on April 23 at 9 a.m. Eastern with The Contrarian Investor Podcast and Breakout Point. This time around, Grizzly Research and Bleecker Street Research will be making presentations.
This year, Grizzly has published short reports on Alpine 4 Holdings Inc (OTCMKTS:ALPP), National Beverage Corp. (NASDAQ:FIZZ) and DouYu International Holdings Ltd (NASDAQ:DOYU). The firm has had an excellent year so far and is one of the top short-sellers in terms of performance of the shorts it has reported on.
Grizzly describes Alpine 4 as a "failed holding company propelled by the wings of [a] defunct drone company." The company started as a special purpose acquisition company or SPAC. Its stock has skyrocketed on "glorious claims combined with a record-setting press release machine" that has churned out more than 35 releases in only three months.
Grizzly described Alpine's management as "highly questionable" and emphasized its promotional activities aimed at driving its stock price in what the firm says is a "proverbial pump campaign" through the acquisition of Aerospace Corp in November.
The firm added that Aerospace doesn't even have a production facility, even though one was advertised in the acquisition. Grizzly described the business as "virtually non-existent with no verifiable tangible assets.'
Grizzly called attention to the campaign targeting short-sellers in February, which lifted GameStop Corp. (NYSE:GME) and other stocks, including National Beverage. The firm believes that rally made National Beverage an attractive short opportunity.
Grizzly heard rumors that brokers were circulating positive notes about the company to hedge funds, and it believes many of the recent buyers don't really understand what they bought. The firm believes that the problems at National Beverage started with "horrific corporate governance."
Chairman and CEO Nick Caporella has been on the board for 36 years, and his son Joseph has been on it for 24 years. Additionally, no one new has joined the board in more than a decade, and all board members are over the age of 60.
Grizzly accused National Beverage of "misleading marketing, alleged dealings with undisclosed related parties and undisclosed insider enrichment." The firm also pointed to allegations of sexual harassment made against the company's 82-year-old chairman. However, Bloomberg reported that the allegations were later retracted by the people who made the claims, saying that they were "factually unsupportable."
Grizzly also said National Beverage has a "history of alleged financial manipulation." Meanwhile, its core business is under pressure, as sales of flatlined and competition has increased.
DouYu International Holdings
Grizzly believes DouYu has been involved with illegal online gambling on its platform. In fact, the firm's research suggests that not only is the company hosting those illegal activities, but it is also encouraging users to gamble on their platform to boost revenue. Grizzly also noted that another online streaming platform in China recently released terrible financial results due to "structural reform," and it expects the same to happen to DouYu.
The firm also pointed out that the company chose not to give revenue guidance for the fourth quarter for the first time since it went public. Grizzly believes it was due to a weak quarter after the crackdown on many of its streamers due to illegal online gambling. The firm also found evidence of suspected pornography and order brushing, which face more stringent regulations in China, on DouYu's platform.
Bleecker Street Research
Breakout Point says Bleecker Street Research is making a comeback, as it hasn't been active in a while. The firm has an impeccable track record, although its most recent short reports were in 2015 and 2016.
The firm targeted Asensus Surgical Inc (NYSEAMERICAN:ASXC), DS Healthcare Group, Inc. (OTCMKTS:DSKX), Sonnet Biotherapeutics Holdings Inc (HOTR), AAC Holdings (NYSE:AAC) and Innovation Pharmaceuticals Inc (OTCMKTS:IPIX).
Chris Dose founded Bleecker Street while he is still in college. While at Furman University, he wrote a report on American Addiction Centers, which caused its stock to plunge by as much as 50%. The company filed for bankruptcy last year.
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Updated to add that the allegations of sexual harassment against National Beverage's chairman were later retracted.