Investments

Our slide presentation explaining our short thesis on Cardtronics, Inc. is available here and our 41-page report is available here.

We are short shares of Cardtronics (CATM), the largest non-bank owner and operator of ATMs, primarily in the US and UK. CATM’s core business is installing ATMs inside brick-and-mortar retailers like 7-Eleven and CVS, where high foot traffic generates withdrawals that in turn generate surcharge fees (paid by consumers) and interchange fees (paid by card-issuing banks). In addition, banks sometimes pay CATM to put their brands on its devices or to offer surcharge-free withdrawals to their customers…

Our slide presentation explaining our short thesis on BofI Holding, Inc. is available here and our 35-page full report is available here.

We are short shares of BofI Holding, Inc. (BOFI), a bank holding company that owns several online-only banking brands, including Bank of Internet USA and Bank X. At almost 3.5x tangible book value, BOFI is significantly overvalued, pricing in not only a long-term continuation of its rapid balance-sheet growth but also an extraordinarily strong net interest margin (NIM) and return on equity (ROE) in perpetuity. But BOFI’s margins have been inflated in recent years by well-timed purchases of distressed securities, aggressive expansion in long-duration lending, and a drastic shift toward short-term deposits…

Our 42-page report explaining our long thesis for JGWPT Holdings (JGW) is available here.

We are long shares of JGWPT Holdings (NYSE:JGW), which, via its J.G. Wentworth and Peachtree brands, is the number-one player in an attractive consumer-finance market niche. JGW provides liquidity to personal-injury plaintiffs, lottery winners, and others who are entitled to long-term payment streams but have near-term financial needs. Despite its 60-70% market share, attractive organic growth rate, and ability to compound capital through acquisitions and platform expansion, JGW trades at a consensus P/E ratio of 7x, an EV/EBITDA multiple of 8x, and at nearly half of our estimate of intrinsic value…

We believe that shares of Unilife (UNIS) are more than 75% overvalued as investors have once again over-reacted to deal announcements heavy on lofty potentials but light on detail. In a sequence reminiscent of the 2003 and 2009 episodic pops in Unilife’s price, shares climbed by over 50% following the announcement of a new supply agreement with Hikma. The stock appreciated a further 17% on December 3^rd after Unilife reported a nebulous supply arrangement with Novartis. While the Novartis arrangement offers nothing in guaranteed revenue, the Hikma agreement promises $5m of upfront cash. Unilife is also eligible for a $15m payment in 2014, assuming certain milestones are met, and another $20m from Hikma in 2015. At a discount rate of 10%, the present value of these payments is just $35m. This is just one-sixth of the $210m market capitalization gain Unilife has realized in the days following the announcement…

Our 35-page report explaining our long thesis for Lindsay Corp. (LNN) is available here.

We are long shares of Lindsay Corporation (NYSE:LNN), a global irrigation business headquartered in Omaha, Nebraska. Lindsay owns a world-renowned brand name (Zimmatic), sells into an under-penetrated market and benefits from the secular trends of increasing global food scarcity and rising protein consumption. Given this long-term growth opportunity, a robust capital efficiency profile (ROIC of 25%+), and the stock trading at 13.7x net-cash P/E on trough FY 2014E earnings, we believe shares trade at a 50% discount to our conservative estimate of intrinsic value…

Our 19-page report explaining our long thesis for Prime Office REIT-AG (PMO.DE) is available here.

Summary 
Prime Office REIT-AG (PMO.DE or “Prime”) is an undervalued German REIT with several near-term catalysts that could unlock its true intrinsic value. With a current share price of just €2.98, Prime Office trades at a high 55.1% discount to book value (“NAV” or “net asset value”) and a 22.4% discount to gross asset value (“GAV”), more than double that of comparable German commercial real estate companies. Prime Office is a busted IPO from June 2011 that owns twelve multi-story office properties in Tier-1 German cities including Munich, Stuttgart, and Frankfurt. These hard-to-replicate, well-equipped buildings house high credit quality tenants like Medtronic, Daimler-Benz, and Deutsche Telekom…

We believe that shares of Sourcefire, Inc. (FIRE) are highly overvalued.

Our full report is available here.

Note that Sourcefire reports earnings on April 30th, and if it beats analyst estimates, the stock could rise. We’re short regardless.

Following a 55% rally since the start of 2012, FIRE shares now imply a 5.4x 2013E revenue multiple and a 204x 2013E GAAP P/E. With valuation multiples as rich as these, it might sound strange to hear that Sourcefire added only 452 new customers in 2012, the exact same amount they added in 2011. Yet FIRE’s revenue growth expanded from 27% to 35% in 2012, masking the slowing momentum in new customer adds. We can attribute this mismatch to the…

We believe that shares of EZchip Semiconductor Ltd. (EZCH) are highly overvalued.

Our full report is available here.

EZCH shares currently trade at $23.97, implying an egregious 7.5x 2013E EV/Revenue and a 32.5x GAAP P/E, surprising multiples for a business that has repeatedly demonstrated its inability to grow. As we frequently see in mispriced businesses, a high-level sector story – in this case the need for greater bandwidth on capacity constrained carrier networks – has steered investors into an overpriced stock with many idiosyncratic risks. We believe that investors are not properly assessing the competitive risks posed to EZchip’s business or the limits of the addressable market, especially in light of the EZCH’s astronomical valuation…

We believe that AMERCO (“UHAL” or the “Company”) is highly undervalued. We are long the stock.

Our 30-page report explaining our long thesis for UHAL is available here.

AMERCO is an underfollowed holding company that owns one of America’s most ubiquitous businesses: U-Haul, the nation’s dominant do-it-yourself (“DIY”) moving company. For over 60 years, numerous well-financed competitors have tried, and failed, to encroach on U-Haul’s ever-growing lead in the DIY moving equipment rental market. Today, U-Haul controls its market niche, with more than 8x as many hubs as its nearest competitor, and is growing revenue and profit at a steady clip while gaining market share…

We believe that ServiceNow, Inc. (“NOW” or the “Company”) is highly overvalued. We are short the stock.

Our full report is available here.

The Company was taken public earlier this year at $18/share and has since ridden the cloud computing wave to a price of $30/share, implying an eye-popping 18.3x 2012E revenue multiple. Even if ServiceNow becomes the market leader and grows its share of the $1.5bn IT Help Desk market from the current 10%-15% to 30%, we believe the stock is still worth less than half of its current trading price…

We believe that ParkerVision, Inc. (PRKR) is highly overvalued. We are short the stock and stand to benefit in the event of a price decline.

Our 30-page report explaining our short thesis for PRKR is available here.

ParkerVision generates no revenue, dilutes shareholders at a breathtaking pace, and boasts one of the longest and most consistent track records of equity value destruction that we have ever come across. In his two-decade tenure as ParkerVision’s CEO, Jeffrey Parker has raised and squandered more shareholder capital than any Chinese reverse-merger CEO we can think of. As such, he deserves a place alongside Xiqun Yu, Zhiguo Fu, and Ron Chan, other ignominious targets of our firm’s detailed ‘short sale’ reports…

We believe that shares of Mellanox Technologies, Ltd. (MLNX) are highly overvalued, not only because it is a semiconductor company operating in a small and technologically fast-changing niche trading at an absurdly high valuation, but, equally as important, the Intel CPU chip upgrade cycle which fueled its past few quarters of atypical growth is about to plateau, and then sharply decline.

We are short and own put options on shares of MLNX.

Investors apparently misunderstand the cyclical nature of Mellanox’s 56 GB/s “FDR” Infiniband business and have mistakenly extrapolated the recent uptick in Q1/Q2 growth into a long-term trend. As the upgrade cycle for Intel’s…