Commentary

We wrote a letter with Steamboat Capital to the CEO and board of directors of ACM Research…

We remain long MTU Aero Engines (MTX GR) with no change to our fair value estimate of €545, implying 80% upside. Since the publication of our original report, we have encountered…

ACM Research (“ACMR”) released an 8K on Friday with very promising implications for shareholders. The company’s shares trade at a dramatic discount to the shares of its Chineselisted subsidiary (“ACMS”) which trades on the Shanghai STAR exchange, and market participants have long discussed ways in which this discount could narrow. Our view is…

We remain long Telephone and Data Systems (TDS). Since publishing our initial report, The New TDS, on January 7^th, shares have outperformed and recent earnings along with the 2026 outlook have reinforced our core thesis around improving fiber execution, stabilizing performance in the tower segment, and substantial special dividends to support…

We remain long shares of ACM Research (Nasdaq:ACMR), one of China’s leading suppliers of semiconductor wafer fabrication equipment (WFE). A technology innovator, ACMR is capitalizing on China’s massive effort to create a globally dominant semiconductor industry built on domestically produced WFE. Already China’s national champion in cleaning tools, ACMR is executing on its vision to become a premier WFE platform company…

We released two letters today regarding Riot Platforms. Our letter to Navarro County commissioners can be found here: kerr.co/riot-navarro Our letter to Texas state senators can be found here: kerr.co/texas-senators We highlight further reasons why Navarro county commissioners shouldn’t provide any special treatment to Riot and why it’s time to rethink energy grid incentives provided […]

We remain short shares of Carvana (CVNA), a poorly capitalized, growth challenged, auto retailer now valued at an absurd $19 billion (42x EV/2024E EBITDA) following last Friday’s 30%+ pop in share price. Prior to this move Carvana’s valuation was already stretched – now, its share price is so ridiculous that it doesn’t just trade at […]

We sent a letter today to C3.ai’s signing audit partner and the head of the U.S. audit & assurance practice at Deloitte & Touche LLP regarding serious accounting and disclosure issues we have identified in C3.ai’s SEC public financial statements. Our letter can be found here.

C3’s fiscal year ends on April 30, and we have asked Deloitte to review our letter in anticipation of its upcoming work conducting the company’s year-end audit. In the letter, we discuss:

• The highly conspicuous growth in unbilled receivables to levels we’ve never before seen in software companies
• Opaque, confusing and highly concerning disclosures and financials related to the company’s related party and very large customer, Baker Hughes
• Efforts to inflate gross profit margins by reclassifying costs of revenue as research and development expenses
• Classification of significant revenue as subscription revenue that in actuality is services- or consulting-oriented revenue
• Significant turnover in chief financial officers, and the appointment of successively less qualified CFOs over time

We hope that our letter will bring to light various highly misleading accounting methodologies that we believe the company utilizes in order to inflate revenue and certain profit metrics, and to conceal deterioration in its underlying business.

In the 18 months since our original report on Korn Ferry, available at kerr.co/kfy, we’ve gained further conviction that the company’s combination of strong revenue growth, attractive incremental margins, and higher subscription revenue mix will continue to drive estimates and multiples higher.

Korn Ferry is the dominant executive search firm and is successfully transforming into a digital-first global consulting organization with a leading technology platform. The company brings an increasingly diversified revenue mix that’s lowered cyclicality in the business, and a scale advantage that is not reflected in its current valuation when comparing KFY to its sub-scale private competitors or firms competing down-market. The company’s recent proxy suggests management wants us to comp the business to commercial real-estate companies like Jones Lang Lasalle Inc. and asset-light dominant franchises like Nielson Holdings plc, and we agree. Korn Ferry’s business model shares many similarities to the commercial real-estate market, including share gains in a fragmented market providing consolidation opportunities, with a growing demand for outsourcing of services benefiting large established incumbents with diversified business segments like KFY. We think shares re-rate from current 8.5x EV/EBITDA multiple to 12 -14x, driving upside for the stock to the $100 – 110 range.

Read our full update here.

In our original report on Principia Biopharma, we emphasized that BTK inhibitors have failed over and over in autoimmune diseases, which we attribute to a basic problem with their mechanism of action: their main effect is to impair the production of new B-cell lineages, leaving the previously established B-cell populations that cause autoimmunity largely unscathed. Alas, Sanofi – the French pharma firm that licensed Principia’s BTK inhibitor SAR442168 for use in multiple sclerosis – doesn’t seem to have gotten the memo. During Sanofi’s recent earnings call, its global head of R&D rattled off what he views as the drug’s key virtues, all the while perpetuating several myths and misconceptions. Here we respond point to point to Sanofi’s paean to SAR442168, explaining why we remain unimpressed.

Read our full update here.

We are short shares of Principia Biopharma. Last week, Sanofi, the large pharma company that has licensed Principia’s BTK inhibitor SAR442168 for use in multiple sclerosis, announced that the drug met the primary endpoint of its Phase 2 trial. In our original report…

Since our last article on Intelsat, newsflow has continued to trend positively and point to major positive catalysts over the course of 2018, yet Intelsat shares have tumbled from the mid $20s to the mid teens. In this article, we provide updates to our thesis and timeline; for background, please also see our original report and 2018 update…