Rhetorical Theory

Short Sellers

Gotham City Research, Iceberg Research, Citron Research, Copperfield Research, Glaucus Research and Muddy Waters Research

2) Trustworthiness, Veracity, Reliability

Gotham City vs. Ebix Inc (EBIX) (February 21, 2013, Report #1): "We consulted with professionals from the disciplines of forensic accounting, law, transfer pricing, background investigations, finance and software."

Gotham City vs. Criteo (CRTO) (September 15, 2017, Report #1): "MMI [Method Media Intelligence] made some very serious & specific claims about Criteo, including: 1. Criteo operates with no transparency as to where clicks they charge clients are generated 2. Criteo charged a client at least 61% more than what was truly reported 3. Criteo reports 42% higher clicks than MMI’s tracking code that is on the same page as theirs 4. Criteo claims attribution credit to their ads for transactions that were falsely triggered by a bot. 5. Criteo displays ads on websites that do not fit a PG13 or ‘Disney Safe’ standard as they claim."

Gotham City vs. Criteo (CRTO) (September 21, 2017, Report #2): "MMI [Method Media Intelligence] is not alone in exposing Criteo: Harvard Business School Professor and ad fraud specialist, Ben Edelman, has been warning about Criteo since 2015".

Gotham City vs. MDC Partners (MDCA) (April 29, 2016, Report #1): "MDCA’s former auditor KPMG expressed ‘an adverse opinion on the effective operation of, internal control over financial reporting’. MDCA soon after hired BDO."

Muddy Waters vs. Orient Paper (ONP) (June 28, 2010) (report #1): "We initially approached ONP as a possible Strong Buy. However, certain red flags quickly emerged that made us suspect that there was some level of graft occurring at ONP. We accept that even many 'well managed' companies in the China context often have some level of internal corruption, so we were willing to accept a thesis that there is a strong underlying business with some investor money being skimmed. Once we commenced our in depth review of SEC filings though, [...] we saw strong indications that the company was largely a fraud."

3) Intentions, Intention Toward the Receiver, Benevolence

Muddy Waters vs. NQ Mobile (NQ) (June 4, 2014) (report #8): "Muddy Waters offered to pay for well-regarded investigative accounting firm Plante & Moran PLC to write an evaluation report of the investigation, which we would publish. The committee declined the offer".

Gotham City vs. Let’s Gowex (GOW) (July 1, 2014, Report #1): "Were Gotham City or someone else not have come along, the Gowex charade could have continued for few more years, costing investors several more billions of dollars."

Muddy Waters vs. Olam (SGX: O32) (November 27, 2012) (report #2): "We always feel sympathy for investors who have misplaced their trust in unworthy managements. This is certainly the case of our feeling toward Olam’s investors."

Citron vs. Valeant Pharmaceuticals (VRX) (September 28, 2015, Report #1): "This article is not for you hedge fund managers who believe that this quarter’s performance is more important than human decency or long-term viability; this article is for the millions of Americans who together can be strong enough to mandate change. Wall Street will understand in time."

Muddy Waters vs. NQ Mobile (NQ) (December 19, 2013) (report #6): "The history of independent committee investigations into allegations of fraud against China issuers is a shameful one, and has cost investors billions of dollars in losses".

Copperfield vs. MagicJack (CALL) (August 1, 2013, Report #1): "This brazen stock manipulation has been exacerbated by a series of ploys to attract and pump retail investors."

Copperfield vs. Avid Technology (AVID) (June 14, 2015, Report #1): "Wall Street loves turnaround stories. Unfortunately, for every seemingly broken business that miraculously recovers, there are many more failed turnarounds that result in significant investor losses."

4) Activeness, Dynamism

Citron vs. Transdigm (TDG) (January 20, 2017, Report #1): "President Trump, Have a Look at This! […] NOTE: Boeing and Lockheed gross margins are 13.6 % and 10.91% respectively. TransDigm boasts gross margins of 54.5% selling airplane parts to our government."

2) Feeling of Doubts, Concerns, Antipathy, Disgust, Anger, Judgement Of Immorality Against Target Firms

Glaucus vs. China Metal Recycling (CMED) (January 28, 2013) (Report #1): "Madoffian Return on Capital. The consistency of CMR’s return on capital through the 2008 financial crisis bears more resemblance to Bernie Madoff's fabricated returns than the returns generated by a highly cyclical scrap metal business during a commodities crash".

Gotham City vs. Endurance International Group (EIGI) (April 28, 2015, Report #1): “Endurance Does not Deny Hosting Terrorist Websites. [...] Endurance has had terrorism-related problem going back to 2008. It hosted a website that taught its members how to outfit a suicide bomber, included Al-Qaeda propaganda videos, and offered Taliban video showing the beheading of three spies."

Copperfield vs. Chegg (CHGG) (November 14, 2016, Report #1): "Why of course you announce a business model pivot on the back of nebulous non-GAAP metrics, concoct a story about a low-cost customer acquisition channel that ignores intense competition from Amazon.com and other economic realities, alter past financial metrics lower to overstate current period growth, create ebullient out-year financial targets only to surreptitiously adjust the target date and growth rates when results are below plan, reclassify your proforma revenue definition multiple [the enumeration then keeps on running for 129 words]. And that runon-sentence is just the beginning…"

Copperfield vs. Carvana (CVNA) (August 18, 2017, Report #1): "We will defer our analysis of Carvana’s circumspect business model and inferior competitive dynamics – including its structural sourcing disadvantage, asinine assumptions that underpin its financial targets, related-party relationships, inexplicable tax receivable agreement calculation that redirects $900 million from unaffiliated shareholders to insiders, extraordinary cash burn …), self-dealing (…), and several other shenanigans – to a later date."

Muddy Waters vs. American Tower Corporation (AMT) (July 17, 2013): “The appraiser on a purportedly US$585.4 million transaction is located in the house to the left, next to the wall with the bullet holes. This neighborhood appears not to be a central business district. [The report shows a Google Maps street view pictures of a modest one-storey house with a dark brown garage door, dirty walls which have not be painted for a long time]."

Gotham City vs. Let’s Gowex (GOW) (July 1, 2014, Report #1): "Hotspots: GOW says 100K, Analysts say 35K, We say 5K."

Gotham City vs. Aurelius Equity Opportunities SE (AR4) (April 5, 2017, Report #2): "If Aurelius largely derives its cash flow from asset stripping, how does its NAV [net asset value] make any sense? That is, how can you squeeze the juice out of a lemon, and value the lemon as if its juice were never squeezed out?"

3) Negative Feelings Towards Executives of Target Firms: Unethical, Liars, Deceptive Crooks, Aggressive, Criminal, Desperate Individuals

Muddy Waters vs. Olam (SGX: O32) (November 27, 2012) (report #2): "We believe that Olam’s fatal flaw, and one of its best kept secrets, is that its CapEx projects seem to be a fiscal black hole. Olam’s insistence that investors accept a 'gestation period' for its investments seems akin to what a degenerate gambler might say to his friends and family in order to get more money to gamble."

Muddy Waters vs. Olam (SGX: O32) (November 30 2012, Report #3): "Olam’s response to our November 27th report is remarkable in that, despite being 45 pages long, it fastidiously avoids addressing the vast majority of our points. The response is essentially a waste of toner, as much of it consists of canned presentation slides and consultant drivel."

Gotham City vs. Ebix Inc (EBIX) (June 21, 2013, Report #3): "A criminal endictment would be unsurprising – Many Americans go to jail for allegations far less serious than the ones that Ebix, Robin Raina, and related parties face."

Citron vs. Shopify (SHOP) (October 4, 2017, Report #1): "Worse, indulging in misconduct that that Herbalife could never dream of, Shopify goes so far as to offer a sample resignation letter to your boss on its corporate website. They’re advising their own prospective customers to quit their day jobs? Who is Shopify’s legal counsel?"

Citron vs. Wayfair (W) (June 16, 2017, Report #2): "'Amazon Who?’ Whenever an online retailer’s CEO says on a conference call he is “not concerned about Amazon” — and dismisses them saying they sell “batteries and books” … it is time to be concerned about your CEO."

Copperfield vs. Chegg (CHGG) (November 14, 2016, Report #1): "The carefully constructed, disingenuous bull thesis, is that CHGG is in the midst of a transition from a low margin textbook rental business into a high growth, high margin digital educational services company. This report extensively details why we believe CHGG has fabricated pro-forma financial results, misrepresented its unit economics, and repeatedly provided misleading metrics that are subsequently altered."

Citron vs. Motorola Solutions (MSI) (August 22, 2017, Report #2): "Not only does Motorola lack a seat at the table, they do not seem to know where the table is."

Glaucus vs. Real Nutriceutical (2010) (October 21, 2015) (Report #1): "Real Nutri’s CFO, Mr. Poon Yick Pang, served as the director of finance for China Medical Technologies ('CMED'), a US-listed company which Glaucus exposed as a massive fraud in 2011. After CMED collapsed following our report, Real Nutri tried to conceal Mr. Poon’s connection to the disgraced firm. (…) In our opinion, Real Nutri (…) employs a disgraced CFO who would likely be behind bars in the United States."

Gotham City vs. Aurelius Equity Opportunities SE (AR4) (April 27, 2017, Report #3): "We believe that Dirk Markus holds no degrees from Harvard [because] Aurelius’ Dirk Markus is not mentioned in Harvard’s alumni directory [and] Student Clearinghouse was unable to verify any Harvard University degrees for a Dirk Markus."

4) Role of Humor in Persuasion: Feeling of Amusement at The Expense of The Target Firm

Citron vs. Monster Beverage (MNST) (January 29, 2016, Report #1): "The bear case thesis on Monster has been around for years. It used to focus on the headwinds of the energy drink business and the health risks of the product. All the while the price of MNST has continued to defy gravity – as if the stock drank four cans of its own product."

Citron vs. 3D Systems (DDD) (January 24, 2014, Report #2): "Stop the Presses! This could be a game changer!! We did find one industry that is being transformed by 3D printing with possibly the most practical application for a consumer product we have seen to date – the sex toy industry. Look what you can make with your 3D printer! A Justin Bieber vibrator. Goodbye China!!"

Citron vs. Shopify (SHOP) (October 4, 2017, Report #1): "What If Citron is wrong on our assessment of Shopify and the future of this world is millions of people selling fidget spinners and we all become our own flea market??"

Muddy Waters vs. New Oriental Education and Technology (EDU) (July 18, 2012, Report #1): "Magna Cum Fraude [in reference to Magna Cum Laude]".

Glaucus vs. China Lumena (0067) (March 25, 2014) (Report #1): "Taken at face value, Lumena’s reported sales of medicinal thenardite simply defy credibility. According to the 2010 Chinese Pharmacopoeia, medical thenardite is typically prescribed in a dose of 6-12 grams. The primary medicinal use for thenardite is to cure constipation. [...] We calculate the number of doses of medicinal thenardite that Lumena claims to sell in China per year, per person. The results are laughable."

Citron vs. Fleetcor (FLT) (April 27, 2017, Report #2): "Since the Citron Report published the egregious details of FleetCor’s aggressive fee-charging strategy [(e.g.] this pattern has become so blatant that many of its own employees sarcastically call their employer: ‘Feecor’. [)...] “Since the Citron Report published the egregious details of FleetCor’s aggressive fee-charging strategy, FleetCor tried to remove all the 'no fee' language from the Fuelman marketing material."

5) Feeling of Fear

Copperfield vs. Solar City (SCTY) (June 17, 2013, Report #3): "The bottom line is investors have been hypnotically drawn to SolarCity, like moths to a flame, dangerously ignoring the house of cards on which the story appears to be built. As one industry publication wrote, 'Given SolarCity's previously reported-upon GAAP, Treasury, Internal Revenue, Franchise Tax Board and other state taxing authority issues, at best aggressive treatment and at worst fraud concerning stepping up the tax basis of their installed systems to claim ITC' this may be a story for investors to simply avoid."

Citron vs. Grayscale Bitcoin Investment Trust (GBTC) (September 5, 2017, Report #1): "If something is so dangerous that it is uninsurable, do you want to own it? Worse, do you want own a fund that owns it, while paying a price 70% higher than what the underlying asset is actually worth?"

Citron vs. Cyberdyne (7779) (August 16, 2016, Report #1): "Building upon our 16 years’ experience in publishing about dangerous investments, we try to add insight into stock markets that are otherwise clouded with promotion and misinformation."

Citron vs. Alliance Data Systems Corp (ADS) (August 19, 2016, Report #1): "ADS does not disclose FICO (originally Fair, Isaac and Company] scores of their borrowers. They are the only credit company in the S&P 500 that does not."

Iceberg vs Noble (April 6, 2018) (Report #16): "We expect Q1 results and the next quarters (if Noble is still alive) to be a bloodbath."

Citron vs. Angie’s List (ANGI) (May 1, 2013, Report #1): "Here is a jaw-dropping but real story from last month: Someone hired a plumber on Angie’s List -- and the plumber was a sex offender. A week after going to the member’s house, he requested the customer attend his parole hearing … as a character witness!"

2) Fraud, Irregularities, Misrepresentation, and Aggressive Accounting

Citron vs. Valeant Pharmaceuticals (VRX) (October 21, 2015, Report #3): "Why would Valeant, a major big cap pharma, a darling of the hedge fund crowd, a suitor of Allergan and an aggressive acquirer of pharmas like Salix, Bausch & Lomb, etc., etc., be secretly maneuvering to buy a little known pharmacy with a concealed ownership structure? And then consolidate its financials? Why was this entity NEVER disclosed in any prior company disclosure?"

Copperfield vs. Points International (PCOM) (July 28, 2014, Report #1): "It is our opinion PCOM's business model has been meticulously designed to permit the company to "gross-up" its revenue, resulting in financial reports that appear to the investing public many times larger than its actual economic size. [...] We believe PCOM reporting revenues on a gross basis is a violation of FASB ASC 605-45. Platform companies typically report revenue 'net' of the total volume of goods or services sold through its system. Platform companies receive a transaction fee that is generally reported as revenue. PCOM actually includes aggregate transaction volume in its revenues, which we believe has led to an approximate 650% overstatement of revenues compared to net revenue accounting. [...] According to FASB ASC 605-45, we believe PCOM should be forced to restate its revenues, potentially cutting previously reported numbers by up to 80%. [Also] In 2013, PCOM surreptitiously altered its EBITDA calculation, excluding certain investment spending from the company's reported EBITDA. We believe these operating expenses are recurring in nature, which management confirmed on a recent earnings call. As such, PCOM is directly violating SEC Regulation G."

Copperfield vs. Tucows (TCX) (January 8, 2018, Report #1): "During this period of nondisclosure, seven different insiders, including the Co-Chairmen of the Board and BOTH CFOs, sold more than $21 million of stock."

Iceberg vs Noble (April 13, 2016) (Report # 11): "The 13% stake in Yancoal is still valued 28 times its market value on Noble’s balance sheet. It was 48 times the market value when we published our first report. Despite the significant and prolonged decline in the fair value of the interest, the auditor still does not apply any serious impairment test. How does Noble justify the valuation of an asset that accounts for 7% of its equity at 28 times its market price?"

Glaucus vs. China Metal Recycling (CMED) (January 28, 2013) (Report # 1): "Fictitious Financials. Many of the Company’s key financial and operational metrics deviate so significantly from other scrap metal recyclers that its reported performance defies credibility".

Gotham City vs. AAC Technologies LTD (2018) (May 18, 2017, Report #2): "SuQian QiXiang describes itself as a division of AAC, yet AAC has never disclosed SuQian QiXiang in AAC’s annual reports. [And] if AAC has invested heavily in automation, why has cumulative employee count growth exceeded cumulative revenue growth since 2013".

Gotham City vs. Let’s Gowex (GOW) (July 1, 2014, Report #1): "GOW’s audit fees s €40,000, which makes sense if Gowex’s actual revenues are only 5%-10% of reported revenues. [...] We visited M&A Auditores, S.L. office, which was more of an apartment, within an apartment complex (in an area that did not seem like an affluent area). The auditor’s ‘office’ was an 8x10 room. There were very old looking laptops. We obtained the auditor’s business card [followed by a picture of an old, battered cheap looking business card]. He did not have a business email address (which is strange), so he wrote his gmail account on the back of his business card."

Gotham City vs. Let’s Gowex (GOW) (July 1, 2014, Report #1): "Gowex told some investors that New York City was paying them €7.5 million. GOW told us €2 million. The real number is <€200,000, according to New York City".

Gotham City vs. Let’s Gowex (GOW) (July 1, 2014, Report #1): "90% of Telecom revenue originated from undisclosed related parties, tied to GOW CFO & an early investor. We have evidence Gowex’s largest customer was really itself."

Gotham City vs. Let’s Gowex (GOW) (July 1, 2014, Report #1): "The head of investor relations is the CEO’s wife. She signed off on GOW’s annual report."

Gotham City vs. Quindell PLC (QPP) (March 22, 2014, Report #1): "In short, Quindell appears to have made an undisclosed payment to CEO Rob Terry in the amount of £251,000 for a shell company that Quindell had sold to the same Rob Terry 2.5 years prior for £1. Despite all this, the transaction was not disclosed as a related party transaction."

Iceberg vs Noble (April 13, 2016) (Report # 11): "In August, PwC 'reviewed' Noble’s fair values. Noble’s chairman, Richard Elman, commented: 'I am delighted that we have received a strong validation of our processes and controls and shareholders can now be assured, as we have always known, that our balance sheet fairly reflects the value of our long term contracts.' Noble’s CEO, Mr Alireza, added 'Does anyone in this room really believe that PwC are going to put their reputation on the line to rubber stamp the situation for a few hundred thousand dollars?' Six months later, Noble recognised a $1.1b impairment of the very same contracts that PwC had reviewed. How does Noble explain this? Was it a PR smoke screen?"

Glaucus vs. Gulf Resources (GFR) (April 26, 2011) (Report #1): "We visited each of GFRE’s factories and each appeared far smaller than GFRE reported in its SEC filings".

Muddy Waters vs. OSI Systems (December 6, 2017) (report #1): "Former employees’ statements support our view that OSIS is rotting from the inside: There have been numerous news reports in Albania accusing OSIS of corruptly obtaining the concession".

Iceberg vs Noble (April 13, 2016) (Report #11): "Noble has impaired a total of $2b, which was 35% of their equity when our first report was published. How can Noble still describe our arguments as 'unfounded allegations' when the confirmation of these arguments can be found in their financial statements?"

Glaucus vs. Gulf Resources (GFR) (April 26, 2011) (Report #1): "We visited each of GFRE’s factories and each appeared far smaller than GFRE reported in its SEC filings".

Glaucus vs. China Lumena (March 25, 2014, Report #1): "Lumena's reported EBIT margin of 56% (average 2008-2012) defies credibility when we consider that other largescale public companies selling thenardite and PPS [polyphenylene sulfide] report EBIT margins of between 5% and 10%. Indeed, Lumena reports similar EBIT margins as Mastercard. This does not pass the smell test".

3) Overvaluation

Citron vs. Ambarella (AMBA) (June 19, 2015, Report #1): "Since their IPO, their revenue has doubled - up 100% from $121 million in 2012 to $248 for the last twelve months. Meanwhile their enterprise value has gone up 6000% as the stock has gone from $6 to $126."

Citron vs. Grayscale Bitcoin Investment Trust (GBTC) (September 5, 2017, Report #1): "While GBTC is trading between 70-90% above the NAV of its holdings, GLD is at .0028%! Yes, you are reading that correctly."

Glaucus vs. Blue Sky Alternative Investments (BLA) (March 28, 2018, Report #1): "Blue Sky’s main broker, Morgans, claims that AUM [Asset Under Management] is the key driver of revenues and ultimately the share price of the Company. Blue Sky likes to compare itself to US-listed alternative asset managers; Apollo, KKR and Blackstone have an enterprise value which is on average 13% of their fee earning AUM. If we apply the same ratio to Blue Sky, and factor in a corporate governance discount, we estimate that the Company’s shares are worth at most $2.66 per share".