If you have been following business news, especially in the investment management industry, you may have heard that Kerrisdale Capital has published a negative report with respect to biopharmaceutical company Proteostasis Therapeutics. If you’re unfamiliar with Kerrisdale Capital, it is a private investment management company headquartered in New York. With regard to Proteostasis Therapeutics, it is a company that works to develop protocols aimed at restoring protein homeostasis in the human body. The negative report published by Kerrisdale Capital points to the company’s short position with QuinStreet, an Internet marketing firm.
Although Kerrisdale Capital is a relatively small investment management firm, they are creating quite a reputation for themselves in the industry, thanks in large part to CEO and Founder Sahm Adrangi. As far as his professional background goes, Sahm Adrangi attended the prestigious Yale University where he earned a B.A. in economics in 2003, before beginning his career with Deutsche Bank, working in the bank’s leveraged finance division. In 2005, in an effort to broaden his career horizon, he joined Chanin Capital Partners, an investment-banking firm with offices in London, New York, and Detroit.
Still eager to sharpen his skills in the financial world, Sahm Adrangi joined Longacre Fund Management, in 2007. In his role with firm, he served as the Chief Financial Analyst, a role that perfectly aligned with his ambitions and desire to achieve greater professional success. This position enabled Sahm Adrangi to gain a great deal of experience in managing multi-million dollar portfolios. In fact, while with Longacre Fund Management, he was tasked with managing over $2 billion dollars in distressed securities.
What does Kerrisdale Capital hope to gain by publishing negative reports concerning Proteostasis Therapeutics? The firm has made a name for themselves by expertly forecasting company stock performance to build capital. So, more likely than not, that is the chief objective.
The firm’s business model works by investing in troubled companies with the hopes of turning a profit. Basically, the firm will sell stocks that they do not own, expecting that the security price will fall. If it does, the firm is able to repurchase it at a much lower price point and resell them when the security price increases.