If you haven’t already heard of Sahm Adrangi, he is the Chief Executive Officer and Founder of the New York-based Kerrisdale Capital, a private investment manager. Although Kerrisdale Capital has been billed as a small investment management firm, they are shaking up the industry. In fact, according to a PR Newswire article, the firm recently published a negative report, which details the firm’s short position with Internet marketing company, QuinStreet, Inc.
In addition, Kerrisdale Capital published a negative report concerning Proteostasis Therapeutics, a biopharmaceutical company headquartered in Massachusetts. If you’re not familiar with the company, Proteostasis Therapeutics is a clinical-stage biopharmaceutical company predicated on developing scientific protocols aimed at restoring protein homeostasis in the body.
What does Kerrisdale Capital hope to accomplish with these negative reports? Well, these reports are intended to forecast a particular company’s stock performance. Kerrisdale Capital has built their reputation on special situation investments, meaning they invest in beleaguered companies in hopes of turning a profit. Basically, this amounts to “shorting” company stocks; although rarely discussed, this is a common practice whereby an individual or corporation sells stocks that they don’t necessarily own, anticipating that the security price will eventually fall. If this becomes the case, the corporation or individual is in a prime position to repurchase the same stock at a substantially lower price. This business model has proven to be very effective for Kerrisdale Capital, and it is one that has made them a key player amongst other private investment managers.
As far as Sahm Adrangi’s background is concerned, he is a Yale University alumnus, who earned a B.A. in economics, in 2003. Shortly after earning his degree, Sahm Adrangi began his career in leveraged finance with the renowned, Deutsche Bank. Sahm Adrangi maintained this role from 2003 to 2004, before landing a role with boutique investment-banking firm Chanin Capital Partners, in 2005. By 2007, Adrangi had his sights set on accomplishing much bigger goals; this ambitious mindset would lead him to Longacre Fund Management, where he landed the role of Chief Financial Analyst. As Chief Financial Analyst, Adrangi was responsible for managing the firm’s $2 billion-dollar distressed securities portfolio.