When it comes to forms of activism, short selling companies typically isn’t the first thing to come to mind. Nevertheless, this is exactly what hedge fund investor Sahm Adrangi does to make a difference and turn a considerable profit for his company Kerrisdale Capital Management LLC, a boutique investment firm based out of New York that he himself founded. Sahm Adrangi uses his expertise particularly in mining, biotechnology, and telecommunications to bring attention and consequences to companies that he and his investors see as engaging in bad business practices.
Mr. Adrangi received a Bachelor of Arts in Economics from Yale University, and worked for Deutsche Bank in the credit and finance sector.
One of the first incidents of activism through investments was short selling several Chinese companies that were US-listed. Together with his firm he used his capital to essentially destroy a handful of these companies that he openly considered scams. In 2011 he managed to make “a couple million” from betting against them. This may not seem like much compared to the profits of more seasoned investors, but for a man who was under 30 at the time this was quite the accomplishment and it grabbed attention on an international level.
Some examples of these fraudulent companies include China-Biotics and the China Education Alliance. Through Sahm Adrangi’s research, he found nutritional supplement China-Biotics claims of having more than 100 outlets to sell their products were completely false: they had only 4. Comparatively, China Education Education Alliance may very well be the most dubious company that he researched during this investigation. The company turned out to essentially be a hoax by Sahm Adrangi‘s standards as their 17 classrooms for students had no desks and their website that they claimed turned a profit did not even function. In light of his findings, the company’s value fell from $150 million to about $25 million.
More recently, Sahm Adrangi has been making headlines for calling out pharmaceutical companies that were trying to push the development of medications that they deemed life-saving but in fact were little to no better than placebo in final stages of testing. Some of the most recent included a Prostate Cancer vaccine and a drug meant to treat a rare and dangerous type of epilepsy. Click Here for related information.