In an unprecedented move that has quickly begun making waves within the industry, founder and Chief Investment Officer of Kerrisdale Capital Management, SahmAdrangi, has raised $100 million in an effort to short an unnamed stock that has yet to go public. Information regarding this move was recently detailed to Reuters by a person with intimate knowledge of the deal. This deal, which is being termed a “co-investment” fund, is said to be completely unique. Historically, hedge fund managers sometimes raise money in an effort to recover companies, such as distressed energy companies or mortgage-backed securities, but a move such as this has never been seen before.
In an email written to investors by Mr. Adrangi, he delivered a few details concerning the unprecedented deal. Mr. SahmAdrangi believes that Kerrisdale Capital Management’s ability to raise such a significant amount of capital over such a short period of time is evidence that his intention to short the unnamed stock is beginning to strike a cord in the alternatives community. The company that Mr. Adrangi intends to short, is said to be worth north of $10 billion. In an effort to garner further backing among supporters and investors, Mr. Adrangi, as well as Kerrisdale analyst, Shane Wilson, have been working on a report, as well as video and a website, that will give further credence to their thesis. The target company is said to be revealed in mid-May, as Kerrisdale Capital Management has already begun buying stock in the company in order to correctly position themselves for the impending move.
Initially created in 2009 on $1 million in startup capital, Mr. Adrangi has remained actively involved in the growth of the company. Mr. Adrangi first made a name for himself by shorting the stock of fraudulent Chinese companies, including Lihua International, China Marine Food Group, as well as China-Biotics. Kerrisdale Capital Management now manages approximately $500 million, including the new money garnered in the revealing of their planned short of the unnamed company. Over the last five years, Kerrisdale Capital Management has averaged a 28% return on investment but was down 7% as of March 2016.