Milton Financial Market Research Institute LLC

Marc Cohodes Short Thesis Badger Daylighting

Marc Cohodes has spent three decades of his career as a Wall Street short seller, which means he’s pretty good at spotting bubbles and betting against them just before they burst. The dude walked away from trading after he made a controversial but accurate bet against Lehman Brothers in 2008, which put his $1.5 billion hedge fund at odds with their prime broker Goldman Sachs. Now he runs a chicken farm in California.

Marc Cohodes wants to make money with another short thesis, Badger Daylighting is his latest pick. The news that he was short Badger Daylighting sent the company down around 25% in last Friday’s trading session. He believes the stock is overvalued at four times annual sales, far more than one of its key competitors. The short-seller has recently engaged in pitched battles with Home Capital Group and Concordia International, where he has alleged malfeasance among the management ranks. Both Home Capital and Concordia have vigorously denied his allegations, which remain unproven.

Mr. Cohodes used Badger’s ugly results (EPS was $0.10 vs. expectations of $0.32) to announce his short position on Twitter. In a series of tweets, Cohodes wrote that he had been staking out the company for the last year, and decided to disclose his position after the release of the company’s latest earnings, which missed profit expectations. In an interesting coincidence, Badger’s largest shareholder is Turtle Creek Asset Management, which also happens to be Home Capital Group’s (OTC:HMCBF) largest shareholder (Mr. Cohodes is famously short that company as well). Last weekend, he launched the website to continue his attack on the company.

On the company’s conference call, Badger Daylighting Chief Executive Officer Paul Vanderberg dismissed Cohodes’ thesis, and noted that short interest in the company is nothing new.

“We’ve had a short position [present] in Badger for some time,” he said. “My focus on that is really not to focus on it. I don’t agree with the thesis: we have a great business model.”

Badger Daylighting full PDF


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