We publish research reports and notes on publicly traded companies in the US and Europe. Our research is sector-agnostic and tends to be focused on forensic accounting. Our reports are extensively researched and information-rich, filled with the details that matter most to the interested public.
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Track record
In October 2024, we reported on Merchants Bancorp (NASDAQ: MBIN), an Indiana-based regional bank with a large portfolio of multifamily real estate bridge loans. In our report, we uncovered that Merchants Bancorp and its subsidiaries made bridge loans to mortgage fraudsters, state-barred real estate investors, and other shady individuals. While the bank’s delinquent loans grew from $4 million to $241 million in just two years, Merchants Bancorp is significantly under-reserved. We uncovered inadequate underwriting practices in which Freddie Mac-banned landlords were given “bridge-to-HUD” loans, even though the mortgagors had a well-documented history of loan defaults and housing code violations. According to a Piper Sandler analyst, Merchants Bancorp admitted during a group discussion with investors and sell-side analysts that it had made loans to shady individuals, but claimed that the mortgagors’ legal problems occurred after the loans were made. Subsequent quarterly results missed analysts’ estimates across the board, while delinquent loans rose to $394 million and the bank’s coverage ratio fell to an all-time low of 40.1%.
In May 2024, we published a report on ODDITY Tech Limited (NASDAQ: ODD), an Israeli cosmetics company marketed as an AI tech company. Contrary to the company’s claims, we uncovered that ODDITY Tech was not an outsider disrupting the beauty industry with purported AI technology, but operates a significant, yet undisclosed network of beauty stores and schools in Israel. We also interviewed former high-level executives and employees who told us ODDITY’s AI technology is akin to “a normal questionnaire,” which he “wouldn’t necessarily call AI.” Since going public in June 2023, insiders sold more than $700 million worth of shares. ODDITY Tech dismissed our findings in a press release titled “Initial Response,” which consisted of boilerplate statements but never provided a detailed rebuttal afterward. Since then, several key executives have left the company, and investors have filed a securities fraud lawsuit against ODDITY Tech and its executives.
In January 2024, we uncovered that one of Sweden’s largest private forest owners, Svenska Cellulosa AB SCA (SFB: SCA.B), had not consolidated SEK 3.6 billion in debt. In addition, the company misrepresented its net debt by counting employees’ private pension assets as its own and thus understating its net debt by billions of Swedish kronor. Most of SCA’s profit comes from non-cash gains from the revaluation of forest assets, driving up EBITDA by billions and offsetting real cash losses in other business areas. Several executives have left the company in recent years, e.g. three General Counsel in less than three years. The audit committee lacks experience as it is chaired by a marketing executive and SCA’s overall corporate governance is a total failure as key decisions are made by an external committee controlled by a single shareholder.
In December 2023, we exposed how German solar equipment manufacturer SMA Solar Technology AG (XETRA: S92) improperly capitalized EUR 146 million in expenses to an opaque balance sheet account that was neither depreciated nor tested for annual impairment. The incorrect capitalization boosted SMA Solar’s profitability for years. As a result, the company achieved a three-year average EBITDA margin of 3%, the threshold above which the SMA CEO is entitled to his bonus. In addition, SMA Solar deviated from IFRS standards and the published FCF figures do not match the previously published numbers. The company rejected our findings but had to cut its sales and profitability forecasts in June 2024, warned of a possible impairment of the obscure balance sheet account in August 2024 and announced a restructuring program in September 2024.
In late 2023, we uncovered that AerSale Corporation (NASDAQ: ASLE) was sued by a competitor, seeking an injunction and millions of dollars in damages. The patent infringement lawsuit was never disclosed to the company’s shareholders. Furthermore, we found that AerSale’s key product, AerAware, lacks market demand, as a 2022 FAA report highlighted the redundancy of such technology. No airline has ordered AerAware to date, despite AerSale’s CEO boasting about a “big boy customer” on various occasions. Since we published our report, one of the company’s co-founders announced his ad-hoc retirement, and AerSale’s cornerstone investor, Leonard Green & Partners, decided to sell its 18% stake. As of November 2024, no aircraft operator or airline has ordered AerAware.
In July 2023, we reported on Runway Growth Finance Corporation (NASDAQ: RWAY), a venture debt lender from Menlo Park, California. We uncovered that the company and its external advisor propped up RWAY’s net asset value by not accounting for investments that are in bankruptcy-like status (so-called ABC liquidation) at fair value, swapping debt for equity, and giving concessions to portfolio companies that are in distress. Ultimately, Runway wrote off the non-performing investments (we called them out on) within a quarter, which drew the attention of sell-side analysts who questioned why Runway valued these investments at cost in the previous quarter. Since we published our report, its cornerstone investor, Oaktree Capital Management, has begun to sell its 51% stake in the company. Subsequently, RWAY’s external advisor, Runway Growth Capital, which was owned by RWAY’s CEO and other company insiders, was sold to two private credit investment firms.
In June 2023, we published on Symbotic (NASDAQ: SYM), a self-proclaimed “A.I.-powered robotic technology platform” but we found that the company’s products are barely on par with competitors’ solutions. Former employees told us that potential customers would only talk to Symbotic because Walmart hired the company to refit its supply chain. Otherwise, nobody would take them seriously. However, we uncovered that the key negotiator for the Walmart contract–a senior vice president at Walmart–quit weeks before the final agreement was signed and began working at Symbotic just weeks after the ink on the contract had dried. Since we published our findings, insiders sold more than $900 million of stock, the Walmart-turned-Symbotic executive resigned, and the company’s CFO retired at age 55. In 2024, investors filed a class action lawsuit against the company, alleging securities fraud.
In March 2023, we reported on mortgage lender Arbor Realty Trust (NYSE: ABR). We uncovered material weaknesses in its internal reporting, hundreds of millions of dollars missing, and undisclosed ownership in a one billion dollar multifamily portfolio with the properties’ net profits not flowing to ABR. The company rejected our findings and announced a share repurchase program, just to issue more than 13 million new shares in the subsequent months. As a cheerleader to management, Leon Cooperman called us idiots on the earnings call but subsequently sold 30% of his position in the months that followed. In 2024, the Department of Justice and the FBI starting probing Arbor Realty Trust and investors filed a class action lawsuit alleging securities fraud.
In late 2022, we uncovered that the CEO’s son of small-town bank Provident Bancorp (NASDAQ: PVBC) ran the company’s digital asset lending segment into the ground by lending money against cryptocurrencies and crypto miners as collateral. The son’s employment was undisclosed to shareholders, and basic risk management in PVBC’s crypto lending was not performed due to the segment head’s immediate relationship to the bank’s CEO. The board of directors failed to perform its supervisory duties while being handed favorable contracts. A month later, on December 23, 2022, Provident Bank’s CEO resigned. Due to the crypto lending business and failed corporate governance, PVBC lost more than $50 million in the span of a few months, evaporating the bank’s aggregated net profits since going public. In November 2024, PVBC disclosed that it had received a Wells Notice from the Securities and Exchange Commission. A Wells notice informs the party in question that the SEC will bring an enforcement action against it for alleged violations of the securities laws.
In July 2022, we reported on the Swedish CPaaS company Sinch AB (SFB: SINCH). We uncovered Sinch’s doubtful revenue recognition practices through billions of unbilled account receivables, an undisclosed qualified opinion issued by Sinch’s auditor, billions of reported receivables in shut-down Australian subsidiaries, and flawed risk management. After market close on the same day, Sinch issued an ad hoc statement disclosing that the company overstated its net income by SEK 162 million. Days later, the company’s CEO resigned effective immediately – the night before Sinch’s Q2 earnings call. In Sinch’s detailed response, the company acknowledged our findings. Two months later, Softbank sold its 5% stake in Sinch at an estimated 80% loss.
In March 2022, we published on the German EV company Sono Group (NASDAQ: SEV) and uncovered that the company made unrealistic promises to reservation holders, leading to increased cancellations. We highlighted that the management is driven by false idealism and to play start-up founder. We concluded that the company won’t produce its signature EV called Sion and will likely go bankrupt due to doubtful prospects of funding. In early 2023, Sono Motors filed for insolvency.
In early 2022, we reported on Bitcoin mining company Northern Data AG (XETRA: NB2). We discovered that the company had purchased shell companies for more than EUR 900 million from related parties. Most of the assets were not real and outstanding payments to be made by the shell companies to Northern Data were offset against the final acquisition of these shell companies. Since then, the company’s COO has resigned, two CFOs and two Chief Legal Officers have resigned. Northern Data finally published its 2022 annual report in March 2024, reporting a EUR 266 million net loss and writing off hundreds of millions euros in previously acquired assets. Weeks later, the company switched from KPMG to a small-town German auditor specializing in auditing small businesses and individuals. In early 2024, the former Group CFO and former CEO for North America sued Northern Data, alleging widespread tax, securities and accounting fraud.