Every successful hedge fund manager knows that their job is to know which assets might increase in value and which assets might be overvalued. Sahm Adrangi can do both of these, and as the chief information officer and founder of Kerrisdale Capital, he helps to identify short stock opportunities that can potentially make lots of money for investors. Kerrisdale has been doing better than the S&P 500 Index for many consecutive quarters and makes the right call on short positions quite frequently.
Recently, Sahm Adrangi and Kerrisdale Capital made the right call to short Proteostasis, which is a biotech company located in Cambridge, Massachusetts. While its stock had improved after recent cystic fibrosis work had been finished by the company, Adrangi found that most of this growth was artificial. The actual jump in price had to do with some data that was released that seemed to suggest that their new drug was doing better than it actually was. Sahm Adrangi and the team at Kerrisdale dug deeper into the company and discovered that the study had drawn on a miniscule-sized placebo group and was not up-to-par with biotech standards for studies of this kind. Adrangi believed that the information would eventually come to light and that this is when the stock price would reverse.
Sahm Adrangi and Kerrisdale Capital decided to move forward based on the data they had that indicated that this failed study was the main reason for the rise of the stock of Proteostasis. The stock of the company did drop by 13% in the beginning once the market caught up with Kerrisdale’s report. After this, it dropped by %20, and Adrangi along with the team at Kerrisdale made quite a bit of money from this short. It is looking like the company’s stock will continue to go down due to the non-objective study that had artificially boosted it previously. This built a lot of confidence in the skills of Sahm Adrangi and the Kerrisdale Capital Team, and it is another reminder that paying attention to every single detail related to a company’s stock rise can yield amazing results.