Sahm Adrangi, Chief Investment Officer of Kerrisdale Capital, released a negative report on QuinStreet, Inc to explain why they’re shorting QuinStreet’s stock, QNST. QuinStreet is a web advertisement firm that provides new potential customers who are shopping for the product that the affiliated website is selling. QuinStreet claims that these leads are high value, while most of the traffic comes from fake traffic and users working for “swagbacks”. Swagbucks is a website that rewards users with gift cards for tasks they complete. These tasks often involve going to certain websites and clicking around on the page to generate traffic, despite the user not being interested in anything the website is selling.
Adrangi claims that there is nothing to set QuinStreet apart from its failing competitors. Their technology is out of date, their affiliated websites are moving to greener pastures, and their business model.
Sahm Adrangi outlines a system of phony traffic to websites in QuinStreet’s network. The phony traffic generates revenue for QuinStreet while costing their affiliated websites. Adrangi further states that their whole business model is flawed. He also points out that key members of QuinStreet, like its CEO and CFO, have already began selling their shares.
From their out dated business model, clunky technology, and utilizing fraudulent traffic to increase revenue and deceive their customers, Kerrisdale Capital has shorted the company and believes it will fail.
Founded in 2009, New York-based Kerris Capital manages over $300 million in investments. The private firm focuses on long-term investments as well as event-driven situations.
Sahm Adrangi is the Chief Investment Officer of Kerrisdale Capital as well as its founder. He earned a bachelors degree in arts and economics from Yale University. He worked at Chanin Capital Partners where he advised creditors in Chapter 11 bankruptcy restructuring. Before founding Kerrisdale Capital, Sahm Adrangi worked at Longacre Fund Management as an investment analyst for both the equity and credit fund.