Sahm Adrangi and Kerrisdale Capital Bet Against Kodak
Recently, Sahm Adrangi and his company Kerrisdale Capital have issued a negative report on the future of the Eastman Kodak Company. This came right after the announcement of new products from Kodak that Sahm Adrangi believes are just an attempt to capitalize off of a popular trend. Kodak Eastman’s new projects are being created with the help of Wenn Digital, a company that has previously garnered attention for their business habits that were considered less than scrupulous.
According to the CMO of Wenn Digital, Bill Elliot, the KodakOne digital licensing systems will search the internet for images that are being used without a license and will reach out to the person or business that has used it to request that they pay to use the photo. When revenue comes in for these images, the original artist will receive compensation through the KodakCoin system. While this may sound good in theory to those who aren’t familiar with how licensing and the technology actually work, Sahm Adrangi does not see the system making much money for the artists whose intellectual property is being used.
Kodak Eastman Company and Wenn Digital are touting their new products as being able to change photography and the way photographers are compensated, but Sahm Adrangi doesn’t believe that it is going to happen. On top of Kodak’s already unstable and unsustainable capital structure, these products falling short of their promises is why Sahm Adrangi and his company Kerrisdale Capital have decided to take a short position on their stock. This position will allow them and their investors to make a decent amount of money if Kodak’s promises aren’t kept and the stock plummets as expected.
Sahm Adrangi’s Kerrisdale Capital Management is focused on value investments over a long period of time and also special situations that are driven by certain events. Shorting a company consists of purchasing stocks on loan and selling them back to the company after the stock price drops significantly.