A Perfect Short

A company on the brink of bankruptcy with a lofty equity valuation

I don’t often look at companies to short. It is a tough game. You can be absolutely right on your analysis. The said company could be a complete fraud. Burning cash like crazy. A melting ice cube. Despite all that, if you don’t get the timing right on a short you can lose significant capital.

I have had enough problems investing value stocks. So there have only been a few times in my career when I look at a company through the eyes of a short seller. This is one of those times. Though I am not currently short. I did want to pen my thoughts down on a company that appears to be operating on the brink of self-destruction.

Before we get into the financial details, we should back the story up for just a minute

The company in question has been touted as the Berkshire Hathaway of the internet. The two founders and co-CEOs, the next Warren Buffett and Charlie Munger. However, if you can read financial statements, you might come to a similar conclusion as myself.

The company is incinerating cash and is on the brink of bankruptcy, despite the lofty equity valuation.