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Edwin Dorsey Profile picture
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23 Feb, 9 tweets, 2 min read
I just published a second article about ARK's liquidity issues👇

thebearcave.substack.com/p/special-edit…
ARK’s illiquid holdings are problematic because if ARK ever faced outflows, hedge funds could take predatory short positions in ARK’s illiquid holdings and create a performance death spiral.

A review of ARK’s illiquid holdings show that could be happening:
On Twitter jokes about front-running forced selling by ARK have gained traction:

ARK Invest has no chief risk officer on its website. ARK’s chief operating officer is Tom Staudt. According to Mr. Staudt’s LinkedIn, prior to joining ARK, he was the account executive at WILX-TV, a local station for Lansing Michigan.
ARK sends out daily emails with its buying and selling and someone even made an app to track ARK’s trades:

This is problematic because any actions taken by ARK will now work against them. If ARK starts selling a big holding, retail may bail and predatory shorts will pounce. This may cause further declines in whatever security ARK tries to sell.
Worst of all, ARK seems indifferent to its illiquidity risks. For example, last week, ARK initiated a position in Vuzix (VUZI), a $900 million small tech company that is up around 1,000% over the last 12 months.
Just yesterday, ARK’s Genomic Fund (ARKG) bought another 122,000 shares of Surface Oncology (SURF), a $350 million cancer drug company. ARK now owns around 9% of the company.
ARK should be treating the situation as a four-alarm fire. Instead, it is just business as usual.

The next 48 hours will play a big role in determining what happens next. If things don’t change, Cathie’s ARK may sink.

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More from @StockJabber

Edwin Dorsey Profile picture
15 Feb
After one year of a free newsletter, and now four months into paid, this thing is for real:

🙏 ~500 paid subscribers
🎉 ~10,000 free subscribers
🤯 ~$160k ARR (before fees)

For anyone thinking about launching a newsletter, some early learnings in the thread below 👇 Image
1/ Do something UNIQUE. You want to be the only person who does what you do. Build a personal monopoly.

No one wants more email, so you need something unique and differentiated to make it work.
2/ Internet niches are bigger than you think, even when your account for the fact they are bigger than you think.

Passionate about agricultural tech? European bonds? Distressed debt in India? Busted tech IPOs?

Each of these would work if you're passionate and dominate it.
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Edwin Dorsey Profile picture
18 Jan
How to become a SUCCESSFUL investor: a guide 1/n
1) Diversify but don’t. Diversification is for idiots, but it is also a free lunch.
2) Stay consistent but don’t. Have a consistent repeatable process, but also adapt to changing markets.
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Edwin Dorsey Profile picture
14 Dec 20
Apollo’s ties to Jeffrey Epstein are much greater than just Leon Black.

This will get crazy👇👇👇
John J. Hannan, Apollo’s cofounder and senior partner, donated $166k to Epstein in 1999. Hannan also replaced Epstein on the Black Foundation Board in 2013.

Notably, Hannan was an executive at Drexel Burnham Lambert with Leon Black in the 1980s. This will be important later.
Marc Rowan, another Apollo co-founder that worked at Drexel in the 1980s, met with Epstein in his townhouse in 2015.
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Edwin Dorsey Profile picture
18 Nov 20
Robert Smith’s issues go well beyond tax fraud.

His private equity firm, Vista Equity Partners, has been accused of defrauding investors and mismarking assets, and he has close ties to a man raided by the FBI in 2019.

Let’s dive into what the media is missing.

<thread>
In lawsuits, Vista has been accused of egregiously mismarking assets.

For example, in 2014 Vista invested in DealerSocket at a $387 valuation.

In June 2019 Vista marked up the investment to $499 million and just *two months* later marked the investment down 95% to $28 million. Image
Vista has also been accused of trying to force healthy portfolio companies to buy failing ones.

A lawsuit by an independent director of Solera Holdings (52% owned by Vista) alleged Vista tried to force the acquisition of its struggling portfolio company called Omnitracs.
Read 14 tweets
Edwin Dorsey Profile picture
19 Oct 20
Robert Smith, a co-founder of Vista Equity Partners, recently signed a non-prosecution agreement over alleged tax fraud. Two lawsuits filed by independent directors of Vista’s portfolio companies suggest much bigger problems at the private equity giant.

<thread>
In a 2019 lawsuit, an independent director at Solers Holdings (52% owned) detailed how Vista pushed the related-party acquisition of Omnitracs over Lytx. Image
The lawsuit also alleged that “Vista’s actions appear designed to mislead current and future investors concerning Vista’s performance” and highlighted an unnamed investment that had $50 million in EBITDA “reduced to zero” after Vista acquired it (see below). Image
Read 10 tweets
Edwin Dorsey Profile picture
1 Sep 20
Something seems off at STAAR Surgical $STAA

1) Questionable large customer (~50% of revenue)
2) Multiple SEC comment letters
3) Changes in revenue recognition
4) Lots of management turnover

Let's explore (thread)
STAAR's largest customer is Shanghai Lansheng, a Chinese distributor.

Shanghai Lansheng accounts for ~50% of STAAR’s revenue, up from 15% in 2015, but STAAR almost never mentions them.

In its 10-K STAAR even misspells the name of its largest customer "LanGsheng"
The SEC also seems skeptical about STAAR and has sent the company multiple comment letters concerning a Warning Letter from the FDA, the company’s Swiss defined benefit plan, loss contingency accrual for litigation, and sales to a distributor in Syria.
Read 8 tweets

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