We plan to publish content on companies we believe are fraudulent. We will focus on small-cap companies as it is easier to move the needle there versus mid-cap and large-cap companies.
Case in point, when we did work on Cintas (CTAS) in 2017 nobody seemed to care that Cintas regularly overbilled customers to goose reported revenue (we got that from an insider who I trust 1,000%). Not every fraud is a house of cards like FTX. Some, like Cintas, have real underlying businesses with a fraudulent wrapper designed to keep the shine on the stock.
- We will look for companies with healthy Adjusted EBITDA but little cash flow;
- Companies where the CEO spends more time on his boat than driving the business;
- Companies where the CEO can’t articulate how the company generates superior margins versus the competition;
- Companies where the CEO does not pass the eye test (Sam Bankrun Fraud looking like a drug-addled teenager for example).
More frauds will be exposed as interest rates remain elevated during 2023. If you have corporate fraud candidates, especially Technology companies, send them our way (email@example.com or firstname.lastname@example.org). I would love nothing more than to rip fraudulent CEOs out of their chairs.