Kerrisdale Capital Releases Negative Report on Allied Minds and Announces Conference Call Schedule

NEW YORK, Sept. 22, 2015 /PRNewswire/ -- Kerrisdale Capital, a private investment manager, has published an investment report explaining its short position in Allied Minds, a $1.8 billion London-listed, US-based firm that operates like a specialized venture capitalist, investing in and commercializing early-stage technologies created by academic researchers.

Even though most venture capital funds have failed to generate meaningful alpha and trade in the secondary market at significant discounts to stated NAV, Allied Minds — which has no objective evidence of commercial success — fetches a $1.2 billion premium. Kerrisdale's review of Allied Minds' subsidiaries indicates that they are developing products that are, at best, minor variations on existing alternatives, often in the face of significant competition and without plausible business models. Furthermore, Allied Minds' three commercial-stage businesses have not been profitable and have no blockbuster potential.

The full report can be found here: https://www.scribd.com/doc/282369341/allied-minds-alm-ln  

Allied Minds' Current Portfolio Holds Little Promise
Allied Minds has 22 subsidiary businesses spread across a wide range of sectors and company management often describes these businesses as "disruptive." But, on closer inspection, Kerrisdale found that many of them already have strong competitors selling or developing similar products. For example, Spin Transfer Technologies, valued by Allied Minds at $250 million, has researched a new form of computer memory since 2007 yet has generated no revenue and no products. Meanwhile, large firms like Micron, Intel, IBM and Samsung as well as start-ups like Everspin, Avalanche, and Crocus have made much greater progress, making it unlikely that Spin Transfer will ever build up a competitive advantage. Even Allied Minds' supposed "commercial stage" success stories have performed horrendously. In the first half of 2015, for example, revenue at the largest such firm, RF Biocidics, declined 79% from the same period in the prior year. 

Past Failures Originally Promoted as Major Breakthroughs
Allied Minds has already spent millions of dollars on low-potential concepts that are now confirmed failures. For instance, SaltCheck, based on research from Cornell, was touted as "a groundbreaking patient salt intake monitoring system," and in 2009 Allied Minds' COO praised its "commercial progress" and "look[ed] forward to bringing this groundbreaking test to the market to help patients and doctors worldwide in managing hypertension." Notwithstanding such hype, the product never gained traction; four years later, Allied Minds quietly shut the company down. While failure is common in the world of start-ups, Kerrisdale believes that this and other case studies underscore the flaws in Allied Minds' investment process, including a tendency to be seduced by ideas that sound "high tech"  but have no plausible value propositions or business models.

Conference Call Schedule
Sahm Adrangi, Chief Investment Officer, and Shane Wilson, Analyst, will host a conference call on Wednesday, September 23, 2015 at 9:30am EDT / 2:30pm BST to discuss the company's report.

To participate in the conference call, please dial 855-780-5918 (United States), 0800-0288438 (United Kingdom), or 224-633-1732 (international) and reference the access code 46410660.

A replay of the call will be available following the call at http://kerr.co/alm-sept23.

About Kerrisdale Capital
Kerrisdale Capital Management, LLC, is a fundamentally-oriented investment manager that focuses on long-term value investments and event-driven special situations. Kerrisdale has $330 million in assets under management and is based in New York City.

Contact
Agnes Cao
Kerrisdale Capital
[email protected]
212-257-4385

SOURCE Kerrisdale Capital Management, LLC