Mark Sharogradsky
Managing Partner & CIO of Kepler Capital, Value Investing
2CRSi's management is difficult to trust after a short report alleging fraud, even though the allegations are not confirmed. The report, as quoted by @TheBigBerbowski, claims 2CRSi built a fraudulent US structure to fabricate a growth story and that almost all its revenue likely comes from an undisclosed related-party scheme; @TheBigBerbowski finds it hard to believe for a family-run firm with heavy insider ownership. x.comÂ
Millrose Properties' external management, related-party transactions and move away from land banking raise conflict-of-interest and principal-risk concerns. These warning signs led straight to SELL rather than HOLD, despite a 13%-plus dividend yield. The comparison with ARCP's earlier warning signs does not imply fraud or that Millrose is another ARCP. x.comÂ
Super Micro Computer does not deserve anyone's time or money because its governance problems keep mounting. It has dealt with multiple bouts of accounting fraud, a third-party auditor quit over doubts about its financial statements, a co-founder was caught illegally smuggling Nvidia chips into China, and now its offices are being raided. x.comÂ
2CRSi is undervalued because it is still seen mainly as a server-assembly hardware company, but scaling its 2CRSi Cloud solutions could unlock higher margins. If it reaches its targeted 12% margins it is a good play, and founder leadership gives management a personal incentive to execute. x.com x.comÂ
Super Micro Computer's fraudulent backdrop is now catching up with it, as it faces fraud charges for smuggling Nvidia GPUs to China. A forensic accounting review flagged it in May 2024 and Bloomberg warned in February 2021, so the best play was not to own it. Nvidia, for which Super Micro is the third-largest customer, may be next, given round-tripping and other accounting dangers. x.com x.comÂ
The short report on EquipmentShare follows the short-and-distort playbook, making legal GAAP accounting sound like the next Enron, and its claims look scary only without understanding the mechanics. Such reports are padded to sound serious, use photos of offices or assets to substantiate claims, as in last year's Lasertec report on a stock since up 232%, and attack founders' reputations. AI makes them easier to produce, so they will likely become more common. x.comÂ
2CRSi is worth adding to a basket of European AI stocks as an NVIDIA Elite Partner shipping the HGX B300 with dual Xeon 6 sockets. It also has direct supply lines into Intel, AMD, Ampere, Samsung, Micron, Broadcom, SK hynix, Western Digital and Supermicro. x.comÂ
Super Micro Computer faces serious legal and regulatory fallout as its problems involve smuggling of Nvidia H-series chips, not just financial reporting. Possible outcomes include forced delisting, investor class-action lawsuits, jail time for CEO Charles Liang and FTC fines, so the stock is best avoided. x.comÂ
SharonAI looks like a pump and dump, with management as shady as NUAI's, with which it once had a joint venture it says it sold. Short seller Bleecker Street reports that the CEO allegedly siphoned millions and that the $1.25bn anchor contract is with a small Indian data center operator whose newest major customer is sanctioned. That operator, ESDS, is not a legitimate customer. @RHouseResearch says SharonAI falsely claimed NVIDIA as a shareholder in its 10-K. x.com x.comÂ
Super Micro Computer is an AI hardware company with a history of fraud and is likely committing some kind of fraud now, so a surprise guide of 15-17% Q4 gross margins versus 8% previously does not make it a credible long. x.comÂ
Zeta Global's CEO Steinberg doesn't seem trustworthy, on top of dilution and an unconvincing strategy and market position. Before Zeta he founded and ran InPhonic, which restated financials in 2007 over accounting errors, disclosed material control weaknesses, faced FTC action over deceptive rebates and investor lawsuits, and filed for Chapter 11 shortly after he sold millions in stock near the peak and stepped down. x.comÂ
