By Parke Shall
It was just a couple of months ago that we wrote a few articles about Eros (EROS) and why we thought the company would not be a good investment. We looked at the pros and the cons surrounding the company, including activist investor Dalton Investments amassing a large position in the company as well as several allegations of fraud and questionable conduct that were raised by a short seller.
In the interest of brevity, we don't want to review these articles at length, but you can find them all here if you would like to review our history with the company.
The controversy over EROS started in late 2015 and at that pointed caused shares to decline almost 66%. Short sellers, led by Seeking Alpha's own Alpha Exposure, had been alleging that EROS is hiding something from shareholders, noting the company's ballooning accounts receivable, lack of cash flow, and inconsistent labeling of its films.
To read Alpha Exposure's full analysis, you can click here and scroll through their articles.
Today we're going to reiterate our previous stance of avoiding the company based on new allegations made by well known short seller, asensio.com.
While our conclusion months ago was to avoid the company, and it still is, some key points of the short thesis launched several months ago seem to have been resolved. We also wanted to give the company credit for this, but conclude as to why we don't think the company is investable here.
For instance, one of the previous short-seller's allegations was that the company was holding back on publishing a full list of all of its movies to perhaps obfuscate where revenue was coming from. The company released what would seem to be a reasonable explanation for this, releasing a full list of movies on its website
