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New Short Report To Be Released Tomorrow

|About: SPDR S&P 500 Trust ETF (SPY)

We'll profile a multi-billion dollar company we believe is misunderstood: trading at an inflated multiple on: 1) the belief its financial disclosures are accurate, 2) it's a potential takeout target.

We will provide evidence that calls into question 45% of its revenues we can't reconcile, and how it reports stable and growing margins in the face numerous red flags.

Our report will profile the people behind the Company and illustrate why we believe investors need to exercise extreme caution.

Tomorrow, Oct 9th, we will issue a new critical "Strong Sell" opinion explaining our short position in a multi-billion dollar company where we believe the results are simply too good to be true.

The full contents of our report will be available on our website. We also encourage readers to follow us on Twitter @sprucepointcap where we will have exclusive additional content. 

To support our opinion, we will provide evidence that points to upwards of 45% of the Company's revenues and ~2,000 bps of gross margin being irreconcilable. We will also show why we believe financial strain is being signaled by various Company accounts and disclosures.

As part of our research process, we conducted extensive interviews, and received chilling quotes:

On Why The Past Audit Chairman Left: "(the CEO) doesn't like people asking questions he doesn't like. And the Audit Chairman was just doing his job and sort of rocked the boat too much."

On Why A Former Account Executive Left The Company: "But I sold all of my stock the day that I left because I just felt that they are not ethical"

Asking For An Opinion About The Company's Inventory Management: "If (the Company) needs to hit a number, this did come up a few times, if they need to hit a number to show a sale, they will force the distributor.... They’ll make a deal. They'll cut a deal with the distributor and they'll convert that inventory to distributor owned inventory to show that they met their numbers for the quarter"

For any current investor involved with this Company, none of this should be surprising if real investigative work and background checks were conducted on the current, and past, individuals associated with the Company. For example, we will show you how a past audit committee member conveniently hid from his biography that he oversaw another company, in the same industry, that eventually restated revenues lower by 35%,  slashed margins almost 1,600bps, and was investigated by the SEC. Coincidence?

Thank you very much for your continued interest in our investment research. 

Legal Disclaimer

This communication is for informational and educational purposes only and shall not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy, sell, or sell short any security or other financial instrument or to buy any interests in any investment funds or other accounts. Spruce Point Capital Management LLC ("SPCM") has short positions in and may own put option interests on the reported Company and stands to realize gains in the event that the price of the stock decreases. SPCM and its clients, partners, affiliates will transact in securities of the company subsequent to publication. The sender has no obligation to update the information contained herein and may make investment decisions that are inconsistent with the views expressed in this communication. To the best of SPCM's knowledge, the information contained herein is accurate and reliable, but the information is presented "as is". The sender makes no representations or warranties as to the accuracy, completeness or timeliness of the information, text, graphics or other items contained in this communication. The sender expressly disclaims all liability for errors or omissions in, or the misuse or misinterpretation of, any information contained in this communication. Wherever used, the words “may”, “could”, “should”, “will”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “believe”, and similar expressions identify forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at which, such performance or results will be achieved. Forward-looking statements are based on information available at the time they are made, assumptions made by SPCM, and SPCM's good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in forward-looking statements, historical results or current expectations. Past performance is no guarantee of future performance.

Disclosure: I am/we are long SPY.