Sahm Adrangi is the Chief Investment Officer (CIO) of the Kerrisdale Capital Management Company. Kerrisdale mainly focuses on long-term investments and special event-driven situations. It is also very research-oriented and includes industries such as mining and biotechnology. Under Adrangi’s leadership, the company also specializes in short activisim exposing short-selling advertising.
Sahm Adrangi recently did a presentation about short selling advertisement fraud with Kase Learning. In it, he stated that Kerrisdale regularly posts new findings on their website, carrouselcat.com, Twitter, and Seeking Alpha. He used the Wikipedia definition of ad fraud, which is defined as the practice falsely representing the number of data events and click conversions for the sake of generating more profit.
How that sort of ad fraud typically works is when a company is looking to spend x amount on advertising. Sometimes, their ads end up on artificial websites that are viewed only by bots and bot nets. The majority of those bots are designed by Eastern European hackers who get that profit instead of a legitmate publisher that actual users can see.
The more that ad fraud is discovered, the more hesitant that business owners will be to post online ads. It is often the intermediaries who are making the ad fraud so pervasive. They are the ones who are benefitting the most from the clicks and the exchanges. If a company is found to have at least a 25 percent exchange, from what Sahm Adrangi says, that’s usually when a short activist lets the business owner know what’s going on.
Sahm Adrangi states that in the case of click fraud, instead of humans making the clicks, it’s often the bots that are entering in all the data. Those sites are often blank with no visible content to the human eye. Vague display ads are another. In the case of videos, there’s often a large amount of other videos behind and around them. The one-pixel videos displayed in the vague ads are another. The videos end up being charged to the business owner but don’t actually get seen by anyone. As a result, Sahm Adrangi recommends going to the company site to watch their videos.