Normally, Sahm Adrangi earns his profits as a short seller, betting against shares of companies he thinks are not what they seem. His fund, Kerrisdale Capital, has outperformed the Standard and Poor’s 500 Index by a wide margin since its inception in 2009, including a 201.2% return in 2011. While his performance was largely flat in 2016 for the first year ever, Adrangi has returned to his winning ways, earning a return of almost 20% in 2017.
— Sahm Adrangi (@SahmAdrangi) February 6, 2018
Although Sahm Adrangi has achieved most of his notoriety as a short seller, at times he takes long positions in stocks. True to his nature, when Adrangi goes long, it is as a contrarian, finding favor in shares of companies that are out of favor in the investment community. When Sahm Adrangi purchases shares, he does so as a value investor, discovering out of favor stocks and profiting from their eventual rise.
One such company that Sahm Adrangi has bought is MOMO, Inc., a Chinese company that specializes in live video streaming. What makes this investment all the more remarkable is that Adrangi shorted numerous Chinese companies in 2011 that turned out to be fraudulent, leading to his outside return in that year.
MOMO, Inc. is not well-covered by Wall Street to say the least. Adrangi believes that live streaming will become a more prevalent part of the Chinese social media market and that MOMO, Inc. is well-positioned to benefit from that. MOMO, Inc. already enjoys a strong position in the Chinese live streaming market. With over 700 million mobile smartphone users in China, the size of this market stands to increase dramatically in the coming years. MOMO, Inc. has taken steps recently to expand its product offerings and to give them a greater reach among the Chinese market. Its emphasis on new content and games should lead to growth in its number of users.
While MOMO’s shares have appreciated recently, Sahm Adrangi believes there is more room for growth. Adrangi maintains that this is the beginning of MOMO’s success and shares are at the early stage of their rally.