February 09, 2010
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Citron Research Reports on Garmin (NASDAQ:GRMN)

Posted in Citron Reports by CitronResearch on the December 11th, 2009

 stock ticker: GRMN

Can Garmin navigate their way out of the dead end they’ve driven into ?

Today marks the day that Nokia is shipping their first navigation based phone in to the US
http://hothardware.com/News/Nokias-5800-Navigation-Edition-And-E72-Smartphones-Ship-To-America/

Some have already called this new unit the “PND-Killer”
http://www.twice.com/article/439546-Nokia_PND_Phone_Offers_Free_Services.php
This announcement prompts us to look deeper into the future of navigation leader Garmin.  While we’re reluctant to join a pinata party here, the company’s own comments at Wednesday’s Barclay’s investors’ conference as delivered by its CFO are particularly important for any investor, long or short, looking to establish an opinion on where management is “driving”. (more…)

Citron Reports on Origin Agritech (Nasdaq:SEED)

Posted in Citron Reports by CitronResearch on the November 25th, 2009

 stock ticker: SEED

Be Careful with your SEED Capital

One of the great movie thoughts in history comes from the classic Night Shift, when an offbeat Michael Keaton suggests: “Wait a minute! Why don’t they just mix the mayonnaise with the tuna in the can… HOLD THE PHONE ! Why don’t they just FEED the tuna fish mayonnaise?!
A good idea, but hardly groundbreaking. Citron recalls the classic “peanut-butter-and-jelly in the same jar” story of Nitromed (NASDAQ:NTMD) which claimed a breakthrough drug that was made up of two available generic drugs. Needless to say, despite the advice of numerous analysts, it was an utter disaster for stockholders.

Introducing Origin Agritech, (NASDAQ:SEED) (more…)

Amedisys: Caught Between a RAC and a Hard Place

Posted in Citron Reports by CitronResearch on the October 15th, 2009

 stock ticker: AMED
Citron first reported on Amedisys over a year ago.  Never before have we received as much correspondence from former employees as we did after this story.  Last month, the market witnessed the abrupt resignations of two key executives from Amedisys.  In this post, Citron will shed some light on the “story behind the story” of Amedisys — a story that neither management nor its analysts want to talk about.

Amedisys business is providing home health care visits – nurses, hospice workers and therapists – on an outpatient basis.  An overwhelming amount of Amedisys’s revenues, in fact 87%, is paid directly by  Medicare reimbursement.  Under the best of circumstances, this concentration of business would be a significant risk factor.  However, for Amedisys, which operates with some of the highest gross and net margins in the business, red flags specific to the company are much more ominous. (more…)

For Life Partners Holdings Shareholders (Nasdaq:LPHI), it has been one heck of a ride - but now it is over.

Posted in Citron Reports by CitronResearch on the September 22nd, 2009

 stock ticker: LPHI
Citron has to give credit where credit is due — CEO Brian Pardo has truly been a visionary in the life settlements industry.   Although he has had more than his share of critics, he has spent the past decade avoiding regulation while returning significant returns to LPHI stockholders.

All good things must come to an end, however, and now the final chapter is being written for Life Partners.  The SEC and Wall St. have decided to move in on life settlement industry and it is Citron’s opinion that this sea change will be at the expense of Life Partners Holdings. Until now the life settlement industry has been a financial product marred with controversy, but the new task force and the effects of commoditization are going to change the landscape – dramatically and permanently. (more…)

Bad News for World Acceptance Corp.: The State-by-State Loophole Business is Now Going Out of Business

Posted in Citron Reports by CitronResearch on the September 17th, 2009

 stock ticker: WRLD
In May, Citron research introduced readers to the curious case of World Acceptance Corp.  (NASADAQ:WRLD) a sub-prime lender doing business in approximately 900 locations mostly located in the South.  Citron has been quiet as of late because 1.  markets have turned indiscriminately positive 2. We were waiting to assess the prospects for regulation of sub-prime lenders.

Neither a bank nor a payday lender, World has built its entire business on loopholes – and therefore its operating region is limited to just 11 states where its been able to curry the favor of state legislatures to open the loopholes in state usury laws so it can make sub-sub-sub-prime loans at super-high rates.  Any form of federal law, which has never existed, would supercede the many loopholes enabling WRLD to operate in their niche states. (more…)

Is Cbeyond (CBEY) the subject of an undisclosed Law Enforcement Investigation? Citron Has the Docs.

Posted in Citron Reports by CitronResearch on the July 24th, 2009

 stock ticker: CBEY

Cbeyond (NASDAQ:CBEY) Relevant Highlights:

Shares Outstanding 28.7 m
Recent Market Cap 410.8 m
Trailing P/E 154
Forward P/E 102
Ttm Earnings Per Share .13
Current Cash Burn Rate $9m - $10m per year
Background

Three weeks ago, Citron introduced readers to Cbeyond (NASDAQ:CBEY), a sales company offering bundled telecommunications services specializing in small business customers.  Citron’s inquiry focused on indicators of stalling growth and failure to gain traction in new markets to match the company’s results in its flagship city markets earlier in the decade. (more…)

Citron Research Reports on Vistaprint (VPRT)

Posted in Citron Reports by CitronResearch on the July 21st, 2009

 stock ticker: VPRT

What are you going to do if 44% of your net income disappears?

For the past few years, Vistaprint has been a controversial name amongst investors.  On one hand you have a printing servicing company that provides printed products to small business at an affordable price.   But on the other hand, you have a company with a dirty secret which derives a large portion of its income from “referral fees” – from companies that offer web loyalty shopping clubs, or in layman terms, those $14.95 a month charges on your credit card bill that leave you scratching your head.

The word “referral” sounds innocent enough, but in real terms, as a consumer, when you complete an online purchase, you are shown a button saying something like “Save $10 on your Next Purchase from this Company”.  Beware!  If you click, even accidentally, your full contact info, but worse, your credit card information, is sent on without your permission to a 3rd party company you haven’t given your permission to.  From that point, the debate rages about how many of these charges represent trickery, and how many more are simply fabricated without the consumer’s consent or knowledge. (more…)

Citron Research Reports on Cbeyond Inc. (NASDAQ:CBEY)

Posted in Citron Reports by CitronResearch on the July 7th, 2009

 stock ticker: CBEY

Citron asks:  Can Investors “See Beyond” market hype, and get to the cold truth about CBEY? 

Not truly a high-tech company, Cbeyond’s business model is in fact a sales organization selling a product that is no longer unique.  It provides bundled telecomm services to small to mid-size companies (generally 4 to 100 lines) in a package.  This includes business phone, long distance, internet, mobile phone, website hosting, voicemail, and optional services. Their business plan is centered on hiring a sales force of ambitious young people who actually go knocking door to door in office parks to solicit customers, incentivized by big commissions for reeling in new customers on three year contracts. 

Citron believes the growth story the company wants Wall St. to believe is pure fiction.  Adjust it to reality, and you have a low-or-no-growth company with sustainable market presence in only 3 or 4 cities, selling for a PE of over 100.  From this precarious point, the stock could fall by 2/3rds and still be seriously overpriced. (more…)

Its Never a Problem… Until it IS a Problem

Posted in Citron Reports by CitronResearch on the May 28th, 2009

 stock ticker: WRLD

The State of Denial at World Acceptance Corp….Citron Keeps Target at 0.

To say we are entering into a new phase of consumer protection regulation is an understatement.  Just last week the US Senate, in a rare bi-partisan landslide (90 to 5), passed a credit card reform bill  — by a margin so wide that one can say the country now has a mandate to protect borrowers from lending abuses.  President Obama has even gone so far as to call for a new financial watchdog agency just to protect consumers.

In early 2009, Citron warned about future regulation in the for-profit education space, in a series of reports on Apollo Group.  Subsequently, the stock has been down over 35% and just yesterday the government announced some proposed regulatory changes regarding marketing and recruiting expenses.  As investors, we must not focus on what is status quo but rather what will be status quo. (more…)

World Acceptance Corp (WRLD) — Part Deux

Posted in Citron Reports by CitronResearch on the May 13th, 2009

 stock ticker: WRLD

“Americans know that they have a responsibility to live within their means and pay what they owe. But they also have a right to not get ripped off by the sudden rate hikes, unfair penalties, and hidden fees …”  President Barack Obama   (May 10, 2009)

While President Obama was referring specifically to usurious credit card practices, those are tame and civil compared to how World Acceptance does business.  Citron believes in the New America, it is only time before either legislatures, the courts, or its own debt/receivables collapse the “shady” business of World Acceptance.  This report clarifies the pivotal difference that makes World’s business model much more vulnerable than the payday lending industry. (more…)

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