When you are looking to invest your personal capital, doing the right level of financial diligence is very important. While most people focus on reading reports about companies that discuss their future growth potential, other people and up researching companies that have potential for big losses.
When looking for opportunities that could result in a company losing stock value, you could end up making a lot of money through short selling and buying put options. One individual that continues to provide insight into companies that may have overvalued stocks is Sahm Adrangi, who is the principal of Kerrisdale Capital.
Over the past few years, Sahm Adrangi has issued a number of very insightful reports that discussed the financial condition of many different companies. While many of his views end up being disputed, he is often proven correct in his assessment. Over the past few weeks, Sahm Adrangi issued a report on the prospects of Proteostasis Therapeutics.
Overall, Sahm Adrangi gave a number of good reasons why he thinks the company will not continue to see a high stock price. Overall, the future prognosis of Proteostasis Therapeutics will hinge on the company’s ability to bring a new drug they are working on to the next stage of a clinical trial. The Proteostasis Therapeutics company was recently able to bring a drug used to treat cystic fibrosis through Stage 2 testing with the FDA. While this is a major accomplishment, there is still a lot more work that needs to be done in order for them to be able to bring it to market. While Proteostasis Therapeutics has seen a big increase in value due to the Stage 2 test, the company could suffer if it is not successful in bringing it through Stage 3.
According to Adrangi, there is plenty of reason to doubt that Proteostasis Therapeutics will be able to bring their next drug through the next stage of clinical trials. He also believes that the company has tried to stay compliant by producing interim reports, but he believes that a lot of the information provided has been swept under the rug.