YouSaid · the spoken record

Edwin Dorsey

lines on the record: 47
first: 2021-10-01
most recent: 2021-10-01
sittings or episodes: 1
sources: podcast

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“Trey, thank you. I had a lot of fun too. My Twitter handle is at stock jabber, Edwin Dorsey at stockjabber. I tweet a lot about stock, so that might be a fun thing to follow. I'm unique in that I don't work for a hedge fund. I'm not employed by anybody. I really just write a newsletter called The Bear Cave, which is focused on exposing corporate misconduct. There's a free email that goes out every week and there's a paid tier for people who want more deep dive articles. And so check out the Bear Cave newsletter if you're into this stuff at stock javver on Twitter and keep listening to this podcast because you guys do well too.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Any investor doing it highly recommend they can reach out to me on Twitter or over email, and I'm happy to talk to people. And then if you're investing a significant amount, FOIA requests are almost market cap independent. Those can add value regardless of the size of the company.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“So it depends. There's elements you can do very easily. If you're investing in a concentrated portfolio and you actually care about understanding your investments, I would totally just play around with the full text search tool, at least put the CEO's name, seeing who the auditor and audit partner is takes like, you know, 10 seconds. It also depends on the area you play in. You know, as you'd expect, bigger companies tend to have less of these issues. I found once you get above the five and ten billion dollar market cap, these extremely obvious red flags go away. So if you're playing in the sub $10 billion and especially like the sub $5 billion or sub $1 billion area, these tools will add a lot of value. If you're investing in Apple and Google and Facebook, these are really irrelevant. Facebook isn't going to have a board member who's been involved in a ton of frauds in the past. All these companies are going to have reasonably qualified auditors. This becomes like less of an issue. But for super small companies.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Months from now, this business is going to go from near bankrupt to actually having a five-year runway of cash and growing sales. The market's going to notice that and then they have a chance to turn it around. And I'm like, this is a remarkably good thesis. I didn't buy any and this guy couldn't have predicted the magnitude of the short squeeze, but it was just out there in the open, this great, like, you know, A plus quality work. And, you know, people still don't recognize that, you know, if you get this stuff crowdsourced, there's a lot of nonsense, but there are like diamonds in the rough there. So I think everybody should use Reddit. Just type in the ticker. And I scroll through everything. And more often than not, there's one useful thing.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Trey, I think Twitter is generally the better tool than Reddit. It's similar, but just the quality is generally higher on Twitter. I've been blown away with some of the research on Reddit, though. If you wear a suit and work at a big hedge fund, you probably think, oh, it's all idiots living in basements saying to the moon AMC, in reality, that's part of it. But there's actually really outstanding research being done to share there if you know where to look. The GameStop stuff is actually a great example of that. If you go back, read the early stuff from Roaring Kitty, the guy who kind of predicted this all, it was remarkably well researched. He was like, well, COVID's going to help with game sales if people stay at home more and, you know, the biggest driver of new game sales are new consoles and a lot of new consoles are all going to be released in this three-month period. That's going to help GameStop. And they currently have a two-year one ray of cash. I'll get them to a five-year runway of cash. And they're at like one-tenth sales.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, precisely. This is precisely it. So it's not like, oh, they have a bad audit partner, so their customers are going to be upset. No, no, no, no. It's that companies almost self-select and work behind the scenes to get the questionable audit partner who will sign off on anything. And if you're getting that person, then that means you probably push for it. And that's a big red flag. And it just happens across the board. I'm literally looking into one company now. I don't want to say its name, like $25 billion entity. The audit partner has audited three companies that have like”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“And wait. The other two companies' audits are also highly controversial and have collapsed. It's like, huh, this is problematic. And you just see this over and over specifically for China a lot, where like specific audit partners, only audit companies that fall 90% or more. It's just fascinating. I think it's because auditors know, wait, this company is a little sketchy, so we're going to assign our like, you know, fall guy person to it. And it's just terrible, but it's like, that's kind of how it works and not enough people are talking about it. And the crazy thing is smart hedge funds don't know about it too. So there's all these like cool niche government websites that no one's using enough that all your listeners should use.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“So, I want to go to the PCOB website right now. It's pcabus.org. In the top right, there's a search button. Then you do auditor search. And there was a Chinese online education company, RYB Education, that collapsed right after its IPO. So you look up RYB and you can see in 2019-2018 and 2017, the auditor was Delois Touche, China, and the specific audit partner responsible for that audit was Lee Shan. And you look her up, you click on her, and she's been responsible for auditing three different companies in the last five years. One was RYB education, which fell like 80%. One was Puxin, which is another online education company, which fell significantly. And the last one was GSX Tech EDU, which is this other online education company that's collapsed like 90%. So if you were researching GSX or these other companies, you pull her up.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Billion dollar company. Wait, that's a problem. What I think happens is every auditor, big four, not big four, whatever, will have some people who are just like ready to be disposed of, ready to be the fall guy if something goes wrong. And they're assigned to all the questionable audits. Can I give you an example, Trey?”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“It's very deep in the 10K. Well, people have no idea you can do is you can go to the PCAOB website, you type in a ticker, it brings up the auditor, but it also shows you the specific audit partner responsible for that audit, which is fascinating. So you don't just know which auditor is auditing the company. You know which person is auditing the company. And what I found is oftentimes like an auditor might have an okay reputation, but specific audit partners, only audit companies that go to zero. And that's a problem. So you can click on the specific auditor on the PCOB website and see every company they've audited in the last four and a half years. And if you see, wait, they audited six different companies, average share performance of like negative 90%. That's a problem. If they've audited five companies that are sub 50 million dollar companies and one company, that's a five.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“When I'm first digging into a company, I'll alternate between a few. My favorite website is insider sport. That website is going to make it very easy to see executive turnover. So I'll pull up that. I'll just type the ticker in and I'll see how many CEOs do they have in the last 10 years. How many CFOs did they have in the last 10 years? Have any directors resigned within two years of joining? He's a high level of resignation is a problem. Second thing I'll do is I'll look into the auditor a bit, Trey. And this is another tool that people don't use enough. It's called the PCAOB Auditor Search Tool. It's public website, PCAOB is the public company accounting oversight board. It's a quasi-governmental agency that regulates auditors. And people don't know this. You can type in any ticker and it pulls up what the auditor is and who the auditor has been for the last five years. That itself is like actually somewhat common knowledge on Wall Street.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Name appears in any SEC filing. Then you see the full list of 40 companies they did deals with and you investigate yourself. No other way to get that. Bloomberg won't do it. A web search won't do it. All in the SEC full text search tool will do it. And that's super value.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“So, Ag Eagle, we referenced this a little earlier, but Ag Eagle, there was this hedge fund, Alpha Capital Ansult, that became their largest shareholder that did a big equity deal. Hey, you know, how do you learn about this fund? You could put them in Bloomberg, nothing comes up other than they're based in Liechtenstein. You can Google them and maybe one or two bad press articles comes up. But if you put in quotes alpha capital and salt into the SEC full-text search tool, run it back 10 years or all 20 years, it'll come up 50 times. And this is where you can add a lot of value just by digging in. You'll see like the average share price performance of every company that does a deal with Abhigl aerial systems is like minus 40% per year, something like that. We're like nine out of 10 really perform poorly. And that's like a massive red flag. And you can't find that any other way than using the SEC full text search tool to find every single time this hedge fund's”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“So Warren Buffett's gonna be a tougher one because he's mentioned in a ton of different filings. The first thing I do is I just see all the different companies he's mentioned in just quickly, I don't even care how he's mentioned. Just look up the share price performance for those companies. Now, Warren Buffett again is an anomalous example because there's so many and they're mostly big. But the first thing I do is like, okay, I see this executive has been mentioned by four different companies in their filing.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“That only go to zero, their companies probably also go into zero. B's like, likes, like. So that's one thing I do. And that actually doesn't take a lot of time to use SEC full-text search tool. Put in the 20 names most important to the company and get a sense of their history. Very, very underused tool by investors. Very underused tool by hedge funds that to me gives you the most comprehensive view of a management team because that's what drives a business, especially smaller businesses. They'll have an outsized impact there.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“But those are going to oftentimes boss over leave out the bad experiences. I want to see the bad experiences if there are any. So this free website, the SEC Full Tech Search Tool, it's run by the SEC, allows you to search any SEC filing that was published in the last 21 years. And what you do is you go to the SEC full tech search website, you can put in a name, put it in quotes, and it will literally show you every single time that name has appeared in any SEC filing for the last 21 years. And I'll do that for the CEO. And you'll see anytime you work for a public company, not just a CEO, but in any role, if he was a shareholder of a company, if he was a board member of a company. So if you've been a board member of three companies that have failed and now you're CEO of one, you know, that's not a great sign. But I'll not stop there. I'll also look at the CFO, the management team, and all the other orders. I found that if you have a board member who's associated with company.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. It's a big part of it. The first thing I usually do is I would try to watch a CEO interview just to get a sense of the CEO. The more you do this, you can try to sense, are they in it for the money? Are they super passionate about it? Is this their heart and soul? Somebody wants equates it. You can put CEOs in two baskets. They're either a mother or a babysitter. You know, babysitters do the job, but mothers care about the child. You love the child. It's your thing. Are they a mom CEO where it's their thing or are they a babysitter CEO or it's their job? That's where one thing you try to differentiate. The other thing is you can tell a lot by past practice, by their historical performance. So one tool I like, and we haven't talked about this yet, is the SEC full text search tool. This is what I use to really dig deep in a CEO and a management team's history. So if you Google a CEO, you might find their LinkedIn or you might find their bio on the company's website.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“A lot of people haven't looked at, and that's exactly what I try to do. I look at one to five billion dollar US publicly traded companies that are sleepy, no one's paying attention to, and maybe are misleading investors or hurting customers.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“So that's what I kind of like. Also, as somebody who's writing a newsletter, I want to focus on stuff that's off the beaten path because that's what provides value. I think there's a lot of groupthink on Wall Street, which is how you get the super high short interest. And then that almost turns me off. What I'll also say is that there's super high short interest. That means a lot of people have done a lot of work on the short side and a lot of people have done a lot of work on the long side. So in order to be smarter than the market, you need to do an extreme amount of work. And just as an individual, you're never going to get there. You might, you know, find one or two interesting things, develop a little bit of conviction, but if there's high short interest, that means there's some nuance or some complexity. You're never going to outsmart the market just as an individual looking at a really high short interest name. Or at least that's my view. You might if you're relentless and you're smart and you really read stuff, do that in like a sleepy, one to five billion dollar US company.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“I love that question, Trey, because traditionally what an academic would tell you is a high level of short interest is correlated with really negative returns. The 50 most heavily shorted companies historically underperform the S&P 500 by like 10% a year. So in theory, it's a good fishing pond. I'm actually turned off a lot by high short interest. I'll give you a few reasons why. One is there can be a short squeeze. And as you've seen from GameStop, it goes through 3 to 300 and it's like, so when it's high short interest, even if you think you're right, you need to make the position so small, it's counterintuitively almost better to get a low short interest name where you can make the position bigger. So something that has a high short interest, at most you want to make it like 1% of your fund. But if you get conviction around ExxonMobil or a sleepy read or some poring stock, you know will never be a meme stock, then you can actually make it a bigger position in your fund and you can develop more conviction around it.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Showed me how to do real research. And both of them, by the way, are very qualitative. Try to understand the company and its relationship with its customers, modeling and looking at financial.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“So, Trey, I've always been interested in stocks from a really young age, like in second grade, I was all about stocks. My transition to the short side for the dark side happened freshman year of college. I, by coincidence, just got introduced to two of the best short sellers out there, freshman year. One is Mark Quahodes, who used to run a billion dollar fund and now is a private investor, and he specializes in uncovering fraud. My other early mentor was Jim Caruthers, who runs a billion-dollar short only fund called SOFOS. I interned for him on and off for all four years. If you're too early mentors are like kind of the greatest in the field, you're going to be drawn to that field. So I like to joke, if my two early mentors were microcraft greats, I'd be here talking about microcaps. If my two early mentors were in private equity, I would have gone into private equity. I just so happened to bump into two of the absolutely best short sellers and that they taught me a ton, they introduced me to the right people, and they kind of gave me.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Or you can see these letters where it's like 15 questions just hammering them like wait, there's a discrepancy. You said this number here, but this number here, you changed the way you recognize revenue, but you didn't close it to investors. Why did this person not sign this document? And sometimes you'll get like crazy answers. Like I saw one like Chinese education company and it's like the SEC's like, why did your CFO not sign this document? And they're like, oh, it was a typographical error. Don't worry about it. And the CEO resigns the next day. The CFO resigned. You're like, wait a second, something's not right here. You've had three different CFOs. There's typographical errors. Let me dig in a little more. So the two ways I find a lot of companies are Twitter, SEC comment letters. If a company has a lot of debt, specifically debt due soon, that is going to be of interest to me. But if the debt is due in 30 years, that's probably not going to play a huge role in the thesis.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Trey, no, I'm gonna give you the strangest answer in the world. You know, none of your guests will say this, but a lot of my ideas come from really just two sources. I'm a big Twitter fan. I think there's a lot of really smart people on Twitter. I've even published a list of the 100 best Twitter accounts to follow that share great ideas. There's a lot of these weird accounts with 50 followers, 100 followers, 500 followers. They're sharing like really good research uncovering one or two red flags. I follow all them. I spend two hours a day on Twitter. I have a working list and anytime I see something a little suspicious, I add that to my working list. And we can discuss what I do once something gets on the working list. But that's how they pop up in one way. The second way they pop up is I'm a big fan of SEC Common Letters. For those who don't know, SEC Comment letters are informal correspondence between the SEC and a publicly traded company. They can be about a frivolous issue like why is there this typo in this box?”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Wait, you did that when you were a younger company well before IPO, and now you have real leaders in there. Maybe there is something there. So oftentimes I'm always skeptical of everything, Trey. And that's kind of almost a counter example to me of something that seems like it has zero substance, but there's actually something there, whether it's worth $4 billion, who knows.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“It's similar. Now, I think Nicola is a very peculiar example to bring up because sometimes the truth is a lot more complicated than people think. So when people think of Nicola, it's, oh, they faked a truck rolling down a hill and they told investors they had a working truck when in reality they were just rolling a truck down a hill. That's actually like, I think kind of far from what actually happened. Is the truck rolling down a hill happened two years before the company went public? So that wasn't as stunt to deceive investors who were investing in the stock. That was just like a promo video to build hype, not even like associated with any round that you were raising from private investors. So yeah, it's wrong. Yeah, it's misleading. But a lot of companies do stunts that aren't exactly true to build hype. And, you know, Nicola actually does have a lot of real people involved. So that's one where you can look at like the surface level and say, oh my God, they're all the truck down the hell that didn't work. It's got to be a total zero. When in reality,”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, but what they do is, you know, you never say you have 11 employees. You're about to acquire a transformative acquisition that's going to bring you to 300 employees. And then the number you see in the slide deck is going to be 300 employees. You have a contractor who makes these for you. So your total employee base, including contractors, there's some weird metric is 200. But you can't find an SEC filing. And that's where you'll get the truth. There's like 12 employees.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Start to dig into it a little more. And it turns out the thing that made the stock price rocket from 1 to 15 is they got this big investment from a Liechtenstein-based hedge fund called Alpha Capital Ansel. And you can look at the last 50 deals they've done, like half of them end with the company nearby.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Ag eagle aerial systems is the most wild story I think I've ever seen. At the time, it was like a billion dollar company, Ticker UAVS, and they claimed to make great drones that could be used for a wide variety of purposes to deliver Amazon packages, to scout gland. At one point in time, they said, we're going to actually be very great with the cannabis industries. You can use our drones to fly above farms, to find good areas for hemp fields to grow marijuana. Just all these wild uses for the supposedly great drones. And then, you know, that's how they're selling themselves to investors in online and what's going on in the chat rooms. You just open the 10K, their annual filing. And it's like they have 12 employees. How much do they spend in R&D $40,000? How many patents do they own? Like zero. It's like, wait a second. How can $40,000 R&D translate to an incredible business? Something smells a little. So, you know, I.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“So, the technology is really tough to evaluate the way you would evaluate their technology is through underwriting performance, and underwriting performance just hasn't been good. They've taken a dollar of premium, they lose a dollar and ten cents. You know, Metrimile or competitor based on the conversations I've had with people in the industry, Metrimile has the better tech. It's tough for me to say just as an individual who doesn't understand this super well. But if you look at the underwriting performance as a proxy for the tech, it just hasn't done well. The rumor was that they tried to get acquired pre-IPO and no one would buy them, which is another sign that the tech isn't as great as they think.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“I'd note though, is when it was at 20 and I put my report out, everybody was like, well, Tiger Global owns it. All these 10 big New York City hedge funds own it. Well, why are you, you know, how could they be wrong? But it happens a lot more often than you think where almost any big company that collapses has a lot of big name investors. That's something I found peculiar and I think I got the last laugh to a small extent there.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“So funny enough, Trey, even though I write a newsletter popular with a lot of short sellers, I don't short any of the companies I write about. I don't buy puts. I only make money from paid subscriptions to my newsletter. Some people find that odd. You know, I would say as a 23-year-old, I don't have a huge balance sheet. So I couldn't even make that money if I wanted to. I think it gives it more journalistic integrity and it allows me to charge subscriptions for my newsletter. So I actually don't have a short position and never have. That said, one thing Root has is a lot of debt. And if you look at the state level, all these states are having them issue like hazard reports and going kind of warnings about their financial position because as an insurance company you have to be strong financially. Where it goes from here, I'm not entirely sure. I think it's played out in kind of the way I expected where the markets noticed, hey, they actually do have a huge customer retention issue. And that's going to be a problem in the long run. No strong opinion on it now. One thing.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“We think this is a normal insurance company that has happy customers. In reality, everybody's furious and is going to churn, then that's some piece of novel information the market's missing. And once the market sees that in the financials, aka lower retention or lower revenue, that's when it's going to get priced in. And that's what I look for a lot when the financials show one thing, but you can tell it's about to change because customers are so unhappy. And as Jeff Bezos says, in the long run, the customer's interest and the company's interests are the same. That's true in most cases and that's what I believe firmly.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“So, I pay a lot of attention to customer satisfaction. How that translates to net promoter score can be interesting. If a company is saying, hey, this is my net promoter score, I want to be super skeptical of it. For example, there's a company called Opi, they give high interest loans, average interest rates of 120%. They claimed in their SPAC perspectives to have a higher net promoter score than Ample and Ritz-Carlton. There's no way this company that's doing payday lending has that high of a net promoter score. You might have hired some shady consultant to give you that number, but that's not a real number. I look a lot at customer satisfaction. But to your point, some businesses that have low customer satisfaction still perform well. So you want to look at the customer satisfaction compared to the investor consensus around that. If everybody's aware, hey, this is a business that leaves a lot of unhappy customers. Now, that business might not be great for society, but the stock still has potential to do well. But if the investing public is like,”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Trey, root insurance is like emblematic of the types of companies I look for. I look for companies that are misleading investors or hurting customers. And root insurance was doing well. Root insurance is a car insurance app, and their pitch to investors is, hey, you sign up for our app, we'll track your location 24-7 for two weeks. By doing that, we can differentiate the good drivers from the bad drivers solely on phone relocation. And based on that, we can only underwrite insurance to good drivers. We can see the times of day you drive. We can see the locations you drive. We can see the speed at which you're driving from the phone. We can see if you brake hard or if you break in a normal way, we can see your turning radius. We get all this data just from your phone on how well you drive that allows us to underwrite insurance in a really novel way. So we're only going to underwrite good drivers and we can get them better prices on that. And once we get scale, it's going to be a massively profitable business. That's how it works in theory.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Are the small payments company? And they're like, we have 3,000 pages of complaints, half of which are IRS suspicious activity reports. It's going to take us two years to get back to you on this, and it's going to be a $500 fee. And, you know, even though I haven't got the records yet, just that information says, wait a second, there's something going on here. You got a lot of problems for a small billion dollar payments company. So that's kind of the value for it. And you can use it in a lot of creative ways. And even the big smart money investors, I don't think are that sophisticated with.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Out facts or physical letter, and this information is online if you just Google FTC Freedom of Information Act request. And you can send him an email saying, I want all complaints against this company within the last two years or all complaints, consumer complaints that use this word within the last two years. It varies by agency. Sometimes they'll email you back three days later saying, here's a PDF with everything. Other times they might charge you a de minimis fee like $20 to get the documents. Sometimes they'll mail you a physical CD. sometimes it'll be an Excel spreadsheet. I do a lot at the state level, so like state attorneys generals. So I might go to the New York State Attorney General's office, send them an email, or use their portal to say, hey, I want all consumer complaints against MasterCard over the last two years. So there's going to be a ton, but for smaller companies, you can get a lot of insightful information. For example, there's a company called Payoneer, and I filed a FOIA request on Payne.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“So the freedom of information act isn't a website, it's a law that dates back a while that allows any US citizen to request information from their government. Journalists use it a ton to get confidential memos and items like that from the government to uncover political scandals. The way investors would usually use it is if you're a biotech investor, you're going to send a lot of FOIA requests to the FDA trying to get any little hint of information on whether or not a drug is going to be approved. If you're looking for an SEC investigation into a company, you might send a lot of FOIA to the SEC to try to see if they can reveal through whether or not they approve or deny the request if there's an active investigation into the company. The way I usually use it and the way I think it is best to use it is to try to get consumer complaints against company. So let's say there's a big company and you think they might have unfair and deceptive trade practices. You can go to the FTC. Usually you file a FOIA request by sending an email.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“About being overbilled by a company. That might be an isolated incident. But if you see a lawsuit, you see online gossip, you test it out for yourself and something seems wrong, you start to form a mosaic that something's really wrong here. So pacer.gov, I don't use it a ton, but it's a very cheap way to find lawsuits.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“So pacer.gov is just a government website that allows any person to look up lawsuits in certain courts against a company. It's pretty easy to use. You need to make an account. There's small fees associated with it, but it's never that material. And what you do after you make an account, which is free and government-broad, you just put in a company's name and you can say search all federal courts. And it brings up most but not all lawsuits that are against the company. It's a little bit of a clunky system. And then you can like organize it by date file or whether or not the lawsuits are currently open. There's some stuff that's sealed, not everything is perfectly arranged, but oftentimes for like the cost of $3, you can just pull up a lawsuit against a company. Sometimes for major ones, most investors will see it or hedge funds will look at it, but oftentimes things are missed. And what you can do is you can use it as an early stage of research to try to find like patterns. So if one person complains.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Know this is going to sound a little odd. I've never paid that much attention to insider sales. I look them up. There's a website called InsiderScore I use. You can find them on the SEC's Edgar database. I think oftentimes it's more noise than Signal. If somebody sells half their stock, yeah, that'll be bad. But tons of companies that have performed well like Facebook have had really aggressive 10v5.1 executive selling plans. Tons of companies that have performed poorly about a lot of insider buying. Well, one thing that I think is worth looking at is if you see cluster buying like”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“So I think a short stock, you need to be 21. And at the time, I wasn't even 21. So at one point, own put options, not for my first report, but for my second report. The sad thing is I ended up losing money on this whole ordeal because the stock went up while I was owning the put options and then collapsed only later. So I lost some money on this, but I gained a little bit of a Twitter following, which is come in handy.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Fake doing background checks when they claim to be doing real ones. Kids got hurt. That article got a lot of attention. The CEO, CFO, and General Counsel resigned, the Stanford Dean that investigated me also resigned. The company sent a private investigator to my house, which was like, you know, another crazy thing in this whole story. And the company ended up, the stock fell in half and it was sold to IAC at a small premium. And the good thing is the silver lining this story is after IAC bought care.com they revamped the board and they really fixed a lot of the safety issues. I tried signing up again under fake accounts and they all caught it. So it's one example of how like you can actually kind of make a little bit of a difference if you're persistent and working and go after it. I think it also goes to show that activist short sellers sometimes at their best can benefit society.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Really start to dig in. I file a FOIA request with every state attorney general, 50 different FOIA requests for consumer complaints against care.com. I go to the NYPD and I file a FOIA request for every time the word care.com had been used in a 911 transcript. So anytime somebody called 911 and used the word care.com. And then I wrote letters to every family that had ever called the police about care.com. I became obsessed and I published a much longer article on medium that got more attention, highlighting a lot of safety issues at the company. as well as other metrics where they were misleading investors. I sent that to a lot of journalists, the Wall Street Journal got interested in it. And to make a long story short, nine months later, the Wall Street Journal runs a front page story about these safety issues at care.com and how five kids were killed by care.com babysitters who had prior criminal history. So they had no business babysitting kids in the first place. This could have easily been prevented, but because care.com”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“They claim to be doing. So I put out a little report on them and I put it on my Twitter and it goes a little viral. The stock falls. A board member resigns the next day. And I'm like, okay, good. Two days later, I get an email from the Dean of Students at Stanford saying, we have to meet, we got a complaint about your Wi-Fi usage. And I'm like, this is probably care.com related. I haven't gotten too much trouble in the past. And I go in and they're like, care.com's co-founder called and said, you're messing with their site and you're harming their business and you need to take this article down right now because you violated Stanford's Wi-Fi policy. And I, you know, I'm like, how did I violate it? And they're like, well, you impersonated Harvey Weinstein and he violated their terms of service while using Stanford Wi-Fi. And I'm like, I'm not taking this down. They're like, you have to. And I say, no. And I'm like, put it in an email. And I get that email. I go straight to the student newspaper. And I decide, you know, this is really weird. The company is like calling my college.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Like somebody who had been arrested for drunk driving past care.com's background check. And I'm like, huh, this seems a little odd. So I decided to test care.com screening for myself because you're a babysitting platform. Your ability to screen babysitters is very material to your business if you claim to be doing that. So I decided to try to sign up as Harvey Weinstein. I used Harvey Weinstein's photo. I made up an address in Social Security number for Harvey Weinstein, completely fake account. I consented to their background check. I documented the whole process and at the end they're like, we're going to get back to you within 48 to 72 hours on whether or not you're approved as a babysitter on care.com. And I'm like, there's no way they approve Harvey Weinstein if they're actually doing these background checks. Lo and behold, I was approved. And not only was I approved, I got to their like second highest level of authenticity. I got all these badges for being CPR certified and first aid certified. And I'm like, they're just not doing any of this betting.”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely, Trey, and it's a great story. So, three years ago, I was a freshman finishing up freshman year at Stanford. I was interested in the stock market. I had been talking to a few short sellers, so I was starting to learn about it. And I had a friend who was a babysitter on care.com. And I knew it was a publicly traded company. And she said, you know, something seems awful about this site. I don't think they're vetting people even though they claim to be vetting people. You should dig into them. So this is the first company I kind of sunk my teeth in and did a little research on. They were the largest babysitting platform in the US at the time, roughly a billion dollar market cap. The first thing I do is I pull up Pacer and I start looking at lawsuits against the company and I see, hey, there's actually been a bunch of lawsuits against this company, a lot around safety issues and them not letting babysitters even when parents pay for background checks. And then I started looking at like local news reporting and there was a lot of these issues where”
2021-10-01 · We Study Billionaires · TIP383: Exposing Bad Companies w/ Edwin Dorsey · IDENTIFIED FROM THE TRANSCRIPT