{
  "docId": "019dd923-622c-750b-8b96-6d03b12e1d18",
  "docSlug": "cfe5ee328183",
  "documentTitle": "Stroer SE & Co. KGaA (SAX)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
  "documentKindSlug": "research-note",
  "documentKindLabel": "Research note",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2016-04-21 00:00:00",
  "orientation": "portrait",
  "aspectRatio": 0.77272725,
  "pageNumber": 4,
  "pageCount": 62,
  "prevPage": 3,
  "nextPage": 5,
  "slideType": "executive_summary",
  "function": "summarize",
  "density": "overcrowded",
  "nDataPoints": 6,
  "notes": "This is a classic short-seller research note summary page.",
  "elementsJson": [
    "paragraph"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b96-6d03b12e1d18/4",
  "deckHref": "/decks/019dd923-622c-750b-8b96-6d03b12e1d18",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b96-6d03b12e1d18.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b96-6d03b12e1d18#slide-4",
  "components": [
    {
      "bbox": null,
      "kind": "callout",
      "text": "Ströer SE & Co. KGaA (“Ströer”) is not the company the market seems to think it is.",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd953-3f3e-76f7-b9de-51cb9d2592e8",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.07,
        "w": 0.78,
        "x": 0.11,
        "y": 0.57
      },
      "kind": "paragraph",
      "text": "Insiders have sold hundreds of millions of euro worth of stock, and even failed to properly report some of their share transactions. We believe that since Ströer embarked on its digital strategy in 2013, its board of supervisors has generally lacked sufficient independence.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "03053f96-3caf-46a6-b903-718f2a6ca6aa",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.07,
        "w": 0.78,
        "x": 0.11,
        "y": 0.11
      },
      "kind": "paragraph",
      "text": "When we scratch the surface at Ströer, we see a company that to us appears far less successful in online than the market seems to think. Moreover, we see a company whose insiders have spun a great story, but with seemingly little substance.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "134e0b88-d172-4f0a-bcb3-4f042cb15486",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.05,
        "w": 0.78,
        "x": 0.11,
        "y": 0.49
      },
      "kind": "paragraph",
      "text": "We have identified an instance in which a once key digital acquisition went bad, and to our mind, the company and management seem to have avoided being held accountable.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "7f337a95-1322-4006-8d5e-6dc82c681340",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.09,
        "w": 0.78,
        "x": 0.11,
        "y": 0.77
      },
      "kind": "paragraph",
      "text": "We adjust Ströer’s 2015 free cash flow down by a) €24.8 million due to our inability to reconcile certain balance sheet and cash flow statement accounts, and b) €26.9 million of purchases of non-controlling interests. We adjust Ströer’s 2015 operating cash flow downward because we suspect the company greatly stretched its payables (in terms of days sales) to 118 days, versus a three-year average of 95 days.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "943ddfec-86d2-45b2-8dc7-9eb58933ceaf",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.07,
        "w": 0.78,
        "x": 0.11,
        "y": 0.25
      },
      "kind": "paragraph",
      "text": "Ströer SE Co. & KGaA (“Ströer”) is not the company the market seems to think it is. We believe organic growth, EBITDA, operating cash flow, and free cash flow to be significantly lower than Ströer reports.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "b74c223c-7965-4a3e-a984-a6da506a22f4",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.07,
        "w": 0.78,
        "x": 0.11,
        "y": 0.67
      },
      "kind": "paragraph",
      "text": "We believe that Ströer has substantially overstated its organic growth figures in 2014 and 2015. We do not know if what we believe to be the overstatements result from incompetence or are an attempt to mislead investors. In our view, the most accurate way of measuring Digital organic growth in 2015 would have yielded a rate of only 2.5%.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "f380722f-3728-4856-b47d-50268db98c29",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.11,
        "w": 0.78,
        "x": 0.11,
        "y": 0.35
      },
      "kind": "paragraph",
      "text": "Ströer’s governance reminds us of some of the companies we researched in China. In one instance, Ströer agreed to buy a company from insiders before the insiders themselves even purchased it. We believe approximately €22.4 million on a €2 million cash investment made just six months earlier is a reasonable estimate.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "ff6eaf0e-a8c3-4416-8d61-8bfae33d4d51",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.02,
        "w": 0.1,
        "x": 0.11,
        "y": 0.21
      },
      "kind": "title",
      "text": "Summary",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "cd7d0c08-6fbd-43e0-bc1b-b13bb9f0f939",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [],
  "arcBeats": [
    {
      "to": 40,
      "from": 3,
      "beatId": "b3f52913-eba1-4212-8b6a-c784e421d7c9",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "Expose Contradiction",
      "beatSlug": null,
      "evidence": "Multiple sections expose contradictions in Ströer's financial reporting and governance.",
      "position": 0,
      "confidence": 0.8,
      "parentBeatName": null,
      "parentBeatSlug": null
    }
  ],
  "loops": [],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}