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  "docId": "019dd923-622c-750b-8b98-72ad4dd9da96",
  "docSlug": "86dfa89096f8",
  "documentTitle": "Momo, Inc. (MOMO)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
  "documentKindSlug": "activist-deck",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2018-06-27 00:00:00",
  "orientation": "landscape",
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  "pageNumber": 20,
  "pageCount": 70,
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  "slideType": "expose_contradiction",
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  "density": "overcrowded",
  "nDataPoints": 6,
  "notes": "The slide uses a table to highlight the discrepancy between disclosed and undisclosed entities, supported by an organizational chart.",
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      "text": "Spruce Point has discovered that Momo has 9 undisclosed first level subsidiaries and 114 undisclosed second level subsidiaries (\"subs\"). In our experience, it is uncommon for a U.S. listed Chinese company to fail to disclose the subsidiaries of its VIE.",
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      "kind": "image",
      "text": "Organizational chart of Momo VIE structure",
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      "kind": "list",
      "text": "Momo uses a variable interest entity (VIE) to operate its mobile app business in China to circumvent foreign ownership limits on internet and mobile content platforms. This is now the common accepted way to operate such a company",
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      "kind": "list",
      "text": "Four subsidiaries are identified in the \"Long Term Equity Investment\" (Note 5 to the financial statements) as equity investments of the group, but not as subsidiaries of the VIE entity. In the same note, there is an \"others\" item for both equity and cost method of investment sections that is the grab bag where the undisclosed entities are presumably recorded",
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      "kind": "list",
      "text": "The Company discloses that its VIE, Beijing Momo has 10 first level subsidiaries and 2 second level subsidiary. Spruce Point has discovered that it has 9 undisclosed first level subsidiaries and 114 undisclosed second level subsidiaries",
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      "kind": "metric",
      "text": "undisclosed subsidiaries: 123",
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      "kind": "paragraph",
      "text": "Spruce Point has discovered that Momo has 9 undisclosed first level subsidiaries and 114 undisclosed second level subsidiaries (\"subs\"). In our experience, it is uncommon for a U.S. listed Chinese company to fail to disclose the subsidiaries of its VIE.",
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      "kind": "source-note",
      "text": "Source: SAIC, Spruce Point Consultant, Company Reports",
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      "kind": "table",
      "text": "Beijing Momo Subsidiaries table showing 14/9/23 and 2/114/116 breakdown",
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      "kind": "title",
      "text": "Red Flag 2: VIE Structure Contains Undisclosed Companies",
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      "evidence": "The slide explicitly labels the finding as a 'Red Flag' and details undisclosed entities to suggest financial misrepresentation.",
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      "arcName": "Overcoming the Monster",
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      "evidence": "Slides 7-69 systematically expose contradictions and red flags in Momo's business, including undisclosed charges, complex VIE structure, and regulatory risks.",
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      "evidence": "Slides 17-28 expose the iceberg of Momo's problems, revealing undisclosed charges and complex VIE structure.",
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      "objective": "What are the implications of Momo's undisclosed charges and complex VIE structure?",
      "structure": "The Symptom (Visible) -> The System (Hidden) -> The Root Cause",
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