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  "documentTitle": "A.O. Smith Corporation (AOS)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-05-16 00:00:00",
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  "notes": "The slide uses a peer comparison bar chart and a time-series bar chart to highlight margin anomalies.",
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      "text": "We are encouraged that now is the time to be short given the start of the gross margin unwind beginning in Q1’2019.",
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      "text": "AOS Margins Unusually High",
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      "text": "First Crack In The Gross Margin Story Appearing",
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      "text": "Gross Margin: 41.1%",
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      "text": "Spruce Point has repeatedly found great short ideas by carefully investigating gross margins and their trends. We observe that AOS has reported substantially higher average gross margins relative to peers. Analysts and the Company say its because they have “premium” performance products and command higher pricing, yet we’ve viewed with skepticism AOS’s ability to sustain this product positioning for commodity-type products. Management does not provide adequate disclosure in its annual report breaking down all items that flow through COGS. We are encouraged that now is the time to be short given the start of the gross margin unwind beginning in Q1’2019.",
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      "text": "Source: AOS 10-K annual reports and conference calls\n1) Panorama Consulting Study 2018\n2) Total costs reported in SG&A plus 2018E amount of $17m",
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      "text": "AOS's Unusually High Margins",
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