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  "documentTitle": "SMART Global Holdings, Inc. (SGH)",
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  "authorName": "Wolfpack Research",
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  "presentationDate": "2019-09-25 00:00:00",
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  "notes": "The slide uses a 'villain' narrative style, accusing management of misleading investors.",
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      "text": "This is evidence that SGH’s management knows its Brazil business will not rebound, in contrast to what they are telling the market.",
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      "text": "However, SGH spent ~75% of its cash on hand at the end of Q3 on the acquisition of Artesyn Embedded Computing, instead of keeping it for the promised and expected rebound. This is evidence that SGH's management knows its Brazil business will not rebound, in contrast to what they are telling the market.",
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      "text": "Current sell-side estimates for 4Q19 and fiscal 2020 reflect expectations that SGH's Brazil segment will grow revenue and SGH as a whole will significantly grow its margins. Frankly, we consider these expectations to be those of credulous analysts mindlessly lapping up the half-truths of executives.",
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      "text": "While SGH's management is telling investors that everything is fine in Brazil, its actions don't match up with its statements. Based on recent movements in SGH's working capital and aggressiveness on the M&A front, we believe management is either deliberately misleading investors or recklessly mismanaging the company's finances.",
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      "text": "If SMART Brazil does completely reverse its downward revenue trends, as the street expects, with realistic margins given the loss of the PPB premium, our analysis shows SGH could find itself in severe financial distress in the short-to-medium term. Below, we will highlight the key assumptions of the model we used to reach this conclusion.",
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      "text": "Even if SMART Brazil manages to reverse its recent trend of 25% sequential revenue declines, this growing revenue would have much tighter margins. As we explained earlier, the old PPB incentive created a premium on Brazilian-made memory, and that premium no longer exists.",
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      "text": "Over the last 2 quarters, SGH has boosted its cash flow through a massive working capital unwind. It has collected $97 million in accounts receivable, liquidated $52 million in inventory, paid down $93 million in accounts payable and $14 million in accrued expenses. All told, SGH netted approximately $47 million in additional cash flow by reducing its working capital.",
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      "text": "we have other businesses that are doing well, that we're growing, that we're as a result less dependent on memory especially the commodity memory products. — SGH Q3 2019 Earnings Conference Call",
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      "text": "12 “SGH Q3 2019 Earnings Conference Call” via Bloomberg LP, accessed September 12, 2019\n13 Walpole v. Smart Modular Technologies Inc. et al., Peters v. Ajay Shah et al., Marder v. Smart Modular Technologies Inc. et al., Wilkes v. Ajay Shah et al.",
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      "text": "Management Calls it Outlook; We Call it Look Out",
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