{ "docId": "019dd923-622c-750b-8b9a-931d15d7e8ac", "docSlug": "c71f39d7ed80", "documentTitle": "SMART Global Holdings, Inc. (SGH)", "authorId": "60_Wolfpack_Research", "authorName": "Wolfpack Research", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2019-09-25 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 25, "pageCount": 35, "prevPage": 24, "nextPage": 26, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 0, "notes": "The slide uses a 'fraud-exposure' or 'expose_contradiction' narrative style to undermine the credibility of SGH's management and business model.", "elementsJson": [ "paragraph", "footnote" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9a-931d15d7e8ac/25", "deckHref": "/decks/019dd923-622c-750b-8b9a-931d15d7e8ac", "deckJsonHref": "/decks/019dd923-622c-750b-8b9a-931d15d7e8ac.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9a-931d15d7e8ac#slide-25", "components": [ { "bbox": null, "kind": "callout", "text": "Whether there is any corruption in these activities is irrelevant. The key point is that SMART Brazil’s profits were reliant on government hand-outs and so their strategy focused on lobbying.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-78b4-70ad-b392-a35cbad5dba2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.86, "x": 0.07, "y": 0.64 }, "kind": "paragraph", "text": "In the eyes of the investment community, Kim is “Mr. SMART” in Brazil.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1cf5e0d4-c607-4101-a706-d1fbabfee9ed", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.86, "x": 0.07, "y": 0.34 }, "kind": "paragraph", "text": "Whether there is any corruption in these activities is irrelevant. The key point is that SMART Brazil’s profits were reliant on government hand-outs and so their strategy focused on lobbying.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "36f5ec30-ad28-4296-98f5-66acf01b453c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.86, "x": 0.07, "y": 0.55 }, "kind": "paragraph", "text": "SGH lists a Californian SVP as the executive responsible for Brazil. SGH’s website and DEF14-A name KiWan Kim as the executive controlling the Brazilian operations. Kim is mentioned eleven times in the most recent DEF14-A. He is consistently identified in SEC filings as President of SMART Brazil.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3bb9f43f-016f-4676-910e-476e0949a147", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.86, "x": 0.07, "y": 0.4 }, "kind": "paragraph", "text": "That strategy has been crushed. Their key man in country had influence with Brazilian politicians but is impotent against the might of the WTO.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "5154050c-4353-42dd-b87b-c638574f7e80", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.86, "x": 0.07, "y": 0.16 }, "kind": "paragraph", "text": "SGH’s corporate strategy in Brazil has hit a wall. It focused on influencing government policy and preserving the anti-competitive tax subsidies of the PPB, which was so critical to profitability, but the WTO’s ruling has made their strategy worthless.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "7b849000-b1a7-4d2f-b8fa-f292590af43c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.86, "x": 0.07, "y": 0.67 }, "kind": "paragraph", "text": "And yet his LinkedIn profile has him living in San Francisco and with no mention at all of Brazil.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a0863c4a-9da4-4efc-9001-ba80ac156961", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.86, "x": 0.07, "y": 0.45 }, "kind": "paragraph", "text": "Investors are likely unaware of how important this has all been to SGH’s earnings, because they have been kept in the dark. Allow us to explain.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "bc684846-6c46-4e7a-8470-cdb27a32e05e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.86, "x": 0.07, "y": 0.25 }, "kind": "paragraph", "text": "Their lobbying is evident in the activities of SMART Brazil’s key operatives. The most senior executive in Brazil is a director of three trade bodies, including one he founded. The records of his meetings with government officials paint a picture of a sustained and focused campaign to drive benefit for SMART.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c28ea9a5-64de-4ec8-ab72-9644104185a3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.4, "x": 0.07, "y": 0.88 }, "kind": "source-note", "text": "22, 23, 24 footnotes", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8716669a-5a6e-44c4-93c7-40589070d51b", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.6, "x": 0.07, "y": 0.12 }, "kind": "title", "text": "3. Lobbying in Brazil was core to SGH’s Strategy, and its Profits", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c42e56b9-86f4-4f3e-849a-c3d01805dd69", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.3, "x": 0.07, "y": 0.51 }, "kind": "title", "text": "Who is “Mr. SMART” in Brazil?", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f5a283a6-1994-47b8-b276-c1522322da32", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "expose_contradiction", "slug": null, "matchId": "66c12626-c994-4709-99f6-bd1012dd0527", "evidence": "Contrasting SEC filings with LinkedIn profile to suggest misleading investor information.", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }