“He’s very quirky,” Taylor says. “He’s like a finance bro, but he’s not. He’s a very mild-mannered Canadian. He’s an exceptionally well-put-together person.”
Adrangi’s rise has inspired some predictable sniping from other hedge-fund managers, who think his Chinese shorts were a one-off hit. “He runs a little fund. How big’s his fund?” asks Andrew Left, a short-seller who runs an online newsletter called Citron Research. “He’s not a trailblazer. I think he does nice research. I also know of a bunch of other guys who are much better. But 2011 was an outlier. He caught an amazing move in the market.” Others see Adrangi as an all-but-inevitable billionaire, poised to compete with his idol Loeb, who started young like Adrangi and eventually built his fund, Third Point, into a $13 billion juggernaut.
“I think Sahm is the Dan Loeb of his generation,” says John Hempton, an Australian hedge-fund CIO, who was also shorting Chinese reverse mergers in 2011. “He’s got this strange combination of modesty, genius, and awareness of his own limitations.”
Earlier this year, Hempton introduced Adrangi to Loeb himself. Loeb, of course, is best known for the vitriolic letters he sends to the corporate executives he thinks are falling down on the job, but Adrangi spent the conversation asking how to institutionalize his fund—in other words, how to stay aggressive while also protecting the fund against potentially fatal mistakes. Risk management is one of Adrangi’s bigger worries, and he’s recently begun reorienting around safer long stocks, picking up stakes in companies like Amerco, which owns U-Haul, and Lindsay Corporation, which makes farm irrigation systems. Sometimes, he buys silently. Other times, he tweets and writes blog posts with detailed research supporting his investment thesis, in hopes of getting a faster market response. In January of this year, he wrote, “We’ve gone long $BV @Bazaarvoice, writing Seeking Alpha article tmrw. A bit speculative but attractive relative to comparable cos (i.e., $NOW).” Stock for Bazaarvoice, a marketing-analytics company, shot up 3 percent that day, before the article had even been published.
Kerrisdale’s long-dominated strategy hasn’t been as lucrative as his 2011 shorts—the fund gained just 13 percent through August 1 of this year—but it’s still commanding respect. Even his social-media push has been validated, after Icahn himself used Twitter to tout his Apple investment earlier this summer.
“Now nobody comes into a meeting and thinks, This guy doesn’t know investing,” Adrangi says.
Having conquered research-based short-selling and gotten his feet wet on basic long trading, Adrangi is pushing himself into the choppier waters of activist investing. Other big-name investors have made billions by buying up shares in companies, taking board seats, bullying management into making the changes they want, and reselling their stakes for a profit. It’s a style of investing that’s been used to press for changes at companies like Sears Holdings and Yahoo. And while activist investing can be riskier than simply picking stocks, it’s also a more fun game, with higher stakes, bigger fights, and more opportunity for stardom.
Adrangi is curious. His approach tends to be more circumspect, more Canadian than an Icahn-style fireworks display. But he likes the brash nature of activist investing, the name-calling, the swagger-as-business-strategy approach. And though his professional demeanor is polished, he’s still capable, in person, at least, of talking in Wall Street trader vernacular. People whose ideas he likes are “the man.” People he disagrees with are “delusional” or “full-on retarded.” He’s been rewatching the YouTube video of a splenetic CNBC fight between Icahn and Ackman over nutrition-products company Herbalife. (Icahn called Ackman a “major loser.”) Adrangi took a small stake in Herbalife—choosing Icahn’s long thesis over Ackman’s short—a shrewd move that got him name-checked in a Vanity Fair article about the episode.
He sees that his Twitter account and his blog could be tools for more brash pronouncements. His e-mail list now has 3,000 subscribers; in time, if that number grows, he might have an army of followers ready to be mobilized for profit.
“That’s where we’re trying to get to,” he says. “We’re building credibility in the marketplace, and so, over time, we’re going to get to the point where we have a great investment and are ready to pound the table, and we’ll get that Icahn effect.”
And if becoming an investing legend requires acting like more of a jerk? Well, it’s something Adrangi’s willing to consider. After the closing bell rings and the trading day comes to an end, we head to dinner at a nearby steakhouse, where he tells me that while he still likes the research part of investing—the long nights hunched over 8-Ks and 10-Qs, the digging through earnings-call transcripts, the private investigators in far-flung countries—he’s realizing that the more profitable route, in the long run, might be to turn himself into a brand, go on CNBC, get some gravitas, and start picking fights.
“I was going to write this Morgans Hotel letter a month ago, but I held it back because I didn’t want to hurt people’s feelings.” He takes a sip of his old-fashioned. “Now I wish I’d sent it.”
A few minutes later, after the waiter brings us another round, Adrangi returns to the topic of Morgans.
“The lesson learned is to be more aggressive,” he says. “Why did Burkle release that letter? Because over the course of his career, he’s learned to say, ‘Fuck it.’”