Director | Exposing Creative Accounting, Bucephalus Research Partnership

Robert Medd

Director | Exposing Creative Accounting

Exposing Creative Accounting

Bucephalus Research Partnership

Bucephalus Research Partnership Limited. Exposing Creative Accounting.

At the Bucephalus Research Partnership (BRP) we analyse financial statements using our accountant's practical experience and our own quantitative algorithms for corporate governance, accounting risk and peer performance.

Our thematic research refines our unique algorithms while our single stock research focuses on examples where we discover a significant gap between published accounts and business reality.

​Bucephalus Research Partnership:
- Is an independent fee-based research service
- Does not take proprietary positions, long or short
- Does not solicit business or fees from the corporates we review

Forensic Accounting

WiseTech trumpeted its H1 results: revenue +31% and EBITDA +29% as vindication of the model.  The problem is that growth is M&amp;A driven, revenue at key customers was flat or down, like-for-like profit margin fell, pre-financing cashflow was negative, acquisitions are performing worse than expected and, having said “no capital raises” in April, they issued equity in May. The metrics they use are obtuse and useless for measuring their real performance, but it is quite clear that asset returns are collapsing. A roll-up with a 4% return on investment on 15x sales and 300x business cashflow looks over-priced. SELL

WiseTech trumpeted its H1 results: revenue +31% and EBITDA +29% as vindication of the model.  The problem is that growth is M&amp;A driven, revenue at key customers was flat or down, like-for-like profit margin fell, pre-financing cashflow was negative, acquisitions are performing worse than expected and, having said “no capital raises” in April, they issued equity in May. The metrics they use are obtuse and useless for measuring their real performance, but it is quite clear that asset returns are collapsing. A roll-up with a 4% return on investment on 15x sales and 300x business cashflow looks over-priced. SELL

WiseTech (WTC AU): Smoke and Mirrors, Sell

WiseTech asked to see our report and questions. There were no direct answers, simply a standardised email that stated that recent disclosures “firmly and comprehensively refuted our claims”, that they “reject misunderstanding, selective representation or mis-representation” and that they comply with all the local standards. This is odd because our questions came after the October filings,  they didn’t note any errors or incorrect conclusions and we think they are the ones using selective representation or mis-representation. We wonder if WiseTech has chosen to “take the fifth”, i.e. silence over self-incrimination.

WiseTech asked to see our report and questions. There were no direct answers, simply a standardised email that stated that recent disclosures “firmly and comprehensively refuted our claims”, that they “reject misunderstanding, selective representation or mis-representation” and that they comply with all the local standards. This is odd because our questions came after the October filings,  they didn’t note any errors or incorrect conclusions and we think they are the ones using selective representation or mis-representation. We wonder if WiseTech has chosen to “take the fifth”, i.e. silence over self-incrimination.

Adobe (ADBE US), the original Software as a Service (SaaS) success story, showed that online conversion could drive revenue, operating leverage and cash generation.  The Australian logistics software company WiseTech (WTC) isan accounting fiction,Slowing growth, negative operating leverage, overvalued intangibles, no profits or cashflow, black box accounting and related party deals.  living the SaaS dream, on 25x sales.It is time for wise technology investors to wake up and move on.

Adobe (ADBE US), the original Software as a Service (SaaS) success story, showed that online conversion could drive revenue, operating leverage and cash generation.  The Australian logistics software company WiseTech (WTC) isan accounting fiction,Slowing growth, negative operating leverage, overvalued intangibles, no profits or cashflow, black box accounting and related party deals.  living the SaaS dream, on 25x sales.It is time for wise technology investors to wake up and move on.  

SELL WiseTech (WTC AU): Slowing Growth, Negative Real Cashflow and Blackbox Accounting

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Investors continue to prefer the stability of the U.S. relative to emerging markets. The recent declines recorded in emerging markets and their currencies suggest global risk aversion. U.S. equity markets are, by contrast, not showing any significant signs of coming unhinged as a result of this rout in emerging markets.  In this report we examine the factors likely to impact the U.S. equity markets, and explore actionable opportunities within the Technology, Consumer Discretionary, and Health Care Sectors.

Investors continue to prefer the stability of the U.S. relative to emerging markets. The recent declines recorded in emerging markets and their currencies suggest global risk aversion. U.S. equity markets are, by contrast, not showing any significant signs of coming unhinged as a result of this rout in emerging markets.  In this report we examine the factors likely to impact the U.S. equity markets, and explore actionable opportunities within the Technology, Consumer Discretionary, and Health Care Sectors.

U.S. Equity Strategy: Cyclicals Remain Leadership - Staples & Utilities Are Strengthening

United States

Manhattan Associates, Inc. provides information technology solutions for distribution centers.  The solutions are designed to enable the efficient movement of goods through the supply chain.  The Company's solutions optimize the receipt, storage, and distribution of inventory, as well as manage equipment and personnel within a distribution center.

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Manhattan Associates (MANH US)

WiseTech (WTC AU): Smoke and Mirrors, Sell

WiseTech trumpeted its H1 results: revenue +31% and EBITDA +29% as vindication of the model. The problem is that growth is M&A driven, revenue...

Bucephalus Research Partnership

Wisetech: Taking the Fifth

WiseTech asked to see our report and questions. There were no direct answers, simply a standardised email that stated that recent disclosures...

Bucephalus Research Partnership

SELL WiseTech (WTC AU): Slowing Growth, Negative Real Cashflow and Blackbox Accounting

Adobe (ADBE US), the original Software as a Service (SaaS) success story, showed that online conversion could drive revenue, operating leverage and...

Bucephalus Research Partnership

U.S. Equity Strategy: Cyclicals Remain Leadership - Staples & Utilities Are Strengthening

Investors continue to prefer the stability of the U.S. relative to emerging markets. The recent declines recorded in emerging markets and their...

Vermilion Research

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