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Sell MiMedx and Purplebricks

By Lucian Miers | Tuesday 12 June 2018


Disclosure: The author has a short position in one or more of the shares mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


US biotech firm MiMedx (NASDAQ - MDXG) has announced that none of its financial statements going back to 2012 can be relied upon and that it is still unable to file for Q4 2017 and Q1 2018. Its CFO was leaving with immediate effect to be replaced by one Edward Borkowski, who had previously tended the books of Canadian pharma company Concordia until it went bankrupt.
 
It is a sign of the times that the stock fell “only” 25% and is still capitalised at $700 million. True there was a fair amount of short covering as this fraud has been flagged in massive and impressive detail by the tenacious Marc Cohodes and his new best friend from the UK, Fraser Perring of Viceroy Research.
 
Borrow on MiMedx is expensive but at $6.3 it is an outstanding short opportunity as my instinct tells me that this one goes to zero and people end up in jail.
 
In the UK, I notice that Purplebricks (PURP) shares have been falling recently. Its prelims should be out this month and it is interesting that we had no trading statement in the first week of May, as we did last year and the year before. Maybe the company thought that the profit warning which accompanied the news of the Axel Springer investment in late March was enough, but given that the company never usually misses an opportunity to trumpet a hint of good news, its silence this time should be noted.
 
As I noted before, the profit warning intimated that sales in H2 would be less than H1 which didn’t include a contribution from the US. For a company priced for spectacular growth this is insane and bears all the hallmarks of another Woodford debacle. Sell at 350p.

This article first appeared on the Nifty Fifty website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next share tip from Tom & Steve and a new shorting piece from Lucian shortly click HERE


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