Dish Target of Negative Report From Short-Seller Kerrisdale

  • Firm preparing an argument that Dish's spectrum is overvalued
  • Investor started a fund dedicated to unidentified short

Dish Network Corp. is being targeted by short seller Kerrisdale Capital Management LLC, the investment firm said in a tweet Friday.

“We are indeed short $Dish,” Kerrisdale said, confirming a report late Thursday by Bloomberg News. “We haven’t chosen to discuss it publicly yet. When we do, we’ll have a lot to say.”

Kerrisdale is preparing a report on Dish that will argue that the satellite carrier’s airwaves are overvalued, according to people familiar with the matter, who asked not to be identified discuss private information. Dish said it’s managing its business for long-term investors.

Shares rose as much as 6.6 percent to $47, their biggest intraday gain since September. Kerrisdale’s confirmation -- without specifics about its rationale for betting against Dish -- made investors more comfortable about buying a stock that had already been dragged down 13 percent in the past week on speculation that the short-seller was targeting Dish. The shares were trading at $46.65 at 9:35 a.m. in New York.

Bloomberg Brief’s “Hedge Fund” newsletter last month reported that Kerrisdale started a fund to invest in one unidentified short-selling target. The firm often publicly identifies stocks for such trades, causing selloffs in the past for companies such as Sage Therapeutics Inc. and ClubCorp Holdings Inc.

Kerrisdale, which stands to benefit from a drop in the stock price, is expected to outline reasons other investors should bet against the stock, according to people familiar with the situation.

Dish reported better-than-expected first-quarter profit last month and is barred from making certain public comments during its participation in a Federal Communications Commission airwave auction.

“We understand Kerrisdale is shopping a negative report on Dish and may be shorting our stock in an attempt to make a short-term gain while we are in an FCC-mandated quiet period,” Bob Toevs, a Dish spokesman, said. “We will continue to manage the business for the long-term benefit of our shareholders as we have done over the last 35 years.”

Sahm Adrangi, chief investment officer for Kerrisdale, declined to comment.

Kerrisdale helped fan the speculation of its Dish short with a tweet Thursday: “We’re working on a $10 billion+ company that we believe is worth 60 percent to 80 percent less than its current trading value,” the firm said. “We’re still weeks -- perhaps many weeks -- away from actual publication,” it tweeted.

Dish Chairman Charlie Ergen has acquired radio wave spectrum valued as high as $46 billion. He has said he hopes to establish a wireless network that can deliver advanced services like video and Internet to rival the larger U.S. carriers.

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