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Ebix on the hot seat again!

February 22, 2013

The short sellers are at it again. Another post on why Ebix is a complete and utter fraud! I must say that I read these anonymous Seeking Alpha posts with interest, as well as a grain of salt. There could, of course, be some truth to what the shorts write, Copperfield and now Gotham City Research. I won’t deny it. This latest article had me really thinking. It contained several arguments, especially the Singapore related-party loan, which brought me closer to considering that there just might be something to the short thesis. But really, is all the hyperbole necessary? It really detracts from the thesis. And the personal attacks on Raina, the CEO? I think those, too, detract from the thesis.

The shares dropped over 25% yesterday with over 3.4 million shares trading, about 7 times normal volume. I picked up a couple hundred more shares at $14.11 (so now you know where I’m going with this post). I’ll be most interested to see Ebix’s response to the latest Seeking Alpha post as well as the part II of the post (the title to the post linked to above is ‘part I’). The jury is still out in my mind. My studied opinion, at this point, is that, with all the subsidiaries in the various countries, the sheer number of companies acquired and Raina’s entrepreneurial approach to business, the company has probably played a bit fast and loose with its accounting. No, that’s not exactly what I mean; it’s more likely that the accounting systems have not grown apace with number of subsidiaries added, and that not enough attention has been given to ‘control’ during this growth stage of the company. By this I don’t mean to exonerate management. There could actually be systemic problems, even fraud, but my ‘feeling’ is that it’s more a lack of attention and focus. I am willing to change my mind if enough real evidence is produced, but I think attacks on the CEO for his charity work are a bit bush league. I wonder if the writer of the article in question has given as much to charity as Robin Raina!

Another a question to consider. Who was selling and who was buying yesterday? Personally, I’m hoping that on the buy side, it was Ebix repurchasing shares and that it wasn’t the short sellers covering.

  1. Mark Bagne permalink

    If you haven’t already, I sure wish you’d listen to Ebix CEO Robin Raina defending his co. against the Gotham attack. He refutes it point-by-point and asserts that Gotham created an “illusion of made-up numbers and concocted tables.” The audio link to the Craig-Hallum conference call, from just yesterday, is:

  2. Thanks for the link Mark. Yes, I had listened to the call and found the reasoning much more convincing than Gotham’s post. So I’m still an Ebix investor and fan.

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