Freedom Holding: After 'Borat,' the Silliest Kazakh Import of the Century; Would You Pay a 22-Year-Old Stanford Grad to Expose Wrongdoing?; DoorDash: 'The Most Ridiculous IPO of 2020'; My letter from a Zimbabwe jail

By Whitney Tilson

Tuesday, January 5, 2021

1) My friend Roddy Boyd at the Foundation for Financial Journalism recently exposed one of the most obvious promotions I’ve seen in quite some time – which has a $3 billion market cap! Freedom Holding: After ‘Borat,’ the Silliest Kazakh Import of the Century. Excerpt:

This Las Vegas–incorporated bank and securities brokerage has its principal office in Almaty, Kazakhstan, and a major presence in other cities of the former Soviet Union.

In Freedom Holding’s (FRHC) most recent quarterly filing of Nov. 19, management attributed the company’s earnings success to customers undertaking a higher volume of trades as a result of “the unique market characteristics surrounding the COVID 19 pandemic.” In other words, quarantined or marooned investors are day trading to pass the time as disease spreads across the world. And thus Freedom Holding’s astronomical revenue growth has seemingly made it the fastest-growing financial services company on Earth.

So why aren’t the big brokerage operations of the U.S. and Western Europe replicating this model? A clue as to why they are not can be found in Freedom Holding’s Securities and Exchange Commission filings. The Foundation for Financial Journalism has found that Freedom Holding serves up gaudy growth figures with few disclosures or incongruous explanations at best – and accompanies them with an operations structure akin to that of a penny stock company.

Despite the fact that Freedom Holding is incorporated in the States and its shares are traded on Nasdaq, nothing about its actual U.S. presence should give American investors any confidence. LinkedIn lists only one U.S.-based Freedom Holdings employee. And the company has situated its U.S. headquarters inside a Regus coworking space. The company’s auditor, Salt Lake City–based WSRP LLC, has just 16 partners and only four publicly traded clients, according to a Public Company Accounting Oversight Board filing.

Similarly Freedom Holding’s outside legal adviser, the law firm Poulton & Yordan, has merely two licensed attorneys and no website. All the while, most of the company’s operations – taking place in its trading and retail brokerage division, Freedom Finance – are carried out thousands of miles away in numerous jurisdictions, mostly in Russia, Ukraine, and Kazakhstan, but also Europe, and quite actively in Cyprus.

2) Speaking of people exposing wrongdoing, I got a kick out of this Institutional Investor article about a very industrious young man: Would You Pay a 22-Year-Old Stanford Grad to Expose Wrongdoing? Excerpt:

If you know something about investing, Edwin Dorsey wants to meet you. And he’s very persistent about it.

Once, Dorsey repeatedly messaged a prominent investor until he got a meeting – and then took a 90-minute Uber ride to get there, because he didn’t have a car. He haunted another investor’s offices, popping in repeatedly with investment ideas. He wrote Warren Buffett so many letters asking to set up a sit-down that Buffett’s assistant felt it necessary to caution him not to fly to Omaha.

If this sounds like boyish overenthusiasm, Dorsey comes by it honestly: He’s 22 years old. He started pestering big-name investors for meetings when he was still in high school.

“I’ve always been a big believer that you’ve got to get your face in front of people,” Dorsey says. “Almost everybody has something to teach you. Even if someone isn’t a wildly successful person in their industry, they’ll know something you don’t.”

He’s already learned enough to carve out a niche for himself in the financial world. At an age when his peers are still learning the ropes, Dorsey is putting out a successful newsletter about a sector of investing that doesn’t get the sustained coverage it arguably should: activist short-selling, betting against a company’s stock while alleging fraud or other problems.

His work has won attention and praise from some of the big names in the field – and now he’s getting people to pay him for his investment ideas as well. “He’s got more moxie and drive than most people doing this for 15 years,” says prominent short-seller Marc Cohodes.

I want to support him, so I just signed up for his research service:

Every Monday, The Bear Cave brings together the latest developments in the shorting sphere: new targets of hedge funds and activist-research outfits, and notable news of the week, with other features often thrown in, like Dorsey’s own research and video interviews with shorts like Cohodes and Block.

Dorsey started the newsletter in February, shortly before he graduated from Stanford University with a bachelor’s degree in economics. What he initially conceived of as a “weekly little recap” has grown to 5,200 email subscribers.

The newsletter is free, but in October, Dorsey introduced a paid tier: For $34 a month, subscribers get two of Dorsey’s own research ideas monthly. More than 200 people have signed up, he says – generating enough income for Dorsey to make it his full-time job.

These aren’t short recommendations as such, he says. They’re companies with red flags that Dorsey uncovers by combing through documents and filing public-records requests.

3) The first issue of The Bear Cave was worth the price of the annual subscription, as I’d somehow missed this bearish report, The Most Ridiculous IPO of 2020, on food-delivery company DoorDash (DASH) by Andrew Left of Citron Research. Excerpt:

There is no business that is more commoditized and competitive than having food delivered from the restaurant to your home. There is zero differentiation between Uber Eats, Postmates, Caviar, Grubhub, DASH, or any local provider. Even worse, this business model has no brand loyalty as the consumer just picks who will deliver their food for the cheapest price.

Yet, DASH is valued at over $50 billion!…

With DASH direct competitors Postmates, Grubhub, and Uber all trading in a tight valuation range of 3x to 6x sales, DASH is by far the most expensive food delivery company in the world trading at 19x sales.

Just five months ago, Postmates was acquired for $2.65 billion in an all-stock deal or 4x sales (based on annualizing Q2 2020 revenue of $161 million). At 4x sales, DASH would trade at $32…

Understand that DASH raised capital less than six months ago at a valuation of $16 billion. Nothing has changed except the stock is now >3x more expensive.

4) Being in Africa reminds me of one of the craziest stories of my life…

I was in Zimbabwe in early 1992 at the start of four months of adventure traveling throughout southern and eastern Africa before I started Harvard Business School that fall. Through a friend of a friend, I was doing a report for the Zimbabwe Department of National Parks and Wildlife on the tourist industry in the Lake Kariba area.

Like a total idiot, I accidentally overstayed my tourist visa by a week. When I realized this, I went to the local immigration office, thinking it was no big deal and they would quickly renew my visa…


To make a long story short, the police arrested me and locked me up in the local jail, where I shared a cell with a smooth-talking Zambian car smuggler. I was going to have to spend three days there, as the judge only came to this small town twice a week, but fortunately my friend got me released while awaiting my hearing.

I ended up pleading guilty and was sentenced to 30 days in jail (my heart sank!)… or a $1 fine!

To read the entire, crazy story, here is the six-page letter I wrote at the time to my then-girlfriend (and now wife of 27-plus years).

Best regards,


Whitney Tilson
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About Whitney Tilson

Prior to creating Empire Financial Research, Whitney Tilson founded and ran Kase Capital Management, which managed three value-oriented hedge funds and two mutual funds. Starting out of his bedroom with only $1 million, Tilson grew assets under management to nearly $200 million.

Tilson graduated magna cum laude from Harvard College with a bachelor’s degree in government in 1989. After college, he helped Wendy Kopp launch Teach for America and then spent two years as a consultant at the Boston Consulting Group. He earned his MBA from Harvard Business School in 1994, where he graduated in the top 5% of his class and was named a Baker Scholar.

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