SMH: WiseTech fights back as short seller attacks acquisitions

The Sydney Morning Herald writes:

Local technology unicorn WiseTech Global has hit back against another short-seller attack which has cast doubts on whether the host of acquisitions made by the $10 billion logistics software maker has added any real value to the company.

Analysis by short seller Viceroy Research obtained by The Age and The Sydney Morning Herald reveals of the 37 listed acquisitions made by WiseTech over the past four years, many are from distressed sales or bankrupt companies with revenues falling post-acquisition.

Viceroy claims WiseTech created “fake value” through dozens of non-material acquisitions, effectively buying revenue at a lower multiple than what it trades at in a strategy known as a “roll-up”.

However, WiseTech’s chief financial officer Andrew Cartledge has “serious concerns” about Viceroy’s claims that he said lacked understanding of the firm’s acquisition strategy and the risk, cost and time involved in developing technology internally versus acquiring it.

“WiseTech has been clear that its acquisition strategy has not been about revenue roll-up,” he said. “It is about bringing in talented and knowledgeable people and critical IP, converging this IP with WiseTech’s own technology to optimise our development pipeline (…).”

WiseTech (…) is one of the leading WAAX stocks (WiseTech, Appen, Afterpay and Xero), driving its growth through an aggressive acquisition strategy making 37 acquisitions for a total of $708 million since June 1, 2015.

However, analysis by Viceroy based, on company reports and publicly available information, shows revenues in a majority of these businesses have flatlined or are in decline, margins are substantially below WiseTech’s consolidated group margins and many of the businesses do exactly the same thing in different countries.

To read the full post, please click here.

The stock is down ~ 8% to A$30.2 in early trade on Monday.