March 13, 2017 / 3:25 PM / 6 months ago

BUZZ-Telit: CEO Cats hits back at short-sellers

** Telit CEO Oozi Cats has hit back against hedge funds that have made the internet of things company one of the most shorted on any UK market

** Stock touched an all-time high on Monday after reporting FY results

** Six hedge funds, each holding a significant bet, cumulatively are short 10.7 pct of the company’s stock

** According to Markit, 15.3% of the company’s outstanding shares are currently on loan, a record

** Short case understood to center on co’s cashflow generation

** Co has reported free cashflow in each of the last four years but would be FCF negative since IPO once M&A is taken into account. Charts: reut.rs/2mj4Kjv / reut.rs/2mji4o3

** Co also capitalizes more than half its R&D costs onto its balance sheet, increasing net income. Charts: reut.rs/2mSxVhg / reut.rs/2mSGXL3

** Analysts at Canaccord (“buy”) have recently criticized this analysis, noting co’s capitalization policy is in line with Swiss peer Ublox

** Cats told Reuters free cash flows were "consistently positive" year-on-year, also noting Telit's high cash from operating activities. Chart: reut.rs/2mj9Z2w

** There was “not one single economic reason” to short Telit, he said

** “It is very simple: it has been going on for more than a year now, we have been ignoring it all along,” he said. “You are free to run your calculation on how much they have lost.”

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