Professional Documents
Culture Documents
Undisclosed Relationships at Transdigm
Undisclosed Relationships at Transdigm
While we are sure there will be many books written on these questions, we can
narrow it down to a small checklist. The smart money got Valeant wrong by:
But the most important rule the Smart Money missed was simple:
Citron strongly advises that investors not rely on analysts to inform them when
the game is over. It was a Jefferies analyst who insisted Valeant was a buy with a
$172 target after the entire Philador mess was revealed. Nobody told them the
game was over.
Now look what they're saying about TransDigm.
That's the game they're talking about here. What the Jefferies analyst deems is
smart is more accurately described as ... illegal.
After the first Citron report, the big questions circling were Does TransDigm have
a captive distributor or Is there an entity that we should be aware of that we
are not? Is there anything that is being covered up?
Bratenahl Capital is actually a family office for Nick Howley. Citron believes that
Howley is the only investor in this fund, which holds ownership interests in
numerous aviation businesses.
Heres the astonishing evidence we have compiled that shows Walter Nicholas
Howley (WNH), and Bratenahl Capital Partners (BCP), are one and the same:
The two General partners which own Bratenahl Capital Partners (BCP) are
Valentine LLC and W.N.H., L.L.C.
The address, principal place of business for BCP from 2003 through October
6, 2011 were the homes of Walter Nicholas Howley (WNH).
The registered agent for process of legal service for BCP L.L.C., W.N.H L.L.C.
and Valentine L.L.C. as filed with the OHIO SOS have always been WNHs
home address. The General Partners initial address on Government filings
also shows WNHs address being used for BCP:
http://www2.sos.state.oh.us/reports/rwservlet?imgc12g&Din=200309000974
So we ask: Why doesn't Nick Howleys name appear anywhere on the Bratenahl
website?
You can look at an archived copy from just months ago here:
http://web.archive.org/web/20161015121357/http:/bratenahlcapital.com/team
And compare it to what todays site looks like, with a conspicuously absent Nick Howley here:
http://bratenahlcapital.com/team/
Here are all 33 of the statements that TRANSDIGMs management made on its recent
conference call:
3. At some point, yes. I don't know what the exact quarter-for-quarter is in each quarter
going forward, but as I said, it's hard to exactly pin that to what exactly did in the quarter
6. If your question is, do I know it's going to ship in the fourth quarter, I do not.
8. I don't know what the price will be but I don't see any indication that the pricing has
changed.
10. I don't know the exact number there. One of the reasons I don't know the exact number is it
sometimes is a little informal rather than -- the bigger the order gets, the more formal that gets
and the smaller ones are a little more informal.
11. I don't -- the answer is I don't exactly know that answer but I do not believe there is any
12. I'm not -- the answer as I sit here is I do not know that.
13. I just don't know how to speculate on where we go other than I think you can -- I think you
know pretty well how we think about this and I don't see any change in the way we look at it.
14. I'm going to pass to Terry on the pro forma versus GAAP growth, because I'm not sure I
understand it.
16. I don't think it's materially different. I'd use roughly the same percents.
17. There is a little bit of an estimate because you don't know if there's a cut in 2018 that could
ripple back into 2017 and you have a little bit of a guess on whether there will be inventory
movement.
18. I don't think there is -- I don't know the exact number on the provisioning, but I do not think
it's very significant.
19. Something like that. That is the total average. I don't think the military's way off of that. I
don't have the exact number here
21. Presumptively, that means there is some share gain but I have to admit I don't know what
the number is.
22. I don't think so. There's nothing that I can really point out that I have any confidence in, in
that.
23. In the commercial, I don't -- I'm not sure of the answer to that.
25. I can't -- obviously, I can't -- I don't know what somebody might do in the fullness of time.
28. That is -- I can't answer that generically. That is very fact and circumstance specific.
30. I don't want to answer that because I don't -- I mean it's -- I just, I haven't done the math; I
don't know the answer.
How do you think this quote from President Trump that began his recent
address to Congress plays in TransDigm's boardroom?
After recent criticism about disclosures to the U.S. Government and to Wall Street
(euphemism for got busted lying), TransDigm has now coincidentally decided
to repurchase $600 million in stock. Instead of giving Wall Street answers, they
give us even more leverage (because 7X EBITDA wasnt enough?!?).
Needless to say...
AT BEST: Citron believes the company needs to inform its auditors of any and all
relationships that could exist between Brantenahl, TransDigm, its distributors,
subsidiaries and all other related party entities to TransDigm and Bratenahl. The
company needs to perform a full internal investigation.
The companys auditors should immediately put everything on hold until these
questions are answered satisfactorily.
AT WORST: Well, we know what happens. Weve seen the story before.