Theses from the Short Side (Part II)
From short theses of Kerrisdale Capital and GlassHouse Research.
Kerrisdale Short Thesis on BitMine Immersion Technologies ( BMNR 0.00%↑ )
Kerrisdale Capital’s latest short report turns its focus to BMNR 0.00%↑ — a crypto-stock upstart trying to reinvent the “digital asset treasury” playbook that made MicroStrategy famous. The problem, Kerrisdale argues, is that BitMine is chasing a trade that stopped working years ago.
The fund describes BitMine’s strategy as a reflexive loop without an exit: issue stock at inflated prices, use the proceeds to buy Ethereum (ETH), then market the rising ETH-per-share metric as “growth.” This self-reinforcing model — once viable when MicroStrategy was the only public vehicle for Bitcoin exposure — now exists in a completely saturated market. With dozens of crypto ETFs and more than 150 listed “digital treasury” companies, the scarcity that once justified paying a premium has disappeared.
Since June 2025, BMNR has accumulated 2.8M ETH — about $13B worth — financed almost entirely through nonstop share issuance. The company has raised more than $10B across 240M new shares in just three months, or roughly $170M per trading day. The result, Kerrisdale says, is “growth by dilution.” While total ETH holdings keep rising, the per-share metric investors actually care about has barely improved. As the report notes, BitMine even stopped disclosing share counts in its weekly updates — a red flag for any company selling the illusion of accretion.
Worse, Kerrisdale exposes BitMine’s supposedly “accretive” $365M direct offering as financial sleight of hand. Marketed as a premium sale at $70/share, each buyer also received two warrants with an $87.50 strike. After valuing those warrants, Kerrisdale concludes the true effective price was $42/hare — a 31% discount, not a premium. The buyers likely delta-hedged the warrants, putting more downward pressure on the stock.
Beyond BMNR itself, Kerrisdale argues the entire Digital Asset Treasury (DAT) model is collapsing. The original bull case rested on scarcity: public vehicles were once the only way to own crypto at scale. But now that Ethereum ETFs and on-chain funds offer cheaper, direct exposure, the “proxy premium” has vanished. Most DATs already trade at or below their crypto net asset value, with BitMine’s remaining premium sustained only by speculative momentum and marketing.
In short, Kerrisdale sees BMNR as a solution in search of a problem — a company raising capital faster than it can justify, relying on a model whose economics have expired. Without the scarcity, hype, or cult personality that made MicroStrategy’s run possible, BitMine’s future looks bleak.
GlassHouse Research short thesis on Ducommun Inc. ( DCO 0.00%↑ )
GlassHouse Research’s investigation into DCO — one of America’s oldest aerospace suppliers — portrays a company whose apparent growth story is built on accounting levers, not operational strength. Behind its “record backlog” and “transformation” narrative, GlassHouse finds evidence of premature revenue recognition, inflated working capital, and a culture obsessed with hitting numbers at any cost.
Aerospace Growth Masked by Accounting Games
DCO manufactures structural and electronic components for major defense and aerospace primes like Boeing, RTX, and Airbus. Under CEO Stephen Oswald, the company has rebranded itself as a high-growth “One Ducommun” platform, promising to reach $1B in revenue and expand margins through acquisitions.
But GlassHouse argues that this reinvention rests on aggressive accounting under ASC 606, where management can book revenue once “material hits the floor” and some labor is applied — even if nothing has been delivered. Former finance executives admitted they were instructed to “go find revenue” every quarter to ensure Ducommun never missed guidance.
The results are clear on the balance sheet:
Days Sales Outstanding (DSO) has surged from 67 to 121 days since 2018.
Contract assets (unbilled receivables) have ballooned to $221M, equal to 109% of quarterly sales — an all-time high.
FCF trails net income, with receivables and inventories devouring liquidity.
GlassHouse estimates that DCO pulled forward $61M in revenue in FY2024, enough to artificially beat analyst estimates in three of four quarters. Without this accounting tailwind, revenue would have fallen short and margins would have missed targets.
Warehouses Full, Backlog Shrinking
As customer programs slipped, DCO kept producing — and recognizing revenue — rather than throttling output. Inventories have doubled since 2019, with Days Sales in Inventory (DSI) now at 121 days, compared to ~68 pre-ASC 606. Insiders confirm this “build ahead” behavior: parts for Boeing and RTX programs are sitting idle due to delays, but still recorded as revenue.
This imbalance is now colliding with a weakening order book. Despite management’s repeated claims of “record backlog,” actual data shows:
Backlog fell from $1.06B (YE 2024) to $1.02B (Q2 2025).
Book-to-bill ratios dropped below 1.0 for consecutive quarters (0.70× most recently).
“Next 12-month backlog” declined from $756M to $714M in one quarter.
For GlassHouse, this marks the point where accounting sleight of hand meets operational slowdown — with warehouses filling up even as real demand ebbs.
Executive Incentives and Non-GAAP Engineering
Ducommun’s management pay is tightly tied to “adjusted” performance metrics — metrics that GlassHouse says are manufactured through exclusions and accounting adjustments.
In 2024, Ducommun reported GAAP net income of $31.5M but Adjusted EBITDA of $116.6M — nearly 4× higher. That spread was achieved by excluding recurring items such as:
Annual “one-time” restructuring charges,
Stock-based compensation,
Acquisition integration costs, and
Miscellaneous “professional fees” and “success bonuses.”
The incentives tied to these figures explain everything. CEO Oswald’s 2024 total compensation reached $21.3M — 68% of GAAP profits, compared to a median of ~9% among peers. Without the $61M revenue acceleration, the company would have missed its performance hurdles and bonus payouts would have plummeted.
Dependence on Struggling Customers
Roughly 60% of Ducommun’s revenue comes from its top ten customers, led by RTX (18.5%) and Boeing (8.2%) — both facing serious operational and regulatory headwinds. Boeing’s FAA-mandated 737 MAX production cap and RTX’s Pratt & Whitney engine recall have disrupted shipments, leaving suppliers like DCO with unfinished product and deferred payments.
Other key clients — Lockheed, Northrop, and Spirit AeroSystems — are also tightening capital and reprioritizing contracts. Spirit’s ongoing acquisition by Boeing further compresses supplier margins. In short, Ducommun’s “record backlog” is hostage to distressed primes whose own challenges cascade downstream.
Vision 2027: Aspirations Detached from Reality
Management’s Vision 2027 plan — calling for $1.3–1.5Bn in revenue and 15% operating margins — anchors the bull case. GlassHouse views it as marketing, not management. The company’s backlog is shrinking, book-to-bill has slipped below one, and regulatory oversight has intensified.
In 2024, the SEC cited Ducommun for multiple disclosure failures:
Over-prominence of Adjusted EBITDA,
Lack of gross disclosure for revenue estimate changes, and
Misclassified cash flow statements inflating operating cash.
Meanwhile, PwC issued an adverse opinion on internal controls tied directly to revenue recognition practices. Despite management’s claims of remediation, working capital metrics and accounting discretion remain unchanged.
The Short Case
The firm expects a “big bath” reset as inflated contract assets, excessive inventories, and weak cash conversion collide with reality. Once pulled-forward revenue is exhausted, reported growth will collapse, exposing the low quality of earnings and the overextended balance sheet.
GlassHouse assigns DCO a “Strong Sell”, valuing the shares at $25–$35, implying 40–60% downside from current levels.