Spruce Point strikes again: Samsara version

Spruce Point has issued a short report with Samsara as the “target.” https://www.businesswire.com/news/home/20230921164081/en/Spruce-Point-Capital-Management-Announces-Investment-Opinion-Releases-Report-and-Strong-Sell-Research-Opinion-on-Samsara-Inc.-NYSE-IOT

Apparently the market is shrugging it off, as the shares are down less today than most of my others: 1.27% as I look now vs the Nasdaq down 1.35%.

For my part, I agree with the market. This is one of the weakest short reports I’ve ever seen. They mention lots of accounting practices which seem perfectly common to SaaS companies, they complain that 25% of Samsara’s revenue is from hardware (which of course we already know), and they even cite “Samsara’s highly exaggerated assessment of its Board of Directors’ skills.” LOL…pretty weak stuff.

I got to buy more under $24 pre-market…not sure if I have Spruce to thank or just this generally crummy market mood we’ve been in.



The toddlers got control of the market again.
“We afraid of what the Fed will do”.
“Fed didn’t raise rates, I will sell everything”.
If the Fed had raised the rates, it would’ve been the same…


The author, Ben Axler came after a company here before - Lightspeed (LSPD) and to be fair, however ludicrous, overwrought and hyperbolic his reports can get was right on that one, which was one of our worst. And he’s apparently gotten many other calls right.

But as far as this Press Release note the use of “COULD” and “MAY”…

We highlight that current and future Advanced Driver Assistance Systems (ADAS) and self-driving systems COULD completely displace Samsara solutions, which threatens to impair any terminal value investors are modeling to support their Samsara price targets.

We believe the blacklisting of Quectel COULD lead to revenue headwinds, particularly in the government sector where Samsara has noted recent strength and necessitate hardware replacements…

New concerns about ELD security vulnerabilities and the potential blacklisting of a component supplier signal unknown risks to Samsara products that MAY result in new revenue headwinds and additional gross margin pressures.

In fact, with the list including several unicorns, we anticipate the next IPO wave will include several of these companies, which MAY create troubling comps for Samsara

We also highlight that Samsara recently removed past disclosures in SEC filings referencing an LTV:CAC ratio above 8x, which suggests its underlying customer economics MAY be deteriorating.

And he makes laughable assertions, for example, Samsara is not a top 10 holding in the IOT ETF. The ETF has 231,000 shares for a value of $5,845,390.72 – that is within striking distance of the top ten. This is beyond a non-issue and non stat. If one has a legit argument to make why pad it with such horse chips?

Bottom line - I really try hard to see the merits in opponent’s arguments and not be flippant but Axler doesn’t make that easy. He’s basically saying that because they have hardware they deal with suppliers, that there may be issues with costs, that because some Chinese companies provide parts there may be issues with security, because they deal with unions the products’ TAM may be restricted, because they must pay up keep top talent, etc. etc. … in other words as a multibillion-dollar business competing in the free market they have … wait for it… obstacles to overcome.

I guess the most charitable take you can give to this is that IOT is aggressive in its accounting, comp practices and with it having a heavier reliance on hardware/communications equipment may be closer to a TWLO than CRWD. And it is reasonable to criticize the fact that an exec in accounting has flaw on resume and fair to mock IOT for having important person serve on 10 boards. TJ Rodgers has written eloquently about just how important boards are and how seriously he takes them. There is no prayer any legit person can do the job needed if on ten of them.

My take is I’m not selling my position but overall I still don’t love this report coming out. Axler is attracted to negative things and he senses enough here to go after Samsara.

I don’t have the time/skill set to look into all of his accusations in detail. And I’m sure as **** not paying for his report. His game is to throw everything and the kitchen sink at a high flying stock, knock it down, take his profits and move on. All while making money off selling his research. Not a bad gig if you think about it.

Bottom line - Though I’m skeptical of this report, I don’t like that it came out. And for me it merits at least some caution.



FWIW this is the cover of the short report…


That time in January when Spruce Point went after Super Micro… and this analyst on Seeking Alpha articulated why the report was all hype. Since then the stock is up almost 200%.


What’s interesting is that the report is reffering to the stock being hyped towards retail investors.

However take a look at the 13F filings for $IOT, institutions are accumulating at a rapid pace.

The 2 largest transactions in the companies public history were made just recently:
- 06/16: 2.43M shares @$28.90
- 09/15: 2.66M shares @28.14

Some notable transactions by institutions as of 06/2023

  • Vanguard Group reported adding 2.83M shares
  • Fidelity reported adding 3.4M shares
  • Two Sigma Advisers reported adding 2.9M shares
  • Two Sigma Investments reported adding 2M shares

Of the top 20 holders only 1 reduced the stake by 2.69%, 2 left it unchanged and the remaining 17 increased their stake.

I can’t say for certain but looking at these filings it appears the 2nd largest purchase in history may have been a buy.

The SNSR - Global X Internet of Things ETF, which is being referenced in the short report added 27% and now owns 246K shares. If they made it their top position the ETF would not make it into the top 20 holders.

The trading volume today was below 5M shares, so either everyone sold out ahead of the short report or institutions did not make any significant changes.

Here are the largest trades I referenced above:


I can see why Bear considers this a nothing burger, and I have held my position, but I have not seen a response from Samsara to the short attack. I tried to email Samsara using the investor relations email asking why they have not responded to the short attacl, but the link doesn’t work. I messaged using a general company information link to see if I can get a response that way.

Am I missing something? Did someone see any response from the company?

It’s very curious that the investor relations email link doesn’t work.





I see the mailing address and email address for Samsara IR at this link. Have you tried those? How many days since you emailed them?



I tried to email them today using that link. I haven’t tried snail mail. They had another areas where business information could be obtained, so I tried that instead of regular mail.


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This doesn’t address the short report, but the press release below just landed in my inbox. Maybe this is one way of saying, “We’re doing just fine, thank you!”




It’s interesting to see how they handle this.

Going over the options…

  1. Viciously strike back at Spruce Point/Axler’s integrity.

  2. Go through it point by point and respond honestly, fixing any legit points but strike back at trivial nonsense or slanderous innuendo.

  3. Acknowledge you saw it and do not feel it is worth responding to.

  4. Totally ignore it - and let execution, new deals, next ER do the talking.

I think that’s really about it.

So far they are going with 4. The trade off is the financial “media” includes so many weak websites whose business model is obviously to post as much content as possible. Therefore the writers are incentivized to just regurgitate what they read. I saw at least four “articles” that basically parroted short report without the slightest analysis. And one friend I suggested IOT too texted back and said he wouldn’t touch it after seeing all the slimy class action lawyers adding their insults to the injury.

So the CEO is basically just allowing the company’'s good name and reputation to be sullied. Why should he assume that prospects considering working with Samsara are not seeing this?

If they execute next ER this issue will be quickly forgotten. For now though, as an investor I think it radiates aloofness, especially when presented in the media with the CEO’s recent sale of $2m of stock. Planned sale or not it’s a bad look. Slootman, Kurtz, Prince and old school gentleman of honor would not allow such an insult to go unanswered.

I’m reminded of the insult to The Dude’s rug at the beginning of The Big Lebowski. And the iconic line…

But maybe The Dude should have just let it stand regardless of how well the rug tied the room together. And CEO Biswas may be taking what he believes to be the high road.



92.13% of IOT shares are held by institutions. I’m guessing they’ve been around the block a time or two with short reports. I’m also guessing that they’d prefer the CEO to focus on executing the mission of the business rather than engage hand-wringing by shorts.

Clapping back just keeps stuff in the news, and we’ve all seen how that can become an unvirtuous cycle that amplifies seeming bad news, even if that news is without merit.

I’m happy to have Biswas let the company numbers and deals speak for themselves. He doesn’t need to explain how pre-planned stock sales work, or that the whole idea is that he can’t change when those sales happen, whether it hits at a good time or a bad time. That’s exactly why they are set far in advance.

Should there be a precipitous drop in institutional investment over the next month, that would be concerning. They have two months before their next earnings. I’m content to wait and see the numbers and deals they put up in that report and let this particular short report shout into the void.

My father always said, “Never do battle with an unarmed man.” Seems like a wise course for Biswas here.

10.38% position in IOT


Fully agree. There is no need for the company to defend itself against this short report. Much of the report is the short sellers personal opinion.

He’s arguing investors can’t value $IOT as a SAAS company because of a hardware component. Really? Well investors seem to disagree. It appears the hardware component creates value and makes the software more sticky. It’s such a ridiculous argument. Turns out some of the best companies in the world provide an ecosystem by combining software and hardware (Apple, Tesla etc)…

Not to state the obvious, but if the short report was of substance, we would have already seen a very harsh stock price reaction. The stock is currently sitting at almost 100% YTD gains, so this correction is hardly putting a dent into the story.


This certainly does not add creditibility to the short report, he is putting out false statements. These sales occured in the past and he is now claiming these are scheduled for the future. The SEC should look into these claims.

Spruce Point Capital on X: “$IOT Form 144s filed late last night show ~2.2m shares ($50m) to be sold by the CEO and CTO. Is this how you respond to a critical short report by continuing a pattern of massive stock sales in short order?” / X (twitter.com)


Hey guys, isn’t this enough discussion of this nonsense. IOT is up 7.7% from last Friday’s close, in spite of all the short sellers can say. Doesn’t that answer the question for you?



Hey Saul - I was very happy to see the $IOT reaction. The reason why I was vocal on defending the company is to protect retail investors from false information. The transaction data I shared was clear evidence of institutions accumulating $IOT. Sometimes I get frustrated when investors play on different playing fields.


Hi Wycap, all I can say is that it’s been my largest or second largest position for each of the last four months.