For those who are imagining a pre-hibernation grizzly with a penchant for spools of ABS or vats of sticky resin, I must burst your bubble... A Bear Raid is a term used in investing circles for the act of manipulating the value of a stock (i.e., making it less valuable) by publicly down talking the company, it’s products or practices.
This is exactly what happened to 3D Systems (which trades with the ticker symbol DDD on the New York Stock Exchange (NYSE)) over the last couple of weeks. A small number of articles appeared on the investing website Seeking Alpha that threw in to doubt some of the accounting practices employed by 3D Systems, particularly in response to it’s 31 acquisitions since Q3 2009.
One of the original articles came from Douglas W. House, and was published by Seeking Alpha on the 12th of November. House had previously been a proponent of AM shares (and is still ‘bullish’ about the AM industry potential according even to the latest report of his.) In March 2011, House compared the stocks of Stratasys (trading as SSYS on the NASDAQ exchange, and 3D Systems (trading then on NASDAQ with the TDSC ticker) — the conclusion was that both companies were on top of an industry set for a revolution, and investors should look to get in on the action when an appropriate point arrived (such an appropriate point is beyond my analysis here I am afraid!)
By November 2012 however, House’s position had changed dramatically. Using some of the same evidence from the March 2011 article a whole new set of conclusions were drawn.
Now, I must make it clear that I am not in a position to make any analysis myself either of the allegation or of the defence. What I can say however is that DDD mounted a very strong defence and countered the accusations against them in the strongest terms possible — going as far as to say that they were pursuing all available legal remedies.
What I can also say is that by having listed companies, the AM and 3D Printing world is coming to terms with the ‘real’ business of being in business. As the industry grows it is likely that we will see more listed companies (and those we have will become more powerful) and more of the behaviour witnessed over the last couple of weeks. While it is very tempting to use the largest companies as a barometer for the industry as a whole, it should be noted that a decline in the price of one set of stocks is normal in the ebb and flow of business. In this case 3D Systems didn’t panic, they simply called an investor meeting and aired their case in public, refuting the claims and providing evidence to counter them.
By the end of the trading day, DDD shares were up around 8% — a demonstration of the confidence their actions instilled in investors. So it’s not the end of the world for 3D Systems, and it’s not the end of the world for the wider industry. The technologies still show amazing promise in a number of areas and continue to find applications in new places. There will be ups and downs for all involved, but as an industry we should (just like DDD) see a prevailing upward trend in the coming months, years and decades.
You can see the transcript of the conference call on the Seeking Alpha site (http://seekingalpha.com/article/1018051-3d-systems-corp-special-call?source=email_rt_article_readmore&ifp=0) as well as an article published on the site today from Preston Cheng (http://seekingalpha.com/article/1017521-3d-systems-ending-the-bear-raid?source=email_rt_article_readmore&ifp=0) which again paints DDD in a more positive light.