Why Tangoe Shares Tanked Twice Within 2 Weeks

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Tangoe (Nasdaq: TNGO  ) tanked today by as much as 24% after a recent bearish report was released by Copperfield Research, alleging that the company is a fraud.

So what: The report believes that Tangoe has "significantly misrepresented" its figures and has all the usual signs of accounting "shenanigans" that usually lead to scandals. Copperfield also says it is calling for a probe by the SEC to investigate the company's financials. Just last week the company was the victim of another short attack by TheStreetSweeper.org.

Now what: In both cases, the publishers of the reports disclosed holding short positions, with StreetSweeper closing the majority of its short position almost immediately after releasing its scathing report. Allegations in these types of reports deserve some attention, but I wouldn't rush to any conclusions so quickly. For example, Copperfield had also attacked Ebix last year, and StreetSweeper tackled Universal Display in December, both of which have since recovered those related losses and remain active official Fool recommendations.

Interested in more info on Tangoe? Add it to your watchlist by clicking here.

Fool contributor Evan Niu owns shares of Universal Display, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Ebix and Universal Display. Motley Fool newsletter services have recommended buying shares of Ebix and Universal Display. The Motley Fool has a disclosure policy.
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Read/Post Comments (2) | Recommend This Article (2)

Comments from our Foolish Readers

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  • Report this Comment On September 07, 2012, at 12:53 PM, MetsFan73 wrote:

    I think it is deplorable that someone can short sell a stock and then publish something that manipulates it's price. This should be considered tantamount to insider trading in my opinion.

    It looks like the real analysts are still listing TNGO as a buy.

    Interesting that, if you do research on Street Sweeper, you find an "adviser" who has been previously convicted for securities fraud, money laundering, and racketeering.

    I guess when you get caught trying to make an easy buck illegally your best option is to look for a way to make an easy buck working within the system (albeit what most might consider unethically).

  • Report this Comment On September 10, 2012, at 10:55 PM, iheartdrop55 wrote:

    Regardless of if the person short sold or not doesn't change the Math and hide the fact that Tangoe is nothing more then a pump and dump with elements of a ponzi scheme. They have also been going through the internet removing my comments and tried to block me on this site as well. I'm a former employee of Tangoe and one of the core original developers of the billingIT platform (an open-source based high volume scalable distributed TEM platform) which Tangoe acquired. BillingIT was VERY profitable and Tangoe merely acquired them for that reason. If you look at Tangoes numbers they've released they are really only profitable for a very short stint after they purchased us. This is what they do, they purchase companies and claim their revenue to make their books look good -- then use that to get more investor money -- to acquire more companies, etc... but the Tangoe model itself is not profitable, never has been and never will. It doesn't matter if you can acquire 100% of the market share with investor money -- if you're model isn't profitable, and Tangoes isn't, then you can own 100% of the market share and still not be profitable -- just like Tangoe.

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