1. First Copperfield And Now Gotham City -
Anonymous EBIX Attacks Veiled As Research
(submitted 2/21/13)
First Copperfield and Now Gotham City - Anonymous EBIX Attacks Veiled As
Research - Will We all Be Fooled Again?
The downside to a free country is that a fool and his money can still be parted when
they give heed to an anonymous attack of the credibility of a company and its
management by a well crafted propaganda campaign that recycles previously
disproved myths.
Alas, EBIX needlessly takes it on the chin yet again but for those who are patient, it
creates a more attractive entry point to invest in a company with an impressive track
record and a three year growth goal of $500M with comparable operating margins of
~39%. I am told that in achieving this mark EBIX shares would rise ~200% over the
next three years while also paying a 1.6% yield.
But let's get to today's rehash report:
It's easy to sling mud when you don't identify yourself - the Gotham City Research
name and website seem constructed solely to host this EBIX attack as they did not
exist prior to last week - after the stock had broken out of a long-term trading range.
The Gotham site was created only last week (Feb. 16th) as this confirms.
But this is not the first time EBIX has been so savaged. On March 22, 2011,
another start-up, anonymous site "Copperfield Research" launched a savage short
campaign that was amazing in its manipulation of facts and its success - the stock has
never regained the ground it lost. They teased out the report on the 22nd with a link to
the full report and the stock flagged a bit that day, closing at $28.70, down from the
$29.07 close on the 21st but then rallied on March 23rd to a $29.33 close. Then the
anvil fell on March 24th with the launch of the report in three parts - and EBIX cratered
$7.10 to $22.23 on nearly 15M shares traded in one day - clearly a more artful job
than Gotham has managed! But the greater damage was the impact the report had on
the company's credibility, with investors shunning the stock all the way to a closing low
of $13.38 on October 3, 2011. It was very hard to hold your position under such
tremendous pressure... and many didn't.
So Gotham's effort mirror's previous campaigns that were very successful in creating
fear and causing EBIX shares to fall despite solid ongoing growth and substantial cash
generation used productively for debt repayment, share repurchases and dividends -
all of which are pretty hard to fake. Cash flow is not typically what you see in good
short ideas so the naysayers have had to be creative in building new reasons to fear

2. EBIX.
Gotham hangs a lot of their view on errors in the 2010 and 2011 10-Ks and yet those
filings have been reviewed by the SEC and just last month… with the benefit of all of
2012 for them to review the data. On Jan. 16, 2013 the SEC issued a "We have
completed our review of your filings" letter for EBIX's 2010 and 2011 10-Ks - link to
letter:
For me, that puts a fair amount of cold water on the allegations of an SEC
investigation of the Company and other claims.
As in the case of the Copperfield reports in 2011 (true masterpieces in propaganda,
persuasion - I really am impressed in their manipulation of facts to make their case)
the authors are not disclosed and therefore they don't have to answer for their
comments.
Copperfield's initial report - part 1
Gotham took the same "Part 1" approach to their report, both suggesting more to
come and creating a perception of in-depth review. It's a genius positioning that
Copperfield used in breaking up what would normally be one report into Three
installments all posted at the same time.
Similarly, Copperfield had no prior "research" and has written nothing since, and like
Gotham seems to have been created with the sole aim of serving as a vehicle to drive
down EBIX's share price. So far it's been very effective and even Bloomberg has
jumped on the innuendo bandwagon filing an article today citing the report and
allegations of an anonymous firm created last week!
I haven't even read the report closely yet - but I'm pretty certain I will find a rehash of
artfully staged allegations that are very light in detail or specificity and long in opinion
and in many cases present facts in a completely misleading light so that those who
don't conduct their own due diligence will likely be persuaded.
Here's a rebuttal I wrote regarding Copperfield providing broad access to Craig-
Hallum's commentary:
The timing of today's report seems obviously aimed at quelling the momentum of a
stock that has finally started to cast off the affects of the most recent rumor recycling
that occurred in a Bloomberg article citing four sources (four is always better than one
- and when have every seen four sources for a rumor?) confirming that EBIX was the
subject of an SEC investigation. That article also sent the stock into a tailspin. And
surprise, surprise, Copperfield was there to lend a hand again.
But the Bloomberg article had to be corrected because the author grossly misstated
facts around the CEO's shareholdings and created the impression that the CEO's

3. holdings had dropped from over 3M shares to under 500k. I would guess that
erroneous view came from one of the four sources because I know the Bloomberg
reporter a little and find him open to hearing both sides of a story and far to
experienced to have botched the shareholding data in his own research. The Form 4
filings are just too clear for him to have come up with that perception on his own - it
seems it was fed to him by his sources and clearly not fact checked. As for the other
allegations - only time will tell if any hold water.
As I have written before, I have known the CEO for around 10 years and worked for
EBIX for 2 years as its IR counsel. While I find various aspects of EBIX's IR profile to
be wanting, and have expressed same to the CEO, I have found his execution in the
business to be nothing short of amazing and so I have put up with a volatile stock and
a depressed valuation for nearly 10 years of being a very satisfied shareholder with an
adjusted cost basis well below $1.00.
EBIX's CEO literally transformed the company, fixing the original business and
acquiring amazing businesses that are very profitable, defensible and recurring. He
has been fierce on cost controls and driving margins and efficiencies and has had little
or no use for paying fees to Wall Street investment banks for M&A counsel or
corporate finance assistance. He's done the deals and raised the money for them with
his own creativity and resources. The downside of that approach has been greater
profitability and far less mainstream support
If you wonder about how were let go, our firm was gently fired after two years because
the CEO felt he was not fully utilizing our services (which was indeed the case) and
that he could perform the IR function in-house with existing resources and save the
$$. He acknowledged that it might not be done as well - but back in ~2006 - given the
scope of the company, our fees were a relevant savings and that cost discipline has
been consistent during my association with the Company.
A few years ago having reached a far greater scale, he staffed up the IR role with a
very capable former Wall Street analyst who does a great job.
Last but not least - I'm a fan but I've been around long enough to keep asking the
tough questions as falling in love with a story is never wise… ever!
I have several sources who track the company closely, but I must confess I also rely
on the due diligence and monitoring of EBIX that is done by its leading shareholders:
% ofFirm Shares Outstanding
Fidelity 3.9M 10.0%
BMO Asset 2.3M 6.0%

4. Wedge Capital 2.1M 5.5%
Capital World 1.7M 4.5%
TimesSquare 1.4M 3.8%
Riverbridge 1.3M 3.3%
Thompson Siegel 1.1M 2.8%
Pyramis* 0.9M 2.3%
Ashford Capital 0.9M 2.3%
Opus 0.9M 2.2%
*Pyramis is a Fidelity sub.
The Bottom line is that I've seen much sizzle and no steak, and so I encourage
investors to look for corroboration of any of the allegations. It's easy to call someone a
crook but impossible to defend against it once it's been said. Even SEC comment
letters don't' seem to count.
From all I have seen, I have had no reason to believe there is any fundamental issue
with EBIX. I just think they run a good business, do not pander to Wall Street, use tax
strategies employed by multinational companies, are very disciplined in cost
management but have not bought their way into a broad base of investment banking
relationships that would come to their defense in such times. They are orphans in a
sense, making them very vulnerable to these attacks. I do believe management needs
to take this situation very seriously and take some steps to address the companies
credibility within Wall Street. In the interim, I count on EBIX to keep generating cash
and paying me to wait for them to grow out of this vulnerability.
Here's what SeekingAlpha wrote about my initial post - holding up its publishing past
the market's close. Wouldn't it be more valuable for them to publish it and have me do
an addendum? - but the above now reflects my attempt to address their comments.
Thank you.<br/>We agree - there needs to be more context presented about the
history of Copperfield, and the relevance of Gotham to EBIX. It's a bit unclear how this
all came about as written. Some of the history of how prior firms (Copperfield) have
attacked EBIX and driven down the stock, and how this is deja vu all over again with
Gotham would be helpful. You hint at it, but again, it isn't quite clear how it all fits
together.<br/>Additionally, if possible, can you please embed the links into the text as
opposed to leaving the native links as you have? So, for example, you might link to
Gotham's website on the word "site" in that paragraph instead of leaving in the native
link. You can do so by highlighting the word in the editor, then clicking on the icon that

5. resembles a globe with chains around it at the top. <br/>
Disclosure: I am long EBIX. I wrote this article myself, and it expresses my own
opinions. I am not receiving compensation for it (other than from Seeking Alpha). I
have no business relationship with any company whose stock is mentioned in this
article.
Additional disclosure: I have been an EBIX shareholder since March 2003.
This article is tagged with: Long Ideas
EBIX - Analyst At $11B Fund Manager Counters Gotham...
Declined
Dear David Collins,
This revision doesn't pass muster. As noted in your other
piece, we welcome constructive counterpoints. If you would
like to offer a constructive rebuttal of the investing issues
raised, we will reconsider, but this version does not inform
investors.
Sincerely Yours, SA Editors
Post as Instablog
Delete Post

6. INITIAL SUBMISSION
First Copperfield And Now Gotham City -
Anonymous EBIX Attacks Veiled As
Research
First Copperfield and Now Gotham City - Anonymous EBIX Attacks Veiled
As Research - Will We all Be Fooled Again?
The downside to a free country is that a fool and his money can still be
parted when they give heed to an anonymous attack of the credibility of a
company and its management by a well crafted propaganda campaign that
recycles previously disproved myths. Alas, EBIX needlessly takes it on the
chin yet again but for those who are patient, it creates a more attractive
entry point to invest in a company with an impressive track record and a
three year growth goal of $500M with comparable operating margins of
~39%. I am told that in achieving this mark EBIX shares would rise ~200%
over the next three years while also paying a 1.6% yield.
But let's get to today's rehash report:
It's easy to sling mud when you don't identify yourself - the Gotham City
Research name and website seem constructed solely to host this EBIX
attack as they did not exist prior to last week - after the stock had broken
out of a long-term trading range. The Gotham site was created only last
week (Feb. 16th) http://www.whois.com/whois/gothamcityresearch.com
Today's article is quite reminiscent of previous campaigns that were very
successful in creating fear and causing EBIX shares to fall even though the
business continues to grow and generate substantial cash (not typically
what you see in good short ideas) used productively for debt repayment,
share repurchases and dividends - all of which are pretty hard to fake. It's
rare to find a short idea that generates lots of cash…
Gotham hangs a lot of their view on the 2010 and 2011 10-Ks and yet
those filings have been reviewed by the SEC and just last month… with
the benefit of all of 2012 for them to review the data, the SEC issued a "We
have completed our review of your filings" letter for EBIX's 2010 and 2011
10-Ks - link to letter:

7. http://www.sec.gov/Archives/edgar/data/814549/000000000013002804/file
name1.pdf
For me, that puts a fair amount of cold water on the allegations of an SEC
investigation of the Company and other claims.
As in the case of the Copperfield reports in 2011 (true masterpieces in
propaganda, persuasion - I really am impressed in their manipulation of
facts to make their case) the authors are not disclosed and therefore they
don't have to answer for their comments.
http://seekingalpha.com/article/259998-ebix-not-a-chinese-fraud-but-a-
house-of-cards-nonetheless-part-i
Gotham took the same "Part 1" approach to their report, both suggesting
more to come and creating a perception of in-depth review. It's a genius
positioning that Copperfield used in breaking up what would normally be
one report into Three installments all posted at the same time.
Similarly, Copperfield had no prior "research" and has written nothing
since, and like Gotham seems to have been created with the sole aim of
serving as a vehicle to drive down EBIX's share price. So far it's been very
effective and even Bloomberg has jumped on the innuendo bandwagon
filing an article today citing the report and allegations of an anonymous firm
created last week!
I haven't even read the report closely yet - but I'm pretty certain I will find a
rehash of artfully staged allegations that are very light in detail or specificity
and long in opinion and in many cases present facts in a completely
misleading light so that those who don't conduct their own due diligence
will likely be persuaded.
Here's a rebuttal I wrote regarding Copperfield providing broad access to
Craig-Hallum's commentary:
http://seekingalpha.com/article/260820-craig-hallum-research-report-
provides-counterpoint-to-copperfield-claims
The timing of today's report seems obviously aimed at quelling the
momentum of a stock that has finally started to cast off the affects of the
most recent rumor recycling that occurred in a Bloomberg article citing four
sources (four is always better than one - and when have every seen four
sources for a rumor?) confirming that EBIX was the subject of an SEC
investigation. That article also sent the stock into a tailspin:
http://www.bloomberg.com/news/2012-11-05/ebix-accounting-practices-
said-to-be-probed-by-sec.html

8. But the Bloomberg article had to be corrected because the author grossly
misstated facts around the CEO's shareholdings and created the
impression that the CEO's holdings had dropped from over 3M shares to
under 500k. I would guess that erroneous view came from one of the four
sources because I know the Bloomberg reporter a little and find him open
to hearing both sides of a story and far to experienced to have botched the
shareholding data in his own research. The Form 4 filings are just too clear
for him to have come up with that perception on his own - it seems it was
fed to him by his sources and clearly not fact checked. As for the other
allegations - only time will tell if any hold water.
As I have written before, I have known the CEO for around 10 years and
worked for EBIX for 2 years as its IR counsel. While I find various aspects
of EBIX's IR profile to be wanting, and have expressed same to the CEO, I
have found his execution in the business to be nothing short of amazing
and so I have put up with a volatile stock and a depressed valuation for
nearly 10 years of being a very satisfied shareholder with an adjusted cost
basis well below $1.00.
EBIX's CEO literally transformed the company, fixing the original business
and acquiring amazing businesses that are very profitable, defensible and
recurring. He has been fierce on cost controls and driving margins and
efficiencies and has had little or no use for paying fees to Wall Street
investment banks for M&A counsel or corporate finance assistance. He's
done the deals and raised the money for them with his own creativity and
resources. The downside of that approach has been greater profitability
and far less mainstream support
If you wonder about how were let go, our firm was gently fired after two
years because the CEO felt he was not fully utilizing our services (which
was indeed the case) and that he could perform the IR function in-house
with existing resources and save the $$. He acknowledged that it might not
be done as well - but back in ~2006 - given the scope of the company, our
fees were a relevant savings and that cost discipline has been consistent
during my association with the Company.
A few years ago having reached a far greater scale, he staffed up the IR
role with a very capable former Wall Street analyst who does a great job.
Last but not least - I'm a fan but I've been around long enough to keep
asking the tough questions as falling in love with a story is never wise…
ever!
I have several sources who track the company closely, but I must confess I
also rely on the due diligence and monitoring of EBIX that is done by its

9. leading shareholders:
% of
Firm Shares outstanding
%
of
Firm
Shares
outstanding
Fidelity
3.9M
10.0%
BMO
Asset
2.3M
6.0%
Wedge
Capital
2.1M
5.5%
Capital
World
1.7M
4.5%
TimesSquare
1.4M
3.8%
Riverbridge
1.3M
3.3%
Thompson
Siegel
1.1M
2.8%
Pyramis*
0.9M
2.3%
Ashford
Capital
0.9M
2.3%
Opus
0.9M
2.2%
The Bottom line is that I've seen much sizzle and no steak, and so I
encourage investors to look for corroboration of any of the allegations. It's
easy to call someone a crook but impossible to defend against it once it's
been said. Even SEC comment letters don't' seem to count.
From all I have seen, I have had no reason to believe there is any
fundamental issue with EBIX. I just think they run a good business, do not
pander to Wall Street, use tax strategies employed by multinational
companies, are very disciplined in cost management but have not bought
their way into a broad base of investment banking relationships that would
come to their defense in such times. They are orphans in a sense, making
them very vulnerable to these attacks. I do believe management needs to
take this situation very seriously and take some steps to address the
companies credibility within Wall Street. In the interim, I count on EBIX to
keep generating cash and paying me to wait for them to grow out of this
vulnerability.
Disclosure: I am long EBIX. I wrote this article myself, and it expresses
my own opinions. I am not receiving compensation for it (other than from
Seeking Alpha). I have no business relationship with any company whose
stock is mentioned in this article.
Additional disclosure: I have been an EBIX shareholder since March
2003.