If you follow my Instagram account, you would have seen my post here regarding the 40% drop in Supermicro:

Source: https://www.instagram.com/p/Bohm6w2FPiH

I use Instagram to make quick posts when I don’t have much time, but now I can go more into details on my thoughts on this position.

Why I thought the Bloomberg story was bogus

I thought the story by Bloomberg was bogus for a number of reasons, including:

• The described hardware attack method just didn’t make sense when other better methods were available
• All affected companies categorically deny the claims
• There was no evidence presented by Bloomberg at all. Not even a named source

It seemed like a case of bad journalism of possibly even a planted story in the context of the trade dispute with China.

Possibility of profit?

My expectation was that the story was not true, so could I buy the shares in anticipation that the story would be proven false and that the share price would recover? There were still risks:

• I could be wrong and the story could be true
• Even if the story is not true, it might not be conclusively rebutted and doubts remain
• Even if the story was proven to be false, the story might still have an impact as if it were true

On the balance of probabilities, I thought it was worth the risk to buy shares in SuperMicro. However, the position I was willing to take was small. Even without the Bloomberg story, the company has a number of issues including ones which led to suspension of trading on the NASDAQ.