Scuttlebutt on Google Maps

Derek Cheung of Honne Capital posted an intriguing presentation of Sientra (SIEN, $6.68) a couple months ago that prompted me to dive into the company. Long story short, Sientra sells breast implants which in the US is a triopoly (I may have made that word up, to clear up confusion: only three companies sell fake boobs). Sientra was buzzing along just fine until late 2015 when their third party manufacturer had some issues during a regulatory inspection. To add fuel to the fire, this manufacturer’s plant burned down shortly thereafter. In response, Sientra voluntarily halted all US sales of their breast implants, but it looks like they’ll be back selling again next month.

On October 28, Sientra held a conference call to discuss the above issues. Then-CEO Hani Zeini made a comment that the fire took place in building F2 which is where Sientra’s implants were produced. Another building, F1, was not affected and could potentially be modified for breast implant production. My first thought upon hearing this comment was, “What if F1’s capacity isn’t what F2’s was?” Sientra could have production bottlenecks for some time. And off I went to Google Maps in search of an answer.

I was able to find two pictures taken of the actual fire in action. The first one is below.

Picture of fire 1

Next, I went to Google Maps street view to try and replicate the above picture angle. I eventually found where the picture was taken and below is a screenshot of the street view. The graffiti on the right wall has changed, but note the double telephone poles and the satellite on the roof of the house across the street.

Picture of fire 1 street view

The second picture I found of the fire (below) is from the adjacent street of where the first picture was taken.

Picture of fire 2

Again, I went to street view and snapped the below screenshot. The above picture of the actual fire is a little higher (probably taken from a roof), but the below is the best angle I could get. Note the same house with the satellite on the roof and the tall radio tower in the background. Importantly, the building on fire, F2, is clearly a large silver or grey building that is taller than those surrounding it.

Picture of fire 2 street view

Silimed, the contract manufacturer, has several locations in Brazil but I was able to corroborate one of them and sure enough, it’s the large silver building below. I added arrows to the bottom left to show roughly where the two actual pictures of the fire were shot from.

Sky view 1

Interestingly, if you go to that same view today, below is what you see.

Sky view 2

The building is burned down! Amazing that Google has already updated it.

So what’s the point of this fun little exercise? The fact that Hani Zeini specifically mentioned F1 was not affected by the fire makes me think F1 is on the same grounds as F2. If F1 was one of Silimed’s separate locations in a different city, Zeini would have just said there’s another plant in another city that could potentially work, but he didn’t. The point is that in the above pictures you can see F2 is BY FAR the largest building on that property. There is no way F1 is even close to the same production capacity of F2. With that being said, Sientra has said they have a year’s worth of inventory in stock to hold them over while new production (F1) is figured out. From the above pictures, however, I’d say a production bottleneck is still very possible.

Now, the above is absolutely not a reason to buy or not buy Sientra. I haven’t done enough research to reach that decision yet. The point of this post is to illustrate how you can use Google Maps to aid an investment process. The above size of F1 (whichever building it is) compared to F2 is simply one small data point among all the others that should be used to analyze Sientra as a potential investment.

As of this writing, Wiedower Capital does not own shares in SIEN. This is subject to change.

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3 thoughts on “Scuttlebutt on Google Maps

  1. What I assume is building F1 is just East a half a block or so on Rua Figueiredo Rocha (the address is Rua Figueiredo Rocha, 374 Vigário Geral – Rio de Janeiro). It looks to be the only other larger building on the street. Silimed’s first manufacturing facility was completed in 1989. I believe that is the building located at Rua Figueiredo Rocha, 374. Their newer production facility, the one that burned down, was completed in 2003.

    I’m sure it’s no small task to retool the older building to get it functional for modern production. I assume that’s what they’ve been doing though. I’m not sure how insurance operates in Brazil but I assume they have some sort of coverage on the building. So the will likely start producing product in the old building while starting construction on a new one, or rebuilding the burned out building.

    There have been several job postings for Silimed over the last few weeks. Also, a German newspaper reported the TUV SUD, the agency that shut them down, is supposed to be reinspecting in mid-February. That would all indicate that production is up now or will be up very soon. I was expecting a PR this week. We still have tomorrow but if not then, then I can’t imagine no news next week. Unless the want to hold everything back for the ER call on 3/9.

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  2. Building F2 did not burn down. The Google Maps view is simply showing you a browned-out roof. The facility is still standing, as numerous pictures of the outside show. (A researcher hired someone to take the pictures.)

    Building F1 is indeed being refitted to make Sientra implants as Silimed cannot distribute to Europe or Australia for another 4 months.

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  3. This is a fantastic idea Travis! Although I don’t have any knowledge of the stock itself, this is a great use of Google Maps to conduct primary research in a different way. Will definitely be thinking of ways to use this in the future.

    Let me know the next time you’re in NYC Travis.

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