8.6 C
New York
Sunday, June 13, 2021
Home Business Canadian waste management firm GFL targeted by U.S. short seller alleging misleading...

Canadian waste management firm GFL targeted by U.S. short seller alleging misleading finances


Waste management company GFL Environmental Inc. has been accused of misleading finances by an American short seller with a history of targeting Canadian companies.

Vaughan, Ont.-based GFL is a waste management firm with 13,000 employees that handles garbage pickup for four million households across eight Canadian provinces and 23 U.S. states, and 135,000 industrial customers. The company went public in an IPO in March, raising $1.4 billion.

New York-based short selling firm Spruce Point Capital Management accused GFL in a 107-page report of various misdeeds on Tuesday, alleging that the waste management firm uses aggressive accounting practices to inflate its balance sheet and hide debt.

Spruce Point also accused various executives at GFL of having ties to potentially criminal activities at previous organizations they were involved with. “GFL’s executives have not only fostered what appears to be an extremely aggressive and opaque business model, but they have either deliberately concealed, or inattentively omitted, past failures and questionable business connections,” Spruce Point said.

Short sellers make money by betting against companies, so Spruce Point has a strong financial incentive to say the things it is saying. The fund admits it “stands to benefit if [GFL’s] share price falls,” but didn’t disclose how much, exactly.

Trading data compiled by Bloomberg suggests that of the roughly 73 million shares in GFL available on the ​​​​TSX on Wednesday, 922,876 of them — about 1.3 per cent of the company — are in the hands of short sellers like Spruce Point.

WATCH | An explanation of how short selling works:

An animated explanation of how people make money from stocks losing value 0:46

‘Baseless’ report

GFL called the report “baseless” and said it “contains numerous inaccuracies and mischaracterizations” designed to “short and distort” the truth.

“We have the support of our shareholders and the utmost confidence in management, who have held themselves to the highest ethical standards,” independent director Dino Chiesa said in a statement. “We continue to believe in the strategy of the business and its focus on creating long-term shareholder value.”

Spruce Point alleged that without new money coming in “the company’s shares are worthless.”

That’s in stark opposition to what most analysts who cover the company say. Of the 12 analysts at investment firms who cover GFL monitored by Bloomberg, 10 have a “buy” rating on the stock. The other two are neutral.

One of them, Tim James at TD, said the allegations of the short seller’s report have the potential to weigh on the shares even if the accusations aren’t true. 

“Regardless of the claims, or our view of claims, in the report, past experiences demonstrate that such reports can weigh on share prices,” he said.

The price of GFL’s Toronto Stock Exchange-listed shares lost almost 10 per cent on Tuesday when the allegations came out. 



Source link

Today news
Today News 1 runs four of the western GTA’s most influential media websites, offering news, food, lifestyle and entertainment coverage for millions to the Golden Horseshoe and GTA regions. The independently-run, online news source was founded in 2019 and specializes in everything from breaking news to food and restaurant, arts and entertainment and lifestyle coverage.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisment -

Most Popular

Health Canada cracks down on UV wands; Will cheap flights get Canadians flying?: CBC’s Marketplace cheat sheet

Miss something this week? Don't panic. CBC's Marketplace rounds up the consumer and health news you need. Want this in your inbox?  Get the Marketplace newsletter...

Canada is slowly reopening, but is live theatre being left behind? 3 insiders weigh in

The reopening of Broadway is nigh, with a long list of shows — like Hamilton, The Lion King and Wicked — and the...

How to cook the perfect cicada

Forget their looks. Ignore their beady little red eyes and set aside their glistening wings and jet-black shell. Just close your eyes and take...

How a worldwide subscription scam network was traced back to Montreal

A Montreal-based marketing firm is at the heart of a scheme involving a massive network of streaming websites that has scammed thousands of internet...

Recent Comments