Spruce Point Capital Management To Issue A Forensic Investigation Report Tomorrow
Q3 2020 hedge fund letters, conferences and more
Forensic Investigation Report: A Company Covering Up Multiyear Margin Pressures
Spruce Point is pleased to announce it will issue a critical forensic investigation report tomorrow morning on benchmark US company that we believe has been covering up multiyear margin pressures in its business. After years of slowly curtailing key disclosures and pulling numerous levers to portray growth, we believe COVID-19 was the body blow that tipped the scale towards management now manipulating the accounting, obscuring its true debt load, and favoring short-term decision making to placate Wall Street at the expense of long-term competitiveness and earnings potential. Management has tried hard to convince investors to ignore certain key accounts, but our report, backed by key interviews of former employees and industry experts, will force management to address its business pressures, accounting imbalances, and dubious financial presentation methods.
Investors should take little comfort that the Company's Audit Committee is financially sophisticated enough to identify the problems. We observe that its former Audit Chairman, and current tenured committee member, has been associated with three companies coming under SEC investigation. This is not easily apparent from his public biographies. In two of the cases, the SEC's focus was on similar issues to those we've identified, and required multiyear financial restatements. In addition, he currently omits from his biography his current Board role at foreign public company that connects him to a colleague who settled a U.S. corruption scandal and another executive whose company is currently under investigation by the SEC, for yet again, similar accounting issues to those we've identified.
The full contents of our report will be available on our website. We also encourage readers to follow us on Twitter @sprucepointcap where we will have exclusive content.
Thank you very much for your continued interest in our investment research. Please read our investment disclaimer.
Disclaimer
This communication is for informational and educational purposes only and shall not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy, sell, or sell short any security or other financial instrument or to buy any interests in any investment funds or other accounts. Spruce Point Capital Management LLC ("SPCM") has short positions in and may own put option interests on the reported Company and stands to realize gains in the event that the price of the stock decreases. SPCM and its clients, partners, affiliates will transact in securities of the company subsequent to publication. The sender has no obligation to update the information contained herein and may make investment decisions that are inconsistent with the views expressed in this communication. To the best of SPCM's knowledge, the information contained herein is accurate and reliable, but the information is presented "as is". The sender makes no representations or warranties as to the accuracy, completeness or timeliness of the information, text, graphics or other items contained in this communication. The sender expressly disclaims all liability for errors or omissions in, or the misuse or misinterpretation of, any information contained in this communication. Wherever used, the words “may”, “could”, “should”, “will”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “believe”, and similar expressions identify forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at which, such performance or results will be achieved. Forward-looking statements are based on information available at the time they are made, assumptions made by SPCM, and SPCM's good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in forward-looking statements, historical results or current expectations. Past performance or success is no guarantee of future performance or success.
