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It’s the particular goal acquisition craze assembly the GameStop madness.
On Thursday, Hindenburg Analysis, the short-selling agency recognized for flagging points with electrical automobile firm Nikola final yr, launched a report concentrating on Chamath Palihapitiya-backed Clover Well being and known as it a “damaged enterprise.”
The insurance coverage startup agreed to go public by way of merger with Palihapitiya’s Social Capital Hedosophia III in October. “This is without doubt one of the most simple investments I’ve ever made,” Palihapitiya mentioned on the time of the announcement.
However on Thursday, Hindenburg Analysis’s report argued Clover Well being was not so simple: Amongst different points, the short-activist group accused the corporate of fueling gross sales utilizing deceptive advertising to aged individuals and alleged that Clover didn’t disclose a Division of Justice investigation into the corporate’s gross sales practices.
Clover Well being hit again at Hindenburg in a prolonged submit Friday, accusing the quick vendor of “sweeping inaccuracies and gross mischaracterizations.” Whereas the DoJ had submitted inquiries to the corporate, Clover Well being downplayed the difficulty, characterizing it as a daily prevalence within the trade that it didn’t think about materials to its traders.
However for the reason that launch of Hindenburg’s report, Clover Well being has acquired a discover of investigation from the Securities and Alternate Fee, the corporate revealed too. Shares of Clover Well being have been down 13% Friday.
Right here’s the large shock about Hindenburg’s report: Whereas quick sellers usually launch such papers alongside a guess towards the corporate, Hindenburg has no place within the firm. Lengthy or quick. As an alternative, the report appears to deal with the current flare-up in criticism towards quick sellers, though Hindenburg says it started trying into the enterprise some 4 months in the past: “We predict on this second for public markets, it’s extra necessary for individuals to know the function quick sellers play in exposing fraud and company malfeasance.”
As traders flooded into GameStop shares final week, quick sellers have been closely focused by retail merchants. Palihapitiya in the meantime positioned himself on the facet of the retail merchants in a lot of the saga.
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