In 2014, the analysis firm Gotham Research pointed out Gowex as a fraud whose accounts were falsified, bringing its value to 0, bringing down the entire company and ending the bones of its CEO, Jenaro García, in prison.
Ten years later, Gotham points this time to Grifols as the next company whose shares will lose all their value. Grifols, whose market capitalization before this news was known is around 9,000 million euros, is a company that develops plasma-derived medicines and transfusion diagnostic solutions.
Anticipates an action that will reach 0
The causes of this accusation by Gotham are not very comparable to those made at the time against Gowex, although the effects will probably be similar. This time, Gotham explains that Grifols manipulates its reported debt and its EBITDA (gross operating profit).
In this way, according to the firm, would artificially reduce your leveragesetting it at 6x, when according to their estimates it would be much higher, between 10x and 13x.
The report reflects a series of movements between Grifols and Scranton Enterprises, a family vehicle that is the majority shareholder of the company, aimed at covering up the former’s accounts. For example, with a loan from the first to the second worth $95 million in 2018 that appears in Scranton’s presentations, but not in those of Grifols. Scranton would have, according to this analysis, a leverage that is still much higher than Grifols’ actual leverage, which is 27x.
Gotham draws a simile with the case of NMC Health, an international healthcare group controlled by investors from the United Arab Emirates that went bankrupt in 2020. On that occasion it was also accused by bearish firms of falsifying its accounts, as is now the case with Grifols.
Gotham, as a bearish firm, tracks companies for suspected irregularities in their accounts. When he discovers them, he invests short (against) those companies before making his discovery public. If the stock falls or loses all value, as happened with Gowex, Gotham makes a profit.
Just a few days ago we learned that Grifols was moving towards reducing its debt with the sale of 20% of its Chinese business, which was going to cost it around 1.8 billion dollars. The company is one of the most indebted on the IBEX, close to 10,000 million euros.
This level of debt has led to several stock market punishments in recent years that have been jibarizing the value of its action. From its all-time high in February 2020, higher than 34 euros per title to the slightly more than 14 at which it was trading in the hours prior to hearing this news… and we will have to see how it evolves in the coming days, starting today same.
