A brief vendor vs. Chamath Palihapitiya

0
87

That is the net model of Term Sheet, a day by day e-newsletter on the largest offers and dealmakers. Signal as much as get it delivered free to your inbox. 

It’s the particular objective 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 focusing on Chamath Palihapitiya-backed Clover Health and referred to 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 said at the time of the announcement.

However on Thursday, Hindenburg Analysis’s report argued Clover Well being was not so straightforward: 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 lengthy post 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 incidence within the trade that it didn’t take into account materials to its buyers.

However for the reason that launch of Hindenburg’s report, Clover Well being has acquired a discover of investigation from the Securities and Trade Fee, the corporate revealed too. Shares of Clover Well being have been down 13% Friday.

Right here’s the massive 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 handle the latest flare-up in criticism towards quick sellers, despite the fact that Hindenburg says it started wanting 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 buyers flooded into GameStop shares final week, quick sellers have been heavily targeted by retail merchants. Palihapitiya in the meantime positioned himself on the aspect of the retail merchants in a lot of the saga.

HOW CONFIDENT ARE YOU ABOUT 2021? Time period Sheet has teamed up with Semaphore for its thirteenth annual confidence survey of personal fairness and enterprise capital professionals. Up to now, a whole bunch of you have got chimed in along with your confidence ranges for the yr forward. Please do fill in your responses here

As a sneak peek, some 62% of you say you made extra in private earnings in 2020 than in 2019.

Lucinda Shen
Twitter: @shenlucinda
E-mail: lucinda.shen@fortune.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here