‘Red flag’: U.S. short seller targets WSP Global

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A prominent U.S. short seller has targeted Montreal-based engineering firm WSP Global and believes its stock is overpriced upwards of 50 per cent.

Spruce Point Capital Management issued a “strong sell” position against WSP as it raised concerns about the “accuracy of its accounting choices and financial reporting, durability of its growth prospects, and sustainability of its extreme valuation multiple.”

Spruce Point also worries that WSP’s growth has been largely limited to acquisitions in recent years and will find it harder to find quality targets.

Ben Axler, founder and CIO of Spruce Point Capital Management, said WSP is showing “clear signs” of financial stress.

“They’re in a competitive space, they report margins that are astronomically higher than peers, which should be a red flag,” he told BNN Bloomberg in a television interview on Wednesday.

“We think they use a number of aggressive adjustments to…

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