Shares of XPO Logistics recovered over 90% of the losses suffered following publication Spruce Point Management’s short report on December 13, Deutsche Bank analyst Amit Mehrotra tells investors in a research note. The snap back is indicative of the short report being “riddled with inaccuracies and misleading statements,” with no implications to the fundamental outlook for XPO shares, Mehrotra writes. The analyst’s analysis of Spruce Point’s over 30 short reports over the last four years shows that most of the firm’s calls have not come to fruition. Further, almost two-thirds of companies targeted by the short seller have positive returns on a six-month basis, with an average return of up 19%, says Mehrotra. The analyst adds that while XPO’s fundamentals are not immune to broader macro forces, he feels “strongly that the business model allows for more resilient cash flows than market participants appreciate.” Mehrotra keeps a Buy rating on XPO Logistics and continues to call the company his top overall pick.
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