Blue Orca Capital announced a short position in Enviva saying the company’s “EBITDA is inflated, it will cut its dividend, and newly discovered and newly discovered data suggests, in our opinion, that the Company is flagrantly greenwashing its wood procurement.” Enviva claims to be a pure play ESG company with a self-funded dividend and cash flows to provide a platform for future growth, but this “is nonsense on all counts,” Blue Orca writes in a short report published on its website. The firm says Enviva is a “dangerously levered serial capital raiser whose deteriorating cash conversion and unprofitability will drain it of cash next year.” The company’s dividends are funded through capital raising, and it will be forced into further “dilutive equity raises, more borrowing at punitive rates, or most likely, a significant dividend cut,” the firm contends. Blue Orca expects the shares “to contract significantly from Enviva’s current nosebleed valuation.” Shares of Enviva are down 5% to $55.89 in premarket trading.
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