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Short Seller Spruce Point Sees Up to 50% Downside in Shares of Generac

By AiVIF.com Staff Generac (NYSE:GNRC), an S&P 500-listed company that makes generators and other power generation equipment, was the target of a report by a widely followed...
Short Seller Spruce Point Sees Up to 50% Downside in Shares of Generac © Reuters. Short Seller Spruce Point Sees Up to 50% Downside in Shares of Generac (GNRC)

By AiVIF.com Staff

Generac (NYSE:GNRC), an S&P 500-listed company that makes generators and other power generation equipment, was the target of a report by a widely followed short seller, Spruce Point, on Wednesday.

Short selling is a strategy that profits from a decline in an asset price, and short-sellers like Spruce Point oftentimes spend weeks or months investigating a company before releasing a report, hoping to profit from the downside as market participants reprice assets based on the new information.

In the case of Generac, Spruce Point said it estimates 40% – 50% downside risk as Generac’s financial situation deteriorates and lofty analyst expectations are missed.

Major short reports targeting S&P 500-listed companies are rare, as companies listed in the index are among the most widely owned and analyst coverage is extensive. For example, at least nineteen Wall Street analysts have a “Buy” rating on Generac.

Spruce Point said shares of Generac are “materially overvalued,” as it struggles to suppress core business challenges while pivoting towards a highly speculative and unproven acquisition spree in clean energy products and services.

“…Generac was an extreme COVID-19 beneficiary from the stay and work-at-home effect, and committed to material capacity expansion which will be a drag going forward as demand tapers,” wrote Spruce Point. “Furthermore, we find recent evidence that Generac fails to discuss that its core portable generator business is under extreme pressure with it having to cut prices by nearly 20% to compete against an onslaught of new foreign competition.”

The report highlights alleged “shady transactions” and other issues plaguing the energy company.

Spruce Point concluded, “We believe Generac trades at an undeserved premium to peers and analysts give it premature credit as a proven player in clean energy. After heavily promoting its recent clean energy acquisitions, Generac recently guided down margins and blamed it on, ‘the start-up nature’ of the acquisitions. Buyer beware: on average, Generac’s acquisitions were founded nearly 15 years ago.”

The critical report was issued early Wednesday morning and Generac has yet to issue a response.

Shares were down 3%.

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26-06-2022 18:17:17 (UTC+7)

EUR/USD

1.0554

+0.0031 (+0.29%)

Summary

Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (5)

Sell (4)

EUR/USD

1.0554

+0.0031 (+0.29%)

Summary

Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (5)

Sell (4)

GBP/USD

1.2272

+0.0012 (+0.10%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (1)

Sell (6)

USD/JPY

135.23

+0.29 (+0.22%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

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Buy (7)

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AUD/USD

0.6944

+0.0055 (+0.80%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

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Buy (2)

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USD/CAD

1.2891

-0.0103 (-0.79%)

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EUR/JPY

142.71

+0.71 (+0.50%)

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↑ Buy

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EUR/CHF

1.0114

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1,828.10

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Silver Futures

21.130

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Copper Futures

3.7365

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Crude Oil WTI Futures

107.06

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Brent Oil Futures

113.19

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Natural Gas Futures

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US Coffee C Futures

223.40

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Euro Stoxx 50

3,533.17

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Neutral

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S&P 500

3,911.74

+116.01 (+3.06%)

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DAX

13,118.13

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FTSE 100

7,208.81

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21,719.06

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US Small Cap 2000

1,765.74

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IBEX 35

8,244.10

+137.70 (+1.70%)

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Sell

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Buy (3)

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BASF SE NA O.N.

42.215

+0.785 (+1.89%)

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Bayer AG NA

57.79

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Allianz SE VNA O.N.

181.20

+2.20 (+1.23%)

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↑ Sell

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Adidas AG

170.36

+3.30 (+1.98%)

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Deutsche Lufthansa AG

5.966

-0.310 (-4.94%)

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Siemens AG Class N

102.62

+3.36 (+3.39%)

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Deutsche Bank AG

8.919

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Summary

↑ Buy

Moving Avg:

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Indicators:

Buy (8)

Sell (0)

 EUR/USD1.0554Buy
 GBP/USD1.2272↑ Sell
 USD/JPY135.23↑ Buy
 AUD/USD0.6944↑ Sell
 USD/CAD1.2891↑ Sell
 EUR/JPY142.71↑ Buy
 EUR/CHF1.0114↑ Sell
 Gold1,828.10↑ Buy
 Silver21.130Sell
 Copper3.7365Sell
 Crude Oil WTI107.06↑ Sell
 Brent Oil113.19↑ Sell
 Natural Gas6.173↑ Buy
 US Coffee C223.40↑ Buy
 Euro Stoxx 503,533.17Neutral
 S&P 5003,911.74↑ Buy
 DAX13,118.13↑ Sell
 FTSE 1007,208.81↑ Buy
 Hang Seng21,719.06↑ Buy
 Small Cap 20001,765.74↑ Buy
 IBEX 358,244.10Sell
 BASF42.215↑ Buy
 Bayer57.79↑ Sell
 Allianz181.20↑ Sell
 Adidas170.36↑ Sell
 Lufthansa5.966↑ Sell
 Siemens AG102.62↑ Buy
 Deutsche Bank AG8.919↑ Buy
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# So hôm qua # Chênh TG
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SJC Cantho6,785/ 6,867
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