A second report from Gotham City Research, maintaining the fund’s scepticism about the accounting practices of Grifols SA (GRFS), once again impacted the pharmaceutical company’s stock performance. In an earlier January 2024 report, the short-seller fund also questioned Grifols’ governance structures and accounting conventions.
Gotham City Research takes aim at Grifols – again
The latest report focuses on the connections between Grifols and Scranton Enterprises NV, which has ties with the founders of the company. According to Reuters, Grifols rejected the claims in the report, labelling it as “malicious, false and misleading”. The company further said that these reports aim to destabilise Grifols, sowing seeds of doubt among its investors.
Since the first Gotham City report, Grifols shares have dropped by approximately 23%. The publication queried the company’s debt, causing it to lose an estimated €2bn in value. Grifols shares had regained some ground in the last two weeks. However, when the second Gotham City report surfaced, shares of the pharmaceutics outfit dropped by 3.2% around the midday mark on Tuesday, 20 February 2024.
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After the first report, Grifols changed its corporate governance by excluding founding members from executive positions. Gotham City did not respond positively to these changes, but implied that the moves validated some of its concerns. The second report alleges that the Grifols family controls about 70% of Scranton. The fund bases these allegations on 2011 data submitted to regulators.
In January 2024, Grifols stated that the family owned less than a 20% stake in Scranton. The Spanish stock market supervisor (CNMV) said that it could take weeks to confirm or debunk the Gotham City claims. The watchdog also indicated that it will follow up on Gotham City’s compliance with European regulations.
