That is the net model of Term Sheet, a each day publication on the largest offers and dealmakers. Signal as much as get it delivered free to your inbox.
It’s the particular function acquisition craze assembly the GameStop madness.
On Thursday, Hindenburg Analysis, the short-selling agency identified for flagging points with electrical automotive firm Nikola final yr, launched a report concentrating on Chamath Palihapitiya-backed Clover Health and referred to as it a “damaged enterprise.”
The insurance coverage startup agreed to go public through merger with Palihapitiya’s Social Capital Hedosophia III in October. “This is likely one of the most easy investments I’ve ever made,” Palihapitiya said at the time of the announcement.
However on Thursday, Hindenburg Analysis’s report argued Clover Well being was not so straightforward: Amongst different points, the short-activist group accused the corporate of fueling gross sales utilizing deceptive advertising to aged individuals and alleged that Clover didn’t disclose a Division of Justice investigation into the corporate’s gross sales practices.
Clover Well being hit again at Hindenburg in a lengthy post Friday, accusing the brief vendor of “sweeping inaccuracies and gross mischaracterizations.” Whereas the DoJ had submitted inquiries to the corporate, Clover Well being downplayed the difficulty, characterizing it as a daily incidence within the business that it didn’t think about materials to its buyers.
However for the reason that launch of Hindenburg’s report, Clover Well being has acquired a discover of investigation from the Securities and Alternate Fee, the corporate revealed too. Shares of Clover Well being have been down 13% Friday.
Right here’s the massive shock about Hindenburg’s report: Whereas brief sellers sometimes launch such papers alongside a wager towards the corporate, Hindenburg has no place within the firm. Lengthy or brief. As a substitute, the report appears to handle the latest flare-up in criticism towards brief sellers, although Hindenburg says it started wanting into the enterprise some 4 months in the past: “We predict on this second for public markets, it’s extra vital for individuals to know the function brief sellers play in exposing fraud and company malfeasance.”
As buyers flooded into GameStop shares final week, brief sellers have been heavily targeted by retail merchants. Palihapitiya in the meantime positioned himself on the facet of the retail merchants in a lot of the saga.
HOW CONFIDENT ARE YOU ABOUT 2021? Time period Sheet has teamed up with Semaphore for its thirteenth annual confidence survey of personal fairness and enterprise capital professionals. Up to now, lots of of you’ve gotten chimed in together with your confidence ranges for the yr forward. Please do fill in your responses here.
As a sneak peek, some 62% of you say you made extra in private revenue in 2020 than in 2019.