The report published yesterday by the bearish fund Gotham City Research that accuses Grifols of manipulating the accounting caused an earthquake in the stock market. The shares of the pharmaceutical multinational of Catalan family origin fell 26% in a single day, after plummeting more than 40% at the beginning of the day. With the information available so far, there are so many doubts about these serious accusations that the most sensible thing is to wait for the facts to be clarified, for the National Securities Market Commission (CNMV) investigate and collect the necessary data to confirm or deny them. Both the new Minister of Economy, Carlos Body, and the Generalitat of Catalonia agreed in calling for “prudence.”
Grifols is a great company blood derivatives, which produces and markets biological medicines derived from plasma, such as some immunoglobins. A document leaked by Wikileaks in 2010 considered her strategic for the United States, where it has 18,000 employees. Also It has a subsidiary in China and plants in Catalonia. Gotham, for its part, is a fund that intentionally seeks to cause companies to fall on the stock market, to obtain an economic benefit through so-called short sales, a speculative operation that is part of the dynamics of financial markets. Yesterday, with the publication of the devastating report on Grifols, he achieved it. Also sowed investors with uncertainty, They no longer know what the real situation of the company is. Gotham places the shadow of suspicion on the Grifols family (which owns 8.4% of shares), maintains that the multinational has a lower profit and a greater debt than declared, with which the leverage (the weight of debt) is much higher than what appears in the accounts, from which he concludes that “his shares are worth zero.” The pharmaceutical company denied everything and recalled that his figures are endorsed by the auditors (KPMG).
Neither of the two possible options that are now open are reassuring. If the statements disclosed by the bearish fund are inaccurate, we would be facing a serious case of an attack on a company. If, on the other hand, the accounting fraud is confirmed, the risk of bankruptcy would be more than likely. The covid pandemic was a hard blow for Grifols, which has liabilities of 9,540 million euros and announced a restructuring plan that foresees 2,300 layoffs. She was also forced to sell part of her business in the china Shanghai RAAS, although he remains a significant shareholder, with 6.58%. The company, which returned to profit in the third quarter of 2023, says it is reducing leverage. If this were not true, there would have been a huge oversight failure for which both the auditor and the stock market supervisor would have had to give explanations.
Gotham has a questionable history, with false accusations, but it has also gotten some of its investigations right. One that is most remembered is the technology company Gowex, a company in the Alternative Stock Market (MAB) which ended up recognizing its bad practices and going into bankruptcy. Now it is a much larger company, listed on the Spanish selective Ibex 35, that is under suspicion. There are many doubts that must be resolved and, for now, only one certainty: The more Grifols’ stock falls, the more Gotham gains.