The shorts are circling.
Things are not looking good for Grupo Actividades de Construccion y Servicios SA (ACS), the world’s biggest international contractor. It started on December 4, when hedge fund manager Per Johansson told a conference in London that he was shorting the Madrid-based company because of its alleged accounting irregularities. And since then, ACS’ problems have snowballed.
According to Johanssen, the heavily leveraged construction company has drastically overstated its earnings, has “a lot of hidden liabilities,” and is suffering from “signs of problematic project execution.” He forecast a 40% decline in ACS’s share price. Shares have since plunged 25%.
ACS’ initial reaction was to do what any company would have done in its position: it issued a blanket denial. The comments are “groundless” and based on a labor case that was dismissed by a judge, ACS said in a statement. It also threatened to take legal action against Bodenholm. But things are just getting worse…
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