Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a759818

Gotham City Research strikes again in bear raid on Spanish telco

by James Phillipps on Jul 02, 2014 at 07:00

Gotham City Research strikes again in bear raid on Spanish telco

Gotham City Research, the short-seller that led a bear raid on Quindell, has now set its sights on Spanish telecoms group Let’s Gowex, claiming that ‘over 90% of its reported revenues do not exist’.

In a note published yesterday, Gotham predicted Gowex’s shares will be suspended and issued a target price of €0.00.

Gotham rose to prominence in April when it issued a damning dossier on Quindell, which led to the insurer’s share price plunging by as much as 52% on the day.

Its 93-page research note on Gowex had a similar impact, pushing the wifi operator’s stock down by 44% in mid-afternoon trading. Gotham has accused the company of overstating both its sales and the size of its operation, alleging Gowex failed to disclose that it is effectively its own biggest customer.

‘After eight months of diligence, we found Gowex is a lot worse than we initially thought. GOW is a zero,’ Gotham wrote.

‘We specifically noticed three clear patterns. Firstly, GOW has a proven track record of making demonstrably false claims. Second, Gowex provides different answers, to different investors. Third, wireless industry experts are unable to make sense of GOW.

‘We are confident GOW is a charade and [its] shares are worthless.’

Gotham said 90% of Gowex’s revenues came from undisclosed parties, which it alleges are tied to its chief financial officer and an early investor. It also claims that Gowex manages or owns 5% of the number it claims to and said if its revenue per employee were as reported, it would be ‘far above nearly all other business in history’, including the likes of Facebook, Microsoft and Google.

Gotham also queried the chief executive’s wife, who is head of investor relations, signing off the company’s 2013 annual report, and why it uses an ‘unknown’ auditor and only pays a fraction of the costs of its peers for auditing.

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home


As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

Investing for income in a changing environment


With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop

More about this:

Look up the shares

  • Quindell PLC (QPP.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet