Via the New York Times, this interesting news about a plastics recycling plant:
Then in November, Bleecker Street Research — a New York-based short-seller, an investment strategy that involves betting that a company’s stock price will fall — published a report asserting that the white pellets that had rolled off PureCycle’s line in June weren’t recycled from plastic waste. The short-sellers instead claimed that the company had simply run virgin polypropylene through the system as part of a demonstration run.
Mr. Olson said PureCycle hadn’t used consumer waste in the June 2023 run, but it hadn’t used virgin plastic, either. Instead it had used scrap known as “post industrial,” which is what’s left over from the manufacturing process and would otherwise go to a landfill, he said.
Bleecker Street also said it had flown heat-sensing drones over the facility and said it found few signs of commercial-scale activity. The firm also raised questions about the solvent PureCycle was using to break down the plastic, calling it “a nightmare concoction” that was difficult to manage.
PureCycle is now being sued by other investors who accuse the company of making false statements and misleading investors about its setbacks.
Mr. Olson declined to describe the solvent. Regulatory filings reviewed by The New York Times indicate that it is butane, a highly flammable gas, stored under pressure. The company’s filing described the risks of explosion, citing a “worst case scenario” that could cause second-degree burns a half-mile away, and said that to mitigate the risk the plant was equipped with sprinklers, gas detectors and alarms.
It is fascinating to see how these short selling firms work, and it's pretty clever to fly drones to find out more data (beats counting cars in a parking lot, I bet.)
Some of these short-selling scumbags often set their eyes on a company and are relentless to try to make them fail. Around the time of the whole Gamestop saga, a lot of articles came out about the shady tactics used by these hedge funds and "research" to crash many companies/stocks over the past few decades.
ReplyDeleteAs has been said before, though, companies rarely have incentive to disclose problems and the only way people get something closer to the actual status of a company is through short sellers. This seems like another example of that - when you're not actually using the tech that is your company's (supposed) key asset to validate that tech and thus boost your company's position, that seems like something that investors ought to have known (but wouldn't have).
ReplyDeleteYour credibility is also an asset, and if you shed it for cash now, it makes it easier to believe short sellers when they don't have any substantive info but need cash.
- Hap