Celadon Falls 14% Following Short Report; Aegis Says Buy The Dip

Shares of Celadon Group, Inc. CGI plummeted Wednesday following a short-seller report published by Prescience Point Research Group. The pullback creates an opportunity since the concerns mentioned in the short report are not new and uses certain figures “in a distorted manner,” Aegis Capital’s Jeffrey Kauffman said in a report.

While reiterating a Buy rating and a price target of $15 on Celadon, Kauffman questioned the “objectivity” of the short report. He explained that Prescience Point Research Group is “tied to” a hedge fund, Spruce Point Capital, which has an active short position; and investors should take a “skeptical read to the author's approach.”

Update: On Friday morning, A Spruce Point spokesperson denied the firm's connection to Prescience Point.

Concerns Not New, Figures Distort The Truth

While the short report raises certain “interesting and thought provoking concerns,” these concerns are not new and are “largely repackaged and republished notes from similar 2016 reports,” Kauffman pointed out. He added that certain figures, albeit factually accurate, had been used “in a distorted manner to make a factually inaccurate conclusion.”

Previous reports by Prescience included “a very mixed performance history,” with one report resulting in a counter-suit by the target company, namely Amira Nature Foods Ltd ANFI. In this, Prescience had made several claims that were “later established to be false or fabricated,” the analyst further mentioned.

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