“Doubtful figures” | Short seller skins WSP Global

Short seller Spruce Point once again takes on Quebec heavyweight Inc. This time, it’s a Montreal engineering champion who is there: WSP Global. The New York firm is banking on a 25 to 50% drop in its stock, accusing it of difficulties with its numerous acquisitions, masked by a “questionable” presentation of its results.

Spruce Point has published reports since 2021 on three other Montreal companies that it considered overvalued: Lightspeed, Saputo and Nuvei.

The short seller claims that WSP – formerly Genivar – has acquired 22 companies since 2020 for a total of US4.3 billion (CAN5.8 billion). According to him, his “opaque” figures suggest that this growth causes “increasingly significant growth challenges and financial stress”.

The most recent acquisitions appear weak and margins are suffering, the report mentions. WSP’s adjusted results are highly questionable and ignore costs to deploy its acquisition strategy.

Excerpt from the Spruce Point report

Spruce Point adds that WSP’s “high employee turnover” and difficulties in recruiting compromise the company’s ability to digest these purchases.

Allegations of tax evasion in India

The New York firm also highlights the allegations of tax evasion facing the company in India. She points out that a former employee “acts as a whistleblower” in this country, accusing him of having avoided tens of millions of dollars in tax payments.

Spruce Point also recalls the serious ethical problems that Genivar experienced in Quebec, widely discussed during the Charbonneau commission on corruption in construction. Its former CEO, Pierre Shoiry, still vice-president of the board of directors, was sentenced by the Order of Engineers of Quebec to fines totaling $75,000 in 2020 for his role in the system of sharing public contracts in Quebec .


Pierre Shoiry during his appearance before the disciplinary council of the Order of Engineers of Quebec, in 2019

Shoiry had pleaded guilty to acts derogatory to the exercise of the profession and renounced his title of engineer. WSP has just announced that he will be leaving the company next month.

“Boys club”

Spruce Point believes investors should not place their trust in the board of directors.

“WSP has become a sprawling global company that receives 80% of its revenues outside Canada, but its audit committee is made up exclusively of a boys (and girls) club from Montreal. » According to the short seller, the engineering firm should reorganize it to review its findings.

In an email from the company’s director of global communications, Aline Vandermeer, the engineering firm said it was “aware” of the release of Spruce Point. “While our team plans to review this report, WSP maintains the highest standards of governance and we take our obligations in this regard seriously. »

WSP’s stock is down more than 5% on Wednesday ahead of the report’s release.

As of December 31, 2022, the Caisse de dépôt et placement du Québec held an investment of more than $3.5 billion in WSP. The Press was unable to obtain comment before the article was published.

Read the Spruce Point report

Learn more

  • 26 billion
    Market capitalization of WSP Global

    TMX Money

reference: www.lapresse.ca

Leave a Comment