A hedge fund which released a scathing report on the ASX-listed travel company’s business practices is facing legal action.
VGI Partners went public with a report that threw into question Corporate Travel Management’s business practices, causing a temporary rout on its share price. The hedge fund had disclosed it was holding a short position on the company at the time.
However, Corporate Travel Management has hit back with a lawsuit against the hedge fund after posting 20 per cent growth across all key financial metrics in its half-yearly results last week. The company’s underlying net profit was $46.2 million in the six months to 31 December 2018.
The lawsuit alleges a conspiracy to hurt the company and market manipulation, with CTM’s lawyers requesting VGI turn over any documents and the names of people who assisted it with the report.
Corporate Travel Management’s share price has returned to the levels before the report, with VGI reportedly now looking at loss on its bet.
Speaking to the Courier Mail, Jamie Pherous, CEO of Corporate Travel Management, said short-sellers need stricter regulations to put a stop to “flimsy analysis and glib assertions”.
“There are lots of other high-growth asx companies at which they could have thrown 20 poison darts … but it needs to be balanced,” he said.