Nuvei Corporation is in the crosshairs of Spruce Point Capital Management for a second time, after the short seller raised transparency concerns following the Canadian fintech company’s recent acquisitions and its business connections.
Spruce Point chief investment officer Ben Axler told BNN Bloomberg recently he is shorting the stock because of “issues we have not just with the management, the people behind it (Nuvei), but the underlying business, which appears to be getting worse and worse.”
“They need more transparency, more disclosure, and everything we see out of them gets more and more opaque,” he added.
Axler questioned the extent of Nuvei’s involvement with troubled crypto exchange FTX, with which it had a past partnership following its acquisition of Simplex in September 2021 for US$290 million.
He noted that Spruce Point’s research found that Nuvei was listed as a creditor in FTX’s bankruptcy filings, adding that the company could potentially have legal exposure and a significant impairment tied to its involvement with FTX.
Spruce Point’s allegations follow Nuvei’s announcement of a creative partnership with Canadian actor and entrepreneur Ryan Reynolds, who also invested an undisclosed amount into the company.
Axler asserted that he has no issue with Reynolds’ involvement, but wants to see more specifics about the actor’s investment in Nuvei.
“But our real question is: did he put his own money into the company? Or was he gifted that through an equity issuance of restricted stock?”
Nuvei’s stock price fell as much as 8.3% on the TSX after Spruce Point’s report was published on Tuesday morning, but quickly recovered.
Shares of Nuvei have surged about 62% year to date.
Contact Sean at sean@proactiveinvestors.com