Noted short-selling specialist Hindenburg Research published a critical report on Thursday on Chamath Palihapitiya-backed Clover Health Investments Corp. , putting shares of the insurance firm on track for their biggest daily percentage drop in four months.
Venture capital investor Palihapitiya, who held a 27% stake in Clover Health as of Jan. 7, was among the big financial names to support last week’s GameStop buying frenzy against institutional short-sellers, saying early in the slugfest that he had bought in to the video game retailer.
The report, whose title called Clover Health a “broken business,” risks reheating the battle between hedge fund short-sellers and investors over a number of U.S. companies.
Clover Health said it will be issuing a statement in the next few hours to address claims made by Hindenburg. Neither Palihapitiya nor his representative immediately responded to a Reuters request for comment.
Hindenburg said in the report that it had no investment position in Clover Health.
Citron, another of the financial world’s famous short-selling research houses, said last week it would no longer publish reports recommending shorts.
Clover, which sells Medicare-backed insurance plans, went public through a $3.7 billion deal with a special purpose acquisition company (SPAC) backed by Palihapitiya. Its other investors had included Alphabet Inc and Sequoia Capital.
Clover shares were last down 10.68% at $12.46, poised for their biggest daily percentage drop since Oct. 6.
In September, Hindenburg issued a report on Nikola Corp calling it an “intricate fraud built on dozens of lies.” Shares of the electric truck maker have fallen about 35% since the report.
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