(Bloomberg) -- Shares of German investment firm Mutares SE & Co. Kgaa plunged on Thursday after Gotham City Research said it was shorting the stock and published a critical report.
The stock fell as much as 28%, the most since it listed on Frankfurt’s entry standard in 2014, erasing about €150 million ($167 million) of market value. It later pared the decline.
In its report, Gotham City said it sees heightened risk that the shares are “substantially overvalued” due to what they called an increasing reliance on debt capital to fund dividends.
A response from the German company accused Gotham City of presenting already-published facts “in a misleading manner” and of making “allegations, assumptions and insinuations in order to distort the facts and to pursue its own economic interests.”
Mutares isn’t the first European company to be targeted by Gotham City this year. In January, the short seller took aim at Grifols SA, sending the Spanish blood plasma firm’s shares plunging. It’s now facing disciplinary proceedings from Spain’s markets regulator.
Other past Gotham City targets include French electronic price-tag maker SES-Imagotag, now known as VusionGroup.
Mutares describes itself as an international investor, which acquires companies in special situations and takes an active part in trying to turn them around. It focuses on buying firms in sectors including automotive, technology and retail with revenues between €100 million and €750 million, according to its website.
(Updates with Mutares’s response in fourth paragraph)
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