(Bloomberg) -- It’s Steve Cohen’s hedge fund versus an activist short-seller in the stock market today. And so far, Cohen is winning.
Bitcoin mining company TeraWulf Inc. rallied as much as 18% on Thursday after Cohen’s Point72 Asset Management disclosed a 1.3% stake in the company in its second-quarter report to the Securities and Exchange Commission. The shares maintained most of those gains following a report published by Grizzly Research that accused the miner of enriching insiders at the expense of investors.
The Easton, Maryland-based company is a vertically integrated miner, meaning it owns the power infrastructure to support its energy-intensive mining operations. It is also planning to convert some of that infrastructure into facilities for artificial intelligence. Its shares are up more than 50% year to date.
Following the disclosure of Point72’s stake, Grizzly Research published a report on Thursday that called TeraWulf a “house of cards” and pointing out that CEO Paul Prager’s private company, Beowulf, provides critical support to TeraWulf, including leasing facilities and providing maintenance and upkeep for them.
“TeraWulf has an unsustainable balance sheet and has relied on at-the-market financings and highly dilutive and destructive debt deals to fund its operations,” the report added. Grizzly Research Chief Executive Officer Siegfried Eggert added in an email to Bloomberg that “As of the time of the publication you have to assume that we have a short position, we cannot guarantee how we trade after the publication.”
TeraWulf said in an email that it has reviewed the claims and believes they are filled with inaccuracies, misrepresented data and unfounded personal attacks.
“The report appears designed to spread misinformation about TeraWulf, its operations, finances, management practices, and key executives and shareholders, all for the short sellers’ own personal profit,” the statement said, adding that its related party transactions are fully disclosed in its regulatory filings and have been approved by its independent audit committee.
A representative for Point72 did not immediately respond to a request for comment.
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