Spruce Point Shorts Church & Dwight
New York short seller Spruce Point Capital has announced a short position in consumer goods manufacturer Church & Dwight. The firm says that since Matt Farrell was appointed CEO in 2016, "CHD’s strategy has pivoted towards extreme financial engineering, aggressive accounting, and managerial self-enrichment practices."
Spruce Point's note criticises Church & Dwight's 2017 acquisition of Waterpik, a dental water flossing product, saying that on a conference call, "management showed little understanding of the business", and that it believes it has "undeniable evidence of aggressive accounting, revenue recognition problems, and operational delays at FLAWLESS" (the hair care removal product Church & Dwight acquired in May this year).
Spruce Point says that CHD’s stock faces 35%–50% downside risk, or $42 - $50 per share.