Gotham City Research released a short report on MDC Partners on Friday, and the stock is down 11% after falling as much as 16%.
MDC Partners is an international advertising and marketing firm.
- Yahoo Finance
Gotham generated a whole laundry list of grievances against the company, slamming its growth numbers, saying that it understates its debt, and pointing out a bunch of executive departures.
Here are a few of the highlights:
- 2015 organic revenue growth is ~1.5%, not 7.2% as reported. Organic growth well below industry averages. MDCA’s true Debt is understated by ~$300 million, or 23% of stated Debt as of 2015. At least 42%-53% of reported profits are suspect. 7+ executive departures within recent quarters. At most 3 of Crispin Porter Bogursky’s original 13 partners remain. BDO and David Wiener & Co are quasi-captive entities MDCA used to structure its dubious accounting strategies. Tax deductible intangibles and goodwill have declined from 100% tax deductible in 2013 to only 16% in 2015.
Perhaps needless to say, MDC refutes Gotham’s claims, and says that it will report numbers next week.
“MDC Partners is in a pre-earnings quiet period and will report its results and host a conference call with investors after the market close on Tuesday, May 3rd,” the company said in a statement. “MDC management is confident in its financial reporting and accounting practices, and intends to defend itself against the false and misleading accusations of this short seller report, which is solely focused on destroying the value we are creating for our shareholders for their own personal gain.”