Spruce Point questions Essential Utilities model, sees 35%-50% downside

Spruce Point Capital Management announced a short position in Essential Utilities, saying it sees 35%-50% downside in the shares to $20-$28. Following a "forensic review," Spruce Point has "grave concerns" about the efficacy of Essential’s business model, the accuracy of its financial reporting, and its ability to meet financial obligations and targets. The firm says Essential is a "vehicle for insider enrichment that operates akin to a Peter-to-Peter-to-Paul scheme whereby money from new and current investors is used to pay existing investors a highly promoted dividend." The stock was also once promoted by a "notorious firm that itself ran a Ponzi scheme," the short seller said in a report on its website. Shares of Essential Utilities are down 2% to $40.77 in early trading. Reference Link