Dun & Bradstreet (DNB) shares dropped at the start of Tuesday's session before recovering and moving into positive territory after Jehoshaphat Research said it is short the stock.
Analysts at the research firm outlined several reasons for their short position on the stock, which they state they have been covering for years. They see a potential 60% to 80% downside.
The firm alleges that DNB's free cash flow is "heavily manipulated, and is ~75% lower in economic reality than it appears," describing it as "mostly vapor." In addition, they claim DNB's adjusted net income is "inflated by ~40% through aggressive accounting."
"Corporate governance is horrendous; the company is a piggy bank for conflicted insiders," alleges Jehoshaphat Research.
The research firm goes on to claim that the company's real organic growth has been "chronically negative" while its dividend is "being supported by stock issuance."
Furthermore, Jehoshaphat Research states there is a "technical overhang" due to PE holders selling tens of millions of shares, even at lower prices.