Muddy Waters’ Block short in dlocal, cites ‘red flags’ at conference

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Hedge fund Muddy Waters is short payment processor dlocal, the investment firm’s CEO and owner Carson Block said at a financial conference on Wednesday.

Block told attendees at the Sohn conference in London that he went into his short position because of the many “red flags” he found in the latest accounts last filed in 2020 by Dlocal Ltd, a Uruguay-based company, which it says is alleged. connecting global merchants with emerging market users through payments.

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“If these were serious people who really wanted to run a payments company for the long term, they wouldn’t have sold a billion dollars worth of stock in the first five months of the company,” Block said in an investor presentation. .

Dlocal did not respond to LinkedIn’s request for comment. The contact links on the company’s website were not working at the time of writing.

A report published on its website by Muddy Waters Research states that there is a $3.3 million deficit in DLO’s ability to fund its dividend.

It also says that the company’s subsidiary in Malta has a deficit of $4.1 million in the company’s ability to finance its use of cash.

“The spate of recent high-profile departures brings to mind the saying, ‘rats fleeing a sinking ship,'” the report said.

Block’s latest research report issued in July 2022 was on energy company Hannon Armstrong Sustainable Infrastructure Capital HASI.N.

The move comes as Muddy Waters founder Carson Block is being investigated by the Justice Department as part of a broader investigation into short sellers and hedge funds focused on alleged coordinated trading. (Reporting by Nell Mackenzie Editing by Tomasz Janowski and Josie Kao)

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