July 1, 2021

Short Reports: The Wheel of Fortune Turns for “Rota Fortunae”

When it comes to short reports, the news is usually about the shortcomings of a company that’s had a target painted on its back. But a NYSE-listed REIT recently turned the tables on the author of a dubious short report. The guy published his stuff under the pseudonym “Rota Fortunae,” which those of you who paid attention in Latin class know means “The Wheel of Fortune.”  Check out this recent Reuters article:

A small Texas investor who caused shares of a real estate investment trust to plunge 39 percent in a day has agreed to pay the company restitution to settle a lawsuit against him, a rare development that could embolden other companies to pursue such claims. Quinton Mathews, who published his research on companies online under the pseudonym Rota Fortunae, will pay Farmland Partners Inc (FPI.N) “a multiple” of the profits on his short bet in 2018, according to the terms of the legal settlement announced late Sunday. His research had helped wipe as much as $115 million off Farmland’s market value.

The parties declined requests for comment on the exact value of the settlement.

Mathews conceded that “many of the key statements” in a report he published on website Seeking Alpha targeting Farmland – including allegations of dubious related-party transactions and the risk of insolvency – were wrong. “I regret any harm the article and its inaccuracies caused,” Mathews said in the announcement, which was posted on Twitter and Seeking Alpha.

Given his pseudonym, I think my fellow liberal arts majors will agree that Mr. “Fortunae” may find solace from the philosopher Boethius in his time of financial distress. Anyway, the faulty research report was allegedly paid for by a hedge fund, which denies any involvement. According to the article, litigation between the company and that hedge fund is continuing.

John Jenkins