Why Arbor Realty Trust Stock Tumbled Nearly 24% in March
Shares of Arbor Realty Trust (NYSE: ABR) plunged 23.8% in March, according to data provided by S&P Global Market Intelligence. One factor weighing on shares of the mortgage real estate investment trust (REIT) was a report published by Ningi Research, which had also shorted the company's stock. The company responded to that report and initiated a share repurchase program to potentially capitalize on the share price decline.
Arbor Realty Trust released a statement in mid-March, noting it had received a research report published by Ningi Research. The company stated that it "lacks merit and contains numerous inaccuracies, misstatements, and otherwise misleading allegations." It continued, "This false and inflammatory report is a transparent effort to mislead the public for the purpose of enabling Ningi and its affiliates to profit from short positions on Arbor's stock." The REIT also noted that contrary to what Ningi reported; it uses generally accepted accounting principles (GAAP) standards to maintain its books and records. The company has used the leading accounting firm Ernst & Young to audit its financial statements since 2003.
Arbor is the latest company under pressure from short-sellers. Fellow REIT Medical Properties Trust recently filed a lawsuit against the firm behind negative research published against the company and published a letter to shareholders to set the record straight. Meanwhile, short-sellers also published a negative report about financial technology company Block. These reports drive down share prices as investors weigh their validity, enabling short-sellers to make money.
Source Fool.com
