Blue Orca says short FMC following ‘recent string of stunning legal defeats’

Blue Orca says it is short FMC Corporation “because FMC has concealed from investors that it has suffered a recent string of stunning legal defeats around the globe that have enabled competitors to now launch competing generics at prices up to 80% below the price of FMC’s flagship insecticide product. Contrary to the company’s claims, FMC’s process patents do not protect its flagship product from generic competition. The dam has broken.” Blue Orca further states that, “FMC continues to misrepresent to investors that it will not face generic competition for its flagship diamides when in reality, as a result of devasting recent legal defeats, generics have already launched in key markets of India and China and are on the precipice of launching in Brazil. Our investigation found dozens of legal competitors, many industry heavyweights, who are, right now, manufacturing and selling generic versions of FMC’s top selling insecticide product in FMC’s most important markets at much lower prices… Given that FMC’s patented diamides account for an estimated 60%+ of EBITDA, we expect that a tidal wave of generic competition on FMC’s flagship product will crush FMC’s revenues and profits while blowing out its leverage covenants. Accordingly, we doubt that FMC will be able to continue to roll commercial paper at absurdly cheap rates and we believe that like Enviva, an investment rating downgrade is likely. Ultimately, we believe that FMC is facing a perfect storm of both falling margins, shrinking revenues and crushing leverage.” Shares of FMC have dropped over 2% to $80.32 in Thursday morning trading.