Blue Orca shorts Baldwin, claims ‘questionable financial engineering’

Blue Orca issued a short reprort on Baldwin Group (BWIN), calling the company a “chronically unprofitable rollup of insurance distributors.” The firm believes Baldwin “engages in questionable financial engineering to hide costs from its income statement and inflate adjusted EBITDA and operating cash flow.” Blue Orca says its diligence uncovered “multiple instances in which Baldwin has acquired small insurance firms of agents that, according to state records, were already working for Baldwin before the time of the acquisition.” Baldwin’s acquisitions “amount to aggressive financial engineering, allowing it to shift commission costs from its income statement to the balance sheet in the form of earnout liabilities and capitalized assets, thus artificially inflating adjusted EBITDA and operating cash flow,” the firm contends. Shares of Baldwin Group are up 32c to $50.82 following the report.