Insurance claims handler Quindell (LSE: QPP) is a controversial business. On Monday it revealed another six-month period of stellar profit growth and its shares soared. But these profits may be too good to be true, and Gotham City Research, an American hedge fund, has bet heavily on the share price collapsing.
Gotham doesn’t like the way Quindell accounts for its sales – recognising them when a claim is processed rather than when cash is received.
Gotham points out that Quindell is very good at reporting big profits, yet cash continues to drain from the business. Eventually profits [...]
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