Short seller Muddy Waters has placed bets against the shares of Canadian insurer Fairfax Financial alleging manipulation in its asset values.

Shares of the property and casualty insurer sank 12% on Thursday, and set for their worst drop since Sept. 2008.

Fairfax currently has a short interest of 0.65% of free float worth C$203.81 million ($151.36 million), with short sellers having made over C$21 million in paper profits so far today, according to data from Ortex.

The Canadian company’s insurance business has struggled to remain profitable even after the hurricane-related catastrophes in 2017, Muddy Waters wrote in a research note.

“This underperformance pressured Fairfax into becoming aggressive in pulling accounting levers starting in 2018,” the short seller said.

“We find that Fairfax has consistently manipulated asset values and income by engaging in often value destructive transactions to produce accounting gains,” it added. Fairfax disagreed with the report, while assuring shareholders it “has prepared its financial statements and reporting in accordance with all applicable accounting principles”. Reuters was not immediately able to verify the allegations made in the report. Short sellers make money by betting that the price of a security (such as a stock) will decrease.

Fairfax was founded in 1985 by Canadian-Indian billionaire Prem Watsa, who is also its chairman and CEO. He is also known as ‘Canada’s Warren Buffett’.

“We see Fairfax as far more akin to GE than to Berkshire Hathaway,” the hedge fund said.

It also alleged Fairfax carried several of its investments at “unrealistic” carrying values. According to the hedge fund, the market value of its shares in Indian outsourcing provider Quess Corp was $477.2 million, while Fairfax continued to carry it at about $1 billion.

In 2019, Fairfax raised its stake in Quess to more than 32% after acquiring over 256,000 shares. As of Sept. 30, it carries the Indian company at a 87% premium to its market value, Muddy Waters said.

Last year, Muddy Waters bet against the credit of the Luxembourg-based commercial landlord CPI Property Group in November and Blackstone’s real estate investment trust in December.

Fairfax becoming the latest short-seller target comes nearly a year after hedge fund bets against Canada’s TD Bank Group hit $4.2 billion, making it the world’s most-shorted banking stock, according to data provider ORTEX’s calculations.

In its most recent third-quarter earnings report, Fairfax reported a profit that more than doubled to C$1.19 billion, compared with C$582.7 million a year earlier.

Net premiums written also grew 4.8%, while gross premiums written also rose 5% in the quarter.

“The MW report does NOT raise concerns with the earnings power of the business,” National Bank of Canada wrote in a research note on Thursday.

“The MW report does not describe any fraudulent or nefarious accounting tactics, but only potentially aggressive valuation marks,” it added.

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