Skip to main content

A small Texas investor who caused shares of a real estate investment trust to plunge 39 per cent in a day has agreed to pay the company restitution to settle a lawsuit against him, a rare development that could embolden other companies to pursue such claims.

Quinton Mathews, who published his research on companies online under the pseudonym Rota Fortunae, will pay Farmland Partners Inc. “a multiple” of the profits on his short bet in 2018, according to the terms of the legal settlement announced late Sunday. His research had helped wipe out as much as US$115-million off Farmland’s market value.

The parties declined or did not respond to requests for comment on the exact value of the settlement.

Mr. Mathews conceded that “many of the key statements” in a report he published on website Seeking Alpha targeting Farmland – including allegations of dubious related-party transactions and the risk of insolvency – were wrong.

“I regret any harm the article and its inaccuracies caused,” Mr. Mathews said in the announcement, which was posted on Twitter and Seeking Alpha.

Paul Pittman, Farmland’s chief executive officer, said in a statement that “investors already recognize that the company was the victim of a short and distort scheme.”

Farmland shares traded at around US$12.50 on Monday afternoon, up from around US$5 after the short campaign. The company has produced trailing total returns of 12.5 per cent over the past three years, about 10 percentage points lower than the specialty REIT sector, according to a Morningstar tracker.

Jacob Frenkel, a lawyer with Dickinson Wright who has defended companies against allegations of stock manipulation and was not involved in the Farmland case, said Mr. Mathews’s apology and payment could build company confidence to pursue similar claims against short-sellers.

“It’s highly unusual and refreshing to see a company take on this fight, because most will take the short-term blow of the attack without pursuing legal vindication,” Mr. Frenkel said.

Rodolfo Hernandez, Seeking Alpha’s current managing editor, declined to comment. George Moriarty, the former executive editor of Seeking Alpha, told Reuters in 2019 that courts had respected the website’s status as a neutral platform, and that its staff vetted all posts.

Mr. Mathews runs a one-person investigative research business, Dallas area-based QKM LLC, and has published more than a dozen articles on Seeking Alpha.

Farmland’s litigation against a hedge fund firm that paid Mr. Mathews for research, Sabrepoint Capital Management LP, continues. Sabrepoint founder George Baxter said his firm had nothing to do with the Seeking Alpha article and that it would “defend itself and its employees vigorously against Farmland’s frivolous claims.”

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Report an error

Tickers mentioned in this story