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Analysts express confidence in GFL Environmental in wake of negative short-seller report

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Maguire directly addressed some of the concerns that Spruce Point raised about GFL’s accounting, arguing that variations in the numbers GFL used for capex in its financial statements were normal and reflected differences in when that equipment was put into service and when cash payments for it were made.

National Bank of Canada, Stifel Financial Corp and Jefferies also published defences of GFL.

Jefferies analyst Hamzah Mazari said he viewed the recent weakness in the stock as a buying opportunity.

Mazari also tackled what he saw as inaccuracies in Spruce Point’s report. He responded to Spruce Point outlining several public documents in which GFL had used different sets of numbers for revenue in the first quarter of 2019. Mazari said the short seller used a prelim prospectus for one set of revenue figures and that document did not yet include reclassifications. The numbers for that quarter would have also needed to be reclassified because it was the first quarter that GFL began reporting waste industries revenue, Mazari said.

As for Spruce Point’s critiques of GFL’s roll-up business strategy, Mazari said that every publicly traded company in the waste management business operates under this structure.

“The waste sector by nature is a roll up and GFL is as well which does not mean it is going to zero,” Mazari said.

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