Corporate Travel Management had warning of short selling probe

UNDER siege Corporate Travel Management reportedly knew last week that short-sellers were questioning its claims to large profit margins and a network of global offices.

Corporate Travel Management managing director Jamie Pherous. Picture: Annette Dew

UNDER siege Corporate Travel Management (CTM) reportedly knew last week that short-sellers were questioning its claims to large profit margins and a network of global offices.

The $3 billion travel empire founded by Rich Lister Jamie Pherous was placed in a trading halt on Monday after short-sellers VGI Partners raised 20 “red flags” about the company.

Brisbane-based CTM said it was made aware of VGI Partners’ research report into the company at approximately 3pm on Sunday. On Monday it said it could not comment on earlier communications it may have had with VGI.

However, sources close to VGI understand that the travel company had been sent the list of VGI concerns almost a week ago but had not responded. VGI claims CTM operates“phantom” offices in overseas locations and has questionable profit margins.

CTM said on Monday it would remain in a trading halt until it released a statement responding to VGI’s claims. CTM joins troubled fund manager Blue Sky Alternative Investments in being the second high-profile Brisbane company targeted by short sellers this year.

Blue Sky shares have fallen more than 90 per cent since the release of a report in March by short sellers Glaucus questioning the value of the fund manager’s investments.

CTM will hold its annual general meeting in Brisbane on Wednesday where it likely faces questions from shareholders over VGI’s claims. VGI has a short position of more than two million CTM shares, estimated to be worth more than $60 million.

Major Queensland stockbroker Morgans, which underwrote the company’s initial public offering in 2010, said yesterday that it will wait until the release of CTM’s response to the claims before updating investors.

Morgans analysts Belinda Moore and Kurt Gelsomino have remained bullish on the stock over the past year. In a note to clients in July headed “Runway cleared for future growth” they put a share price target of $32.25 on the stock. The shares closed at $27.64 on Friday.