Here we are again talking about Marfrig. After all, the old adage says “if there is smoke, it can be fire.”
After several fraud accusations (here, here and here), Marcos Elias’ research firm Empiricus is now questioning Marfrig’s misterious stock purchasing strategy by its main shareholder.

The repurchase of shares ​​by a company itself is usually seen as a positive – it is a sign that management believes in the company’s prospects. But what is happening with Marfrig, Empiricus says, is that the company’s main shareholder (Marcos Molina) and his wife are purchasing shares with their own money, no matter at what price. Marfrig’s shares are down 41% so far this year.

Molina said in a statement that he bought shares motivated by the solid foundations of trust in the company and its significant potential for value creation.” But he does not seem interested in seeking the lowest price – actually he is buying stock at any price. Molina‘s ownership in the company has shot up to 47%.

According to Empiricus (via Exame), the share purchases were initiated on November 11, but Molina seems to have bought stock without the logic of the participant seeking the lowest value. Through his brokerage house Umurama, Molina’s acquisitions are concentrated in the last 15 minutes of trading sessions, no matter at what stock price. Empiricus says that “the trade pattern of Umuarama is, at minimum, unusual. In the period from September 29 to November 24, on average 40% of purchases were made in the last 15 minutes”

Every day, we received notices from traders saying that Marfrig’s shares are being manipulated. We do not have enough evidence yet about this manipulation, but we find them unusual and suspect,” says Empiricus. Marfrig was contacted, but declined to comment on the subject. 

Only time will tell if Empiricus is right in portraying Marfrig as the “Brazilian Enron”.

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