The Art of Slowing Down
164: Brunello Cucinelli Halted - Milan Fashion Week Hit Job or Imminent Short Squeeze?
I was enjoying a nice lunch outside at the golf club reading through a few physical documents trying not to look at my phone which buzzes all the time, when a follower pinged me saying, “Brunello Cucinelli’s stock has been halted!” I checked Bloomberg and sure enough the stock was halted due to a short report on Brunello Cucinelli from Morpheus Research. This is the second time the company has been targeted in the past few days, the first was by London-based Pertento Partners who made similar claims via the Financial Times on Sunday.
To me this seems like a coordinated effort by Eduardo Marques’ Pertento Partners and Morpheus (a bunch of former Hindenburg Research team members) to try and force the stock down by taking an activist short approach. As I mentioned on Sunday Cucinelli allegedly selling into Russia isn’t that surprising given that I know and have documented very clearly here and here that LVMH (on an alleged much larger scale) is still doing it. It also seems that companies like Tesla are selling in Russia (allegedly) which I have documented here. The entire question is the “so what?” Is this a bad look, yes, however in all these cases the sales in Russia make up a very small percentage of overall revenue, in Brunello Cucinelli’s case the number is 2% of revenue.
Based on the positions that Pertento and Morpheus have along with whoever their working with (family offices, balance sheet partners etc.) and short positions in Cucinelli being at a record high (per data from the Italian regulatory bodies) I could see Brunello Cucinelli being set up nicely to squeeze them. I also do not see the Italian regulatory bodies being thrilled with a potentially coordinated hit job on an Italian company.
Unlike LVMH, where I believe there are a lot of other issues in addition to other rot like knowingly selling into Russia, it’s a pretty weak argument to say, “well 2% of revenue is coming from Russia therefore let’s use the Financial Times and some activist bullshit to drive the stock down”. I also don’t think it’s a coincidence that this report and the Financial Times publishing their first article on Sunday coincide with Milan Fashion Week.
I will consider taking a