Hedge fund VGI Partners has been emboldened by last week's 27 per cent fall in Corporate Travel Management ('CTM', ASX: CTD) shares and has increased its short position in the Brisbane company.
The fund sent a 52-page to investors last night claiming the group tried to "tap-dance out of trouble" over allegations of ghost offices overseas, thus "further misleading investors".
VGI also hit back at Corporate Travel's claim it did not engage with the company, sending investors email correspondence from last month between VGI partner and AFR Young Rich Lister Douglas Tynan and Corporate Travel chief financial officer Steve Fleming.
"After carefully considering the Company's response, we have increased our short position by around 23%," the fund said in the report.
"With the Company's response not adequately addressing many of our questions, every one of the 20 Red Flags in our previous Presentation continues to concern us.
"VGI Partners is now short 2,501,286 shares in Corporate Travel, with significant capacity to increase our short position in the future."
VGI also accused Corporate Travel Management of trying to "shift the narrative" in its response to the hedge fund's analysis, giving rise to "serious additional concerns".
"This included the Chairman's remarks at the Annual General Meeting when he deviated from the script lodged with ASX for his formal address as he sought to question our claim of a Phantom office at the building known as the "Hatrack" in Glasgow," said VGI.
"He claimed our research was based on a review of the Company website that was at least six months out of date. This is simply false.
"As recently as 26 October 2018 the Corporate Travel website showed two offices for Glasgow, and was updated to remove the Phantom office at the Hatrack only after our Presentation was released to our investors on 28 October 2018."
The company said CTM chairman Tony Bellas' claims of having 73 employees in the Glasgow office were at odds with its observations of 20 employees at the site.
"Are there really 73 employees crowded into this 418 square metre tenancy? If so, Corporate Travel has allocated only 5.9 square metres per employee," said VGI.
"This compares unfavourably with the minimum area of a Scottish standard single prison cell of 7 square metres (excluding the toilet cubicle)."
The hedge fund also said CTM CEO Jamie Pherous' claim that small offices in the US would be wound down with a shift to the larger ones didn't hold up, as only "a handful of employees" were seen in each office in Boston, Seattle and Denver during normal business hours.
"We think Corporate Travel owes it to its shareholders to provide a detailed and up-to-date breakdown by city of its claimed 2,750 full-time equivalent employees," the group said.
"We have found Corporate Travel's lack of attention to detail, and insufficiently transparent investor communications, to be easily exposed in areas where a bit of old-fashioned research can reveal the truth."
CTD shares have been placed in a trading halt until the 8 November at the latest pending the announcement of a response to the new revelations.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Business News Australia
Get our daily business news
Sign up to our free email news updates.