Shares in Kerry Group slumped as much as 10% in early afternoon trading on Thursday, following the publication of a research note that is highly critical of Kerry’s business model.

The research note, which was published by a group called Ontake Research, is highly critical of Kerry Group’s recent string of acquisitions, labelling many takeover deals as ‘suspect’.

The research note questions whether Kerry Group paid vastly inflated multiples for a number of businesses in recent years, including major acquisitions such as Red Arrow and Southeastern Mills.

“Rather than a sophisticated 'Taste & Nutrition' business, we view Kerry Group as a dairy and bulk ingredients supplier that overstates acquisition spend to mask inflated free cashflow,” said the research note.

Investors spooked

The publication clearly spooked investors, with Kerry Group shares falling sharply on Thursday to lows of €102, having opened above €113.

Shares in Kerry Group rallied after lunch, coming back to €109, but this is still down 4%.

Based on its analysis, Ontake said it had shorted Kerry Group’s share price.

In simple terms, shorting a company is betting that its share price will fall.

Short-selling companies has been a major feature of stock markets in 2021, with activist investors attacking short-selling investors who had bet against high-profile companies, such as GameStop.