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Investigations  /  05.15.2019

Shareholder Investigation of XPO Logistics, Inc.

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XPO Logistics, Inc.’s (XPO) Officers and Directors Accused of Misleading Investors About Company’s Financial Condition

According to the complaint against the company’s officers and directors for breaches of fiduciary duties between February 26, 2014 through the present, XPO Logistics, Inc. (XPO) grew from an aggressive and ill-advised mergers and acquisition strategy. XPO touted its strategy and accompanying fast-paced growth through its publicly issued financial statement. However, those financial statements contained irregularities that conveniently disguised its true financial state. On December 12, 2018, Spruce Point Capital Management started casting doubt on the legitimacy of XPO’s growth by publishing a report asserting that XPO was covering financial irregularities. It had evidence to suggest XPO was utilizing dubious tax accounting methods and aggressive amortization assumptions amongst other factors to portray glowing ‘Non-GAAP’ results. By Spruce Point’s calculations, XPO’s acquisitions had “generated $73m of cumulative adjusted free cash flow in an expansionary economic period… [and is] indicative of a failed business strategy yielding a paltry 1.2% return on invested capital.” Following the publication of the Spruce Point report, XPO’s stock price fell $15.77, or 26.17%, to close at $44.50.

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