One of the worst performers on the Australian share market on Wednesday has been the Corporate Travel Management Ltd (ASX: CTD) share price.
In late morning trade the corporate travel specialist's shares have crashed over 21% lower to $21.74.
At one stage Corporate Travel Management's shares were down as much as 27.5% at $20.00.
Why are Corporate Travel Management's shares crashing lower?
Corporate Travel Management's shares had been in a trading halt this week whilst it responded to a short seller report by VGI Partners.
VGI Partners is a hedge fund that holds a substantial short position (~2 million shares) in the corporate travel specialist and stands to benefit from any share price decline.
It released a 176-page report to clients over the weekend which identified 20 concerns in relation to the company's operations.
Although Corporate Travel Management responded to the 20 concerns today with a comprehensive rebuttal, it hasn't been enough to stop its shares from cratering amid concerns that this could turn into another Blue Sky Alternative Investments Ltd (ASX: BLA).
While it has been a dark day for shareholders, VGI Partners will certainly be smiling. Based on its last close price of $27.64, two million shares had a market value of approximately $55.4 million.
Those two million shares are now worth approximately $43.5 million, meaning a paper profit of $11.9 million at this point.
Should you sell your shares?
While I thought that the company's response was solid and comprehensive, it was inevitable that its shares would sink lower due to panic selling.
If you've held onto your shares, then I wouldn't be in a rush to sell them now. Unless VGI Partners can poke holes in this rebuttal, I wouldn't expect its shares to fall much further than here.
