Yesterday morning, shares of less-than-truckload carrier ArcBest (NASDAQ: ARCB) plunged as much as 6.6% on issues raised in a report published by research firm Off Wall Street, based in Cambridge, MA. The stock closed at $49.25 at the end of trading on Friday: at press time, ARCB stock had trimmed some of its losses and was trading at $47.
Seeking Alpha’s Clark Schultz reported that Off Wall Street’s research outlined “a major accounting problem” and set a new price target for ArcBest at $35.95, implying a 27% devaluation from Friday’s close.
FreightWaves talked to several equities analysts about rumors surrounding ArcBest, but no one had seen the report. This morning, we spoke to Off Wall Street principal Mark Roberts, who acknowledged the release of the ArcBest report but refused to discuss the firm’s research with non-clients. Transportation equities analysts we spoke to speculated that the report was a contributing factor in yesterday’s broad sell-off of trucking stocks.
Finally, we talked to ArcBest VP of Investor Relations David Humphrey and General Counsel Michael Johns about the Off Wall Street report. The ArcBest officers insisted they had a copy of the report but could not share it. Humphrey and Johns said that Off Wall Street did not allege criminal financial misreporting or SEC noncompliance.
“We have not in any way had any accounting irregularities: we follow all of the rules of the SEC and Generally Accepted Accounting Principles,” said Humphrey.
The issues brought up in Off Wall Street’s report involved off-balance sheet “long-term contingent liabilities related to pensions that are not required by accounting rules to be recognized,” said Johns. ArcBest went on to say that Off Wall Street would issue a clarification of its research report.
FreightWaves spoke to a number of transportation equities analysts who were not familiar with the Off Wall Street report but were actively looking into the matter. It’s worth noting that in the company’s last few earnings calls, ArcBest executives did not take live questions from analysts, but instead had analysts submit questions for screening a day prior.