(Bloomberg) — IRB Brasil Resseguros SA plunged after Warren Buffett’s Berkshire Hathaway Inc. pushed back against a media report that it held a stake in the Brazilian reinsurer.
“Berkshire Hathaway Inc. is not currently a shareholder of IRB, it has never been a shareholder of IRB and it has no intention of becoming a shareholder of IRB,” Berkshire said Tuesday in a statement.
Shares fell as much as 41% to 16.66 reais in Sao Paulo, the lowest intraday level since July 2018. It’s the worst day for the stock since IRB’s initial public offer in 2017.
IRB had been targeted by short seller Squadra Investments, which alleged that the Brazilian reinsurer included one-offs in its recurring pretax income figures. IRB has fought back, accusing the asset manager of stock-price manipulation. Local newspaper O Estado de S. Paulo reported last month that Berkshire had a stake in the company and was boosting its holding, a claim that Berkshire denied late Tuesday.
“There have been recent stories in the Brazilian press that Berkshire Hathaway Inc. is a shareholder of IRB Brasil Re,” Berkshire said in the statement. “Those stories are incorrect.”
Brazilian research firm Eleven Financial cut its price target for the stock amid the selloff. In a report signed by analysts Carlos Daltozo and Tatiana Brandt, Eleven said it took part in a conference call held by the reinsurer on Monday in which executives said Berkshire had boosted its stake in the firm through its Berkshire Hathaway International Insurance Ltd. subsidiary and touted a close relationship with Ajit Jain, Berkshire’s vice chairman of insurance operations.
Jain didn’t immediately respond to a message seeking comment. IRB Brasil had no immediate comment about Monday’s call.
After Berkshire denied investing in IRB, the reinsurer said that it was reviewing data on its shareholder base.
Shares of IRB are down more than 60% since Feb. 2, when Squadra released a 150-page report explaining why it was shorting the name.
(Updates shares in third paragraph, adds analyst comment in sixth paragraph and IRB comment in seventh paragraph)
To contact the reporters on this story: Vinícius Andrade in São Paulo at vandrade3@bloomberg.net;Katherine Chiglinsky in New York at kchiglinsky@bloomberg.net
To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Dan Reichl, David Scheer
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