Short Seller QCM Questions Safety of Penumbra Stroke Device

(Bloomberg) -- Short seller Quintessential Capital Management raised concerns over the safety of Penumbra Inc.’s Jet 7 catheter for stroke victims in a new report Tuesday. Shares of the company tumbled in early trading.

The report from New York-based QCM says Penumbra rushed to modify its Jet 7 Reperfusion Catheter device to compete with rivals and that the increased flexibility offered by the Jet 7 with Xtra Flex may have made it more prone to malfunction.

Penumbra didn’t immediately respond to a Bloomberg email request for comment.

Shares of the Alameda, California-based company sank as much as 7.9% at Tuesday’s open, the most in six months. Short reports aren’t new for the medical device company which was targeted by Spruce Point Capital Management LLC in July 2019. Since the money manager’s report the stock had rallied 35% through Monday’s close, double the return for the S&P 500.

Bearish bets have increased with 16% of available Penumbra shares currently sold short, according to data compiled by S3 Partners. That’s the highest in more than a year, the data show.

Gabriel Grego, founder of Quintessential Capital Management, has previously targeted companies including Italian bio-plastic company Bio-On SpA and Canadian pot firm Aphria Inc.

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