Blue Orca Capital

Blue Orca is Short Enviva Inc. (NYSE: EVA)

We are short Enviva (NYSE: EVA) (“Enviva” or the “Company”) because we think EBITDA is inflated, it will cut its dividend, and newly discovered data suggests, in our opinion, that the Company is flagrantly greenwashing its wood procurement.
 
Enviva claims to be a pure play ESG Company with a healthy, self-funded dividend and cash flows to provide a platform for future growth.  We think this is nonsense on all counts. 
 
In our opinion, Enviva is a dangerously levered serial capital raiser whose deteriorating cash conversion and unprofitability will drain it of cash next year.  Contrary to Enviva’s claims, it generates nowhere near the cash from operations to support its dividend, let alone future capital expenditures to drive growth.  Rather, Enviva’s dividends are funded through capital raising.  Given its already troubling leverage, we think Enviva will be forced into further dilutive equity raises, more borrowing at punitive rates, or most likely, a significant dividend cut.
 
We believe that Enviva is the latest ESG farce, a product of deranged European climate subsidies which incentivize the destruction of American forests so that European power companies can check a bureaucratic box.  In an Orwellian twist, even though burning wood emits more CO2 per unit of heat generated than any major energy source (including coal), an arcane carbon accounting loophole subsidizes European power companies to replace coal with wood pellets derived from deforestation in the United States.  All in the name of climate activism.  
 
In our opinion, Enviva is engaging in textbook greenwashing.  Hidden GPS data embedded in Enviva’s Track and Trace disclosures allowed us to geolocate the Company’s harvests.  Satellite imagery indicates that contrary to the Company’s claims, in many instances Enviva is procuring wood from the widely condemned practice of clear-cutting.  Former senior Enviva sustainability and procurement executives confirmed that this practice was endemic.  We also think this explains the “exodus of sustainability leadership” from Enviva in 2021, including the recent resignations of both authors of the Company’s prominent sustainability “white paper.”
 
Ultimately, we think that any legitimate ESG investor or allocator should be embarrassed to own this stock.  But in addition to evidence of greenwashing, Enviva’s troubling cash flows, dangerous leverage, and unsustainable dividend only add further momentum to the short thesis, which is why we expect the stock price to contract significantly from Enviva’s current nosebleed valuation.
  

A copy of the report can be downloaded here.

For all media inquiries, please contact Blue Orca directly at [email protected]. 
 
 

DISCLAIMER

We are short sellers. We are biased. So are long investors. So is Enviva. So are the banks that raised money for the Company. If you are invested (either long or short) in Enviva, so are you. Just because we are biased does not mean that we are wrong. We, like everyone else, are entitled to our opinions and to the right to express such opinions in a public forum. We believe that the publication of our opinions about the public companies we research is in the public interest.
 
You are reading a short-biased opinion piece. Obviously, we will make money if the price of Enviva stock declines. This report and all statements contained herein are solely the opinion of BOC Texas, LLC, a Texas limited liability company, and are not statements of fact. Our opinions are held in good faith, and we have based them upon publicly available evidence, which we set out in our research report to support our opinions. We conducted research and analysis based on public information in a manner that any person could have done if they had been interested in doing so. You can publicly access any piece of evidence cited in this report or that we relied on to write this report. Think critically about our report and do your own homework before making any investment decisions. We are prepared to support everything we say, if necessary, in a court of law.
 
As of the publication date of this report, BOC Texas, LLC (a Texas limited liability company) (along with or through our members, partners, affiliates) have a direct or indirect short position in the stock (and/or possibly other options or instruments) of the company covered herein, and therefore stands to realize significant gains if the price of such instrument declines. Use BOC Texas, LLC’s research at your own risk. You should do your own research and due diligence before making any investment decision with respect to the securities covered herein. The opinions expressed in this report are not investment advice nor should they be construed as investment advice or any recommendation of any kind.
 
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