The bankruptcy of trucking giant Celadon just left nearly 4,000 people jobless. The short-seller who predicted the company’s implosion told us what tipped him off.

The $67 million hedge fund Prescience Point predicted in April 2017 that the trucking giant Celadon was going to zero.Some 2 1/2 years later, the short seller’s call turned out to be prescient. The Indianapolis-based company told its 3,800 employees on Monday it was shuttering.Eiad Asbahi, the founder of the Louisiana-based fund, told Business Insider…

The bankruptcy of trucking giant Celadon just left nearly 4,000 people jobless. The short-seller who predicted the company’s implosion told us what tipped him off.

The $67 million hedge fund Prescience Point predicted in April 2017 that the trucking giant Celadon was going to zero.Some 2 1/2 years later, the short seller’s call turned out to be prescient. The Indianapolis-based company told its 3,800 employees on Monday it was shuttering.Eiad Asbahi, the founder of the Louisiana-based fund, told Business Insider that a number of things signaled issues at Celadon, including its accounting practices, nepotism among hires at the executive level, and the use of a regional firm for its auditor. Click here for more BI Prime stories. The biggest bankruptcy in truckload history was unsurprising to a small Louisiana-based hedge fund. Celadon Group filed for Chapter 11 protection on Monday and plans to shutter the company entirely, the firm’s CEO said in a statement. That comes about 2 1/2 years after Eiad Asbahi’s Prescience Point Capital Management predicted the firm’s stock price would fall to zero. Last week, the US Securities and Exchange Commission charged two former Celadon executives with accounting fraud: former President and Chief Operating Officer William Eric Meek, and former Chief Financial Officer Bobby Peavler.While Asbahi’s original prediction that the firm would go to zero in a quarter or two did not materialize that quickly, his call of an eventual bankruptcy was still prescient. He told Business Insider that there were multiple red flags that led to his firm taking a short position against the trucking firm, which grossed $1 billion a year as recently as 2015.Celadon could not be reached for a comment. The company’s attorney did not immediately respond to phone and email inquiries.Read more: Thousands of truck drivers have lost their jobs this year in the trucking ‘bloodbath.’ Here’s what’s behind the slowdown in the $800 billion industry.According to Asbahi, “some of the most prominent” warning signs included “numerous severe accounting discrepancies”; transactions between the company and an off-balance-sheet entity called 19th Capital; the selection of a regional auditor, BKD; and several hires of vice presidents and managers who were all in the same fraternity at Franklin College. ‘Actually worthless’ Asbahi told Business Insider that while initially sniffing out opportunities in the transportation sector, his interest in Celadon piqued after industry insiders pointed to unusual happenings at the cross-border trucking company. That “prompted us to start digging into the company’s financial statements,” Asbahi told Business Insider.What caught Asbahi’s attention initially were transactions between Celadon and 19th Capital, according to his 2017 report.Celadon’s leadership disclosed in a 2016 earnings report that it would form a new off-balance-sheet entity allowing the retirement of an asset-financing group called
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