January 6, 2023



Fiat Lux Partners, a team of independent short activists, is issuing a public critical response to Spruce Point Capital Management’s recent short report on Saputo, Inc. (TSX: SAP).

It is our opinion that Spruce Point’s report contains numerous critical errors which mischaracterize the financial state and outlook of the company. We believe that Spruce Point’s short thesis is built largely upon erroneous claims and irrelevant observations, and that it presents facts out of context in a way that portrays the company in a far more negative light than is deserved. Much of the report also consists of commentary on company fundamentals or macroeconomic matters which, in our opinion, are either already well-understood by investors – and on which Spruce Point, we think, offers neither novel nor unique insights – or entirely speculative and without substantive factual support.

The result, we think, is a lengthy report which, in its size, appears, in a superficial sense, thorough and deeply researched, but which in reality contains no compelling reason to sell the stock, in our opinion. Spruce Point, we believe, offers no coherent rationale for selling SAP, but rather a collection of (at best) loosely-related claims which are largely erroneous, taken out of context, or uninformative.

Spruce Point claims, upon this foundation, that shares of SAP have up to 60% downside from current levels. We believe that it is more likely that Spruce Point is wrong than the market is wrong about the value of SAP shares.