Burlington Stores (BURL) has been a high flyer this year, but one hedge fund manager says that stock could fall 20% to 40% from its current level. Ben Axler, who's founder and chief investment officer at Spruce Point Capital Management, is shorting the stock, writing in a report that his firm "has obtained bona fide documentary evidence which suggests aggressive accounting at Burlington." Axler also writes that the company has benefited from "management's aggressive financial and accounting tactics to engineer 'beat and raise' quarters."

During an interview with TheStreet TV, Axler said "we've found the management team made a number of aggressive financial moves to propagate the stock to allow the insiders to sell out recently, and now we're seeing the management sell as well." Axler also wrote that "recent sales growth rates have rapidly diverged from accounts receivables growth."

Axler said the biggest factor leading him to short the stock was the fact that "there's cracks in the story leading us to believe that their earnings are unsustainable." Axler explained that Burlington Stores is trading at a premium to other competitors, like TJX (TJX) and Ross Stores (ROST) , which are opening more new stores than Burlington. "We evaluate a retailer on its ability to deliver sales and cash flow over its entire square footage base, whether it be the warehouse, the whole distribution, the store front. If you look at these guys, Burlington is at an enormous gap, and we think they're going to have to spend hundreds of millions of dollars to bridge that gap,' he said, adding that investors have not factored that in to the stock price.

Asked to respond to Axler's report, a spokeswoman for Burlington Stores said "the company is currently in their quiet period and they are unable to respond until after the Q3 results."

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