The hedge fund manager who targeted Greek retailer Folli Follie SA is now attacking one of the biggest pot companies in Canada.

Gabriel Grego, founder of Quintessential Capital Management, told a conference in New York on Monday that Aphria Inc. (APHA.TO) has diverted about half of its net assets into inflated investments held by insiders.

He says that the company, which had a US$2 billion market capitalization last week, is a “black hole,” according to a report he ran in conjunction with Hindenburg Research, a forensic analysis firm based in New York. Both firms are shorting Aphria.

"Allegations that have been made by the short seller Quintessential Capital in the report that they published this morning are false and defamatory," Tamara Macgregor, VP of communications at Aphria, said in an emailed statement to BNN Bloomberg. She noted Aphria is preparing a detailed response and is “pursuing all available legal options” against Quintessential Capital.

Shares of the Leamington, Ont.-based company tumbled in early trading in both Toronto (APHA.TO) and New York (APHA.N). If sustained, that would be the biggest one-day share drop since it went public. The company's TSX-listed shares were down 24.83 per cent or $2.61 at $7.90 of 2:27 p.m. ET.

With files from BNN Bloomberg

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