Carson Block, founder of Muddy Waters Research, announced a new short position in Singapore-based food commodities firm, Olam International, Bloomberg Businessweek reports.You may recall that Block is that man that wrote the research that destroyed timber company Sino-Forest. And just as in that case, he’s arguing that Olam (owned by Tamasek Holdings) has some shady accounting stuff going on.
Specifically, Block claims the company is counting its chickens before they hatch, and booking profits from transactions before the deals are complete. He also says they’re in a lot of debt.
“It’s a leap of faith to think the company is being honest with its valuation” gains, Block said. “We think the company will fail.”
Recoveries for Olam investors will be “negligible,” he said.
“I have absolutely no idea what he is talking about so I can’t react,” Olam Chief Executive Officer Sunny Verghese, said by phone from Singapore. “This is the first time I’m hearing of it.”
Olam’s stock has dropped 17% since Block made his announcement at the Ira Sohn Conference in London today.
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