Standing up to short-sellers, Fortescue Metals’ Andrew “Twiggy” Forrest says moves to make him sell is 33% stake in the iron ore company won’t work.
Over the past 12 months Fortescue shares have fallen 65% – dragged down by the iron ore price which hit $US47 a tonne last week, as well as market concerns over the miner’s debt levels, especially after it aborted a bond issue last month. Fortescue is heavily exposed both to the iron ore price and Chinese demand.
There’s a report in the AFR today that Forrest has responded to rumours short-sellers are attempting to lower Fortescue’s share price as a way to get him to sell his personal holding in the company to pay lenders.
“I have no margin loans at all. I have a very secure position. My wife and I don’t give away hundreds of millions of dollars to charities around Australia and around the world if we’ve got any security issues at all,” he said.
“So the hedge funds starting the rumourtrage really need to take that into account when they start rumours.
“My debt to debt-plus-equity ratio is minuscule and in any event could be covered by my other assets, not my Fortescue shares.”
Short-selling involves offloading shares that have been borrowed in the hope they can be bought back later at a lower price. It’s a tactic which was used against Nathan Tinkler and his Whitehaven Coal stake, as well as ABC Learning’s Eddy Groves.
Fortescue stock has been a favourite short of US investment manager Jim Chanos who has previously signaled out the company as a “value trap” and back in 2012 slammed it when he said it would fall because of its exposure to iron ore and China.
There’s more here.