Muddy Waters’ Carson Block has made some big claims about the companies he and his colleagues have targeted and shorted, the latest of which is Olam. But the extent to which the market has been willing to follow his trades has been falling. More importantly, the willingness of sovereigns to support their listed companies has been rising. The combination of the two suggests shorting Block-style is getting less profitable. Read more
Here’s embattled agriculture combine Olam on Tuesday morning:
“We are very comfortable with our balance sheet position, in terms of our equity position as well as our debt position,” Sunny Verghese told Reuters in an interview on Thursday… Asked when Olam was likely to tap the markets at the earliest, Verghese said: “Definitely not in the next five to six months.”
Since that interview we might assume Olam has become less comfortable with its balance sheet position because on Monday the company announced an intriguing $750m rights issue.
Following Muddy Waters’ report on why it’s shorting Olam, released yesterday, the company has released a detailed defence. In fact, it’s 45 pages long… Read more
Carson Block has faced some criticism in the past couple of days (such as from the FT’s Lex) for the week-long delay in releasing the promised Muddy Waters’ report on Singapore-based Olam International.
But the wait is over. The report was published on Monday night. Block has not skimped on his allegations, so have a new ink cartridge ready if you’re planning on printing out all 133 pages. Read more
Carson Block of Muddy Waters laid into Singapore-based commodities trading group Olam International at Monday’s Sohn conference in London. Such is the way of his shorting.
The thrust of his argument was that there are troubling irregularities in Olam’s accounts and that the company has taken on excessive leverage.
But Block also pointed to Olam’s acquisition of NZ Farming Systems Uruguay, noting that latter had recently published an annual report with the words “fudge this” next to one of the line items. The suggestion was that Olam has not been particularly wise or scrupulous in picking acquisition targets. Read more
With his reputation suitably inflated from his Sino-Forest adventures, Carson Block’s next target is Olam International, the Singapore-based commodities trading group. As usual with the companies Block focuses on, it should be assumed that that his firm, Muddy Waters, is shorting the name.
Speaking at the Sohn London Investment Conference on Monday, Block questioned Olam’s accounting practices, declaring that the company was engaged in “constant ‘reclassification’” of certain parts of its balance sheet. He alleged there was a case where “office supplies became biological assets”. Read more
That chart (click to enlarge) and more in Hugh Hendry’s April letter to investors, H/T Tail Chaser. There’s a very interesting assault on Asian commodity giant Olam too, for Glencore watchers…
Merger talks between Louis Dreyfus and rival Olam International of Singapore to create the world’s third-largest agricultural trading house have collapsed amid disagreement between the French company’s owners, reports the FT. The merger would have created a commodities trader with an estimated market value of $15bn-$18bn and the third-largest presence after Cargill and Archer Daniels Midland. Sunny Verghese, Olam’s chief executive said on Monday the two companies had decided to end their talks, disclosed in September. Louis Dreyfus’ future has been unclear since CEO Robert Louis-Dreyfus died in 2009. His widow, who owns a controlling stake of more than 50%, opposed the merger with Olam. Louis Dreyfus’ shareholders are now debating whether to take it public through a listing, a merger, or to remain private.
Louis Dreyfus, the French family-owned commodity trader, is in merger talks with Singapore-listed rival Olam International to create the world’s third-largest agricultural trader, the FT reports. Olam said that the two companies’ discussions were still preliminary. However, if a deal is made, it would create the commodity market’s largest trader in cotton, coffee, and rice — including formidable presence in wheat and corn. Both Olam and Louis Dreyfus have moved in recent years to add more profitable production assets to their pure trading activities, seeking to take advantage of future regional imbalances in supply and demand in agricultural products.
Forget unprofitable investments in western financial groups. The scramble is on among Asian sovereign wealth funds for a big piece of the commodities action. As the FT reports on Tuesday, China Investment Corp has agreed to take a 15 per cent stake in Noble Group, the Hong Kong-based, Singapore-listed commodity supplier.
Noble, which boasts a sweeping business presence in China ranging from a soy-meal processing plant in Sichuan to dealings with most of the top steel mills, will sell $850m worth of new and existing shares to CIC at 8.1 per cent less than the last traded price. Read more