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
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
Let us know if you can make sense of this boardroom drama at Nasdaq-listed e-learning company ChinaCast Education:
As previously disclosed in a Form 8-K dated March 26, 2012, the Company terminated Ron Chan as chief executive officer and effected his resignation as a director. In connection with his termination, the Company actively sought to reach Mr. Chan to conduct an orderly transition of his management functions to interim chief executive officer Derek Feng. This transition was meant to include, among other things, the return of the company seals, business licenses and financial seals of the Company’s Chinese subsidiaries relating to its e-learning and training services business and one of its universities, which items the Company believes are in Mr. Chan’s possession or persons under his direction. Under PRC law, the company seals, financial seals and business licenses are necessary for these Chinese subsidiaries to enter into contracts, conduct banking business, and take official corporate action, including registering the change in management with the relevant authorities in China. Mr. Feng and interim chief financial officer Doug Woodrum made a number of unsuccessful attempts to contact Mr. Chan in connection with his termination to conduct this orderly transition. Read more
Is it all over for Sino-Forest?
The timber firm can’t even keep its own deadlines, never mind those of bondholders. Read more
It’s about time we heard again from Sino-Forest.
The timber flipper has been quiet since it published the interim report into allegations of fraud made in June by short seller Muddy Waters. Third quarter results aren’t out until December 15, but Bloomberg has spoken to Judson Martin, Sino-Forest CEO, and the company seems in pragmatic mood. Read more
And it can start by answering: what’s the deal with these alleged whistleblowers (see below)?
The interim report published by Sino-Forest claims to exonerate the company, but that’s going too far, too soon. Read more
Bloomberg’s Christopher Donville has combed through Sino-Forest’s regulatory filings and found evidence that its senior executives have sold $83m of shares in the firm since 2006. Excerpt below, with our emphasis:
[Allen] Chan, who stepped down Aug. 28 after the Ontario Securities Commission suspended trading in Sino-Forest, sold C$3 million of stock, the filings show. Kai Kit Poon, with whom Chan founded the tree-plantation company in 1992, sold more than C$30.1 million. Chief Financial Officer David Horsley sold C$11.2 million of shares. Simon Murray, a director and also chairman of Glencore International Plc, sold $10.8 million.
On Monday morning Moody’s downgraded $1.3bn of Sino-Forest debt to Caa1 from B1.
This is unsurprising given the farcical events of the last three days: trading suspensions and resignation orders, rescinded resignation orders, and, well, resignations. Read more
There are good times to bury bad news and then there is 4:44am, New York time, on a Sunday, in the middle of the worst hurricane to hit the eastern seaboard in decades.
But as we’ve learned, Sino-Forest is not your average company. Read more
We take it back, perhaps the Canadian regulators have absolutely nothing to teach their US counterparts.
A few hours after suspending trading in Sino-Forest shares and ordering the executive team to resign, the Ontario Securities Commission issued the following statement: Read more
This really wasn’t what Sino-Forest hoped for when it welcomed the Ontario Securities Commission investigation following the release of Muddy Waters’ now infamous report into the firm.
The OSC has decided to not wait around for Sino-Forest’s independent investigation. Read more
Sino-Forest, how we’ve missed thee.
Everyone’s favourite Chinese-Canadian timber company released its Q2 2011 earnings on Monday morning. Its share price rose 8 per cent immediately after Canadian markets opened and was up nearly 4 per cent at pixel time. Read more
The Globe & Mail continued its coverage of the Sino-Forest story by sharing a few beers and a Cobb salad with Carson Block.
In a “dude”-laced interview with Andy Hoffman published Saturday, Block reiterates his belief that Sino-Forest is a “fraud”. Read more
Here is what Sino-Forest said, in its first quarter 2011 earnings call, 14 June:
Operator: And your first question comes from the line of Richard Kelertas from Dundee Capital Markets. Your line is open. Read more
Shares in Sino-Forest soared the most almost two weeks after Wellington Management said it owned an 11.5 per cent stake in the Chinese tree plantation company. Bloomberg says Sino-Forest rose 30 per cent on Monday in Toronto after Wellington Management said in a regulatory filing it held 28.3m shares as of June 30. The stake was valued at C$90.7 m on that date. Wellington, which manages $663bn, held 79,700 Sino-Forest shares, or 0.03 per cent, as of December 31, says Bloomberg. Sino-Forest shares plunged in June after a scathing report by Muddy Waters, a research company founded by short seller Carson Block.
FT Alphaville caught up on its Sino-Forest reading over the weekend and enjoyed the latest post by John Hempton of Bronte Capital. It looks at Paulson & Co.’s loss from the perspective of a fellow portfolio manager, offering sympathy and rivalry in equal measure. Hempton recognises that small teams of investors will use “shortcuts” based on received wisdom such as timber being a safe asset.
However, that does not excuse Paulson & Co for not doing their research thoroughly, writes Hempton: Read more
We bet Paulson & CO. wishes it had this research before it bought shares in Sino-Forest.
On Wednesday, Tom Szabo and David Zurbuchen from Augment Partners, a research firm that normally focusses on metals and mining stocks, published the first part of a report on Sino-Forest Corporation (TRE). Read more
Here are extensive extracts from the memorandum sent by John Paulson, Michael Waldorf, and James Wong of Paulson & Co. Inc. to investors on Thursday:
It begins: Read more
Only one of these exhibits is real:
Exhibit A: Read more
Paulson & Co has lost more than $500m after selling its entire holding in Sino Forest, the Chinese forestry company fighting allegations of fraud, the FT reports. The sale adds to the pressure on Sino Forest as it attempts to fight a series of accusations by short seller Carson Block, and represents a high-profile setback for John Paulson, Paulson & Co’s founder, as his hedge fund struggles with recent poor performance. “Due to the uncertainty over Sino Forest’s public disclosures and financial statements, we have sold our stock and await the results of the independent committee’s investigation,” Mr Paulson said in a statement. On Tuesday, Fitch Ratings cut Sino Forest’s long-term foreign currency issuer default rating and senior unsecured debt rating to BB- from BB+ and put the ratings on negative watch, attributing the move to the fact that the company did not have direct access to the profits of its main operating subsidiaries.
Paulson & Co has lost more than $500m after selling its entire holding in Sino Forest, then FT reports. The sale adds to the pressure on Sino Forest as it attempts to fight a series of accusations by short seller Carson Block, and represents a high-profile setback for John Paulson, Paulson & Co’s founder, as his hedge fund struggles with recent poor performance. Paulson & Co was the largest shareholder in Sino Forest when Muddy Waters, Mr Block’s research firm, published a report on June 2 accusing the group of overstating its ownership of forestry assets in China. The company has denied the allegations and appointed an independent committee to examine the report. Since the report was published, shares in Sino Forest have fallen by more than 80 per cent.
Timeline courtesy of Sino-Forest’s erstwhile supporter, Dundee Securities:
June 1: Read more
Now, about them trees.
Canada’s paper of record, the Globe and Mail, on Saturday published the results of a two-week investigation into Sino-Forest’s assets. Read more
FT AlphaTilt, the swashbuckling blogging portmanteau, noticed on June 2 that Paulson & Co was listed as owning by proxy 14.13 per cent of the outstanding shares in Sino-Forest Corporation.
The timber firm’s troubles were more bad news for the world’s third-largest hedge fund, whose main fund lost 6 per cent of its value in May. Read more
As if Sino-Forest didn’t have enough problems, it seems like the Markets Live effect is alive and well.
It’s a not-so-secret Sino-Forest session over at Markets Live.
It’s Tuesday — Sino-Forest results day.
The Chinese forestry firm already stands accused of being a “stratospheric” fraud by research and short-selling outfit Muddy Waters. Today Sino-Forest is set to offer a deeper look at its finances with Q1 results. Read more
From those loyal analysts at RBC Dominion Securities on Friday, a note entitled:
RBC puts forward three main reasons why Muddy Waters is wrong and Sino-Forest warrants an “out-perform” rating. We’ll let you decide whether “mounting” is justified in the note’s title (or instead whether “in” should be removed.) Read more
“We are going to provide you with some information on why Muddy Waters research is a pile of crap” — Richard Kelertas, Dundee Capital Markets. [Source: Financial Post]
A bold (and so far unheeded) call from Dundee Capital, given Muddy Waters’ “perfect” track record, depicted by Thomson Reuters in a chart released on Thursday. Read more
In the previous post we tried to identify Muddy Waters’ (MW) main allegations concerning Sino-Forest Corporation’s (TRE) assets in Yunnan province, China.
This post looks at TRE’s response and makes some new information publicly available. Read more