“Nov. 20 (Bloomberg) — Olam International Ltd. slumped the most in six months in Singapore trading after short-seller Carson Block questioned the agricultural commodity trader’s accounting methods.
The share declined 7.5 percent to S$1.61 at the close, the lowest since May 16, while its bonds also fell in Asian trade. Block said he is betting against the stock because Olam, which had a record level of shorts as of Nov. 15, is booking profits on transactions before it’s clear how the deals will work out and is “aggressive” in reporting biological gains.
Olam “strongly rejects the assertions made by Carson Block and or Muddy Waters,” it said in a statement. The company said earlier it wasn’t contacted before by Block nor his Muddy Waters LLC research firm, and may issue a further statement if Block publishes a report on Olam.
Block, a 36-year-old lawyer, has successfully bet against Chinese companies that trade in North America after questioning their accounting methods. One target, tree-plantation operator Sino-Forest Corp., slumped 74 percent before eventually filing for bankruptcy protection in March.
“Olam has to come out to prove their case and allay the fears raised by Muddy Waters,” said Alan Richardson, a Singapore-based fund manager who helps oversee about $82 billion for Samsung Asset Management, which doesn’t own Olam shares. “We will need to see how both sides are able to articulate their arguments.”
