Olam Shares Top Level Last Reached Before Block AttackMichelle Yun
Olam International Ltd., the commodity trader targeted by short-seller Carson Block, topped the price it last traded at before the founder of Muddy Waters LLC said he was betting against the company.
The stock rose as much as 2.6 percent to S$1.765 in intraday trading in Singapore, before closing at S$1.715. Shares of Olam, which rejected Block’s claims and sued for defamation, closed at S$1.74 on Nov. 19 before Block questioned the company’s accounts at a London conference.
The rebound shows returning confidence among investors after the shares slumped 20 percent following Block’s allegations in November. Olam, whose largest shareholder is Singapore’s state investment firm Temasek Holdings Pte, will in April present the results of a review of its businesses.
“People could be anticipating the strategy recalibration, which they may be thinking is positive for the stock,” James Koh, an analyst at Maybank Kim Eng Holdings in Singapore, said by phone on March 18. “The direction seems to be heading toward slowing down investments.”
Olam, based in Singapore, fell to as low as S$1.395 on Dec. 17, the lowest since March 25, 2009. The stock was the second-worst performer on Singapore’s Straits Times index in 2012 with a 27 percent slump, trailing only Wilmar International Ltd. Five analysts advise selling Olam, 6 recommend holding it and 8 rate it buy, according to data compiled by Bloomberg.
Block’s research firm Muddy Waters followed his initial allegations with a Nov. 27 report likening Olam to failed energy trader Enron Corp., questioning its acquisitions and accounting, and rating the stock a strong sell. Olam, which in February reported its highest quarterly profit since 2010, has said the short-seller’s claims are baseless and were intended to panic shareholders and benefit Block’s short positions.
Olam, also one of the world’s top six cotton traders, said in February it will review its business priorities, spending plans, and cash flow generation targets. It does this every year, the company said.