Short-Seller's Latest Hong Kong Stock Target Plunges 91 PercentBy and
Tech Pro denies report, saying information is misleading
GeoInvesting’s David had recommended shorting shares in June
Tech Pro Technology Development Ltd. shares tumbled as much as 91 percent in Hong Kong after activist short-seller Glaucus Research Group questioned the company’s accounting.
Tech Pro closed 86 percent lower at 31.5 Hong Kong cents, a record drop. Glaucus Research Group rated the company a strong sell with a target price of zero in a report Thursday, saying the company overstated its profits and inflated the purchase price of its acquisitions. Tech Pro said in an exchange filing that it vigorously denies the report, and the information in it is “incomplete, biasedly-selected and presented and materially misleading."
Volume on the stock was more than 50 times its three-month daily average, according to data compiled by Bloomberg. Short interest in the company rose to a record 3.7 percent of outstanding shares on July 26, IHS Markit data show.
Dan David of GeoInvesting LLC, at the 2016 Sohn Conference Hong Kong on June 1, recommended shorting shares of Tech Pro, citing “unbelievable” valuations. David said that the company is funding operations with equity financing, which is dilutive, and also said the football team it purchased, France’s Sochaux-Montbeliard, is a “cash burning” business.
"I think this result was inevitable," David said Thursday in an e-mail.
Glaucus, in its report, said Tech Pro is a “roll-up of unrelated businesses,” adding that the company sells LED lighting products, is a sub-leasing agent for a commercial real estate property in Shanghai and cited the purchase of the French football team.