Will Olam Survive Muddy Waters: Sunny Verghese Vs Carson Block
Olam International Ltd is under attack from short sellers but the company looks to be holding on OK, I do not think Olam is the new Enron, and if we were to extend the theory of pre booked profits that is being spouted by the short sellers then every insurance company in the world is in bankruptcy and so are most of the banks.
Olam will survive this, and considering how much short selling would have been generated, and the net short position the company may bounce back over $2.00SGD and give the short sellers a nasty, but well deserved shock.
"There is no substance in their broad allegations," Olam said today in a statement, promising a fuller response in due course. "We will clear our name and hold Muddy Waters accountable for their damaging actions."
But instead of fighting the short sellers CEO Sunny Verghese needs to reach in to his pockets, rally his friends and burn the short sellers, it is not our opinion that the short sellers are well heeled enough to withstand much of an attack, there are plenty of rumors about the financial state of the short seller and Muddy Waters may be looking for a big winner here to salvage themselves.
Certainly I hope it is the case, it would be a shame for the reputation Singapore has built to be destroyed by the rumor and innuendo of Muddy Waters.
Sunny Verghese, here is the check list of what you need to do now.