Tuesday, 31 May 2016
Last updated 3 days ago
Jun 3 2011 | 2:06pm ET
John Paulson may feel like a felled tree landed on him today, after another hedge fund said a timber firm in which his Paulson & Co. is the biggest shareholder is a fraud.
Shares of Sino-Forest Corp. fell by about 60% today, after losing 21% yesterday before trading on the Toronto Stock Exchange was suspended. The precipitous drop-off was triggered by allegations from hedge fund Muddy Waters that the company lied about the value of timberland it owned in China's Yunnan province.
New York-based Paulson owned more than 14% of Sino-Forest as of April 29, and, based on those holdings, may have lost in excess of $500 million over the past two days. The hedge fund is also reportedly a major holder of Sino-Forest debt.
Sino-Forest CEO Allen Chan has denied the allegations, blasting Muddy Waters, which is shorting the company, and its "shock-jock approach," calling it "transparently self-interested." The firm promised a full investigation of the hedge fund's claims, although Chan said they were "inaccurate and unfounded."