Thursday, 29 September 2016
Last updated 8 hours ago
Jun 21 2011 | 8:20am ET
Paulson & Co. has abandoned its huge stake in Chinese timberland owner Sino-Forest Corp., taking a huge loss for its investors.
The US$37 billion New York-based firm said yesterday that it had sold off its entire 14% stake in Sino-Forest. That company, accused of overstating its timber holdings in China by hedge fund Muddy Waters, has seen its stock price plummet 85% since the beginning of the month.
That translates to a US$720 million loss for Paulson, whose nearly 35 million Sino-Forest shares were worth C$815.8 million in April but just C$110.7 million at the end of last year, when Paulson said it had sold the last of its shares. On the bright side for the hedge fund, Paulson sold off its stake prior to a Saturday report in the Globe & Mail newspaper backing some of Muddy Waters’ claims, which sent Sino-Forest shares down even further yesterday.
Sino-Forest has denied the allegations against it.
“Due to the uncertainty over Sino-Forest’s public disclosures and financial statements, we have sold our stock and await the results of the independent committee’s investigation,” Paulson said. The hedge fund, which had invested in the company since at least March 2008, was Sino-Forest’s largest shareholder.