Monday, 26 September 2016
Last updated 2 days ago
Aug 2 2011 | 12:07pm ET
Another hedge fund has taken aim at a Chinese company, again to great effect.
Absaroka Capital Management, taking a page from the playbook of Muddy Waters, accused copper wire-maker Lihua International of "excessive stock promotion" and "illogical financial results." The hedge fund also questioned deals between the company and another company owned by Lihua's chief operating office.
The Absaroka report pushed Lihua's shares on the Nasdaq Stock Market down 22.5% in about a half-hour yesterday, although they rebounded to close down just 11%. This morning, the stock, after a brief plunge, was trading above $6.00, or more than twice what Absaroka says it is worth.
A spokesman for Lihua told Bloomberg News that Absaroka's allegations are "pretty baseless" and that the company was preparing a response.
In June, Muddy Waters, another hedge fund, issued a damning report on Chinese timberland company Sino-Forest Corp, pushing that company’s shares down by some 90% and, in the process, costing Paulson & Co. almost $600 million.