BackEchoes of Adani-Hindenburg row: Hong Kong firm faces massive rout after obscure short-seller's attack
Techtronic Industries Co - founded by German billionaire Horst Julius Pudwill - underwent a $4 billion rout last week after a little known short seller accused it of manipulating profits and using fraudulent accounting practices.
PremiumIn a case reminiscent of the Adani-Hindenburg row, a Hong Kong-based billionaire saw his net worth tumble more than $670 million within a span of two days. Techtronic Industries Co - founded by German billionaire Horst Julius Pudwill - underwent a $4 billion rout last week after a little known short seller accused it of manipulating profits and using fraudulent accounting practices.
The company saw a 19% decline in shares - the most since November 2008 - after the ‘anonymously operating’ Jehoshaphat Research alleged that Techtronic has been “inflating its profits dramatically for over a decade with manipulative accounting."
Techtronic has ‘vigorously denied’ the allegations levelled in the 60-page report and threatened to take legal action against the short seller group.
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The company recovered some of its losses by the Friday afternoon session after denying the allegations. However, the stock is down 9.6% this year, versus a 1.6% gain for the benchmark Hang Seng Index. Meanwhile, Pudwill's net worth now stands at $4.5 billion according to the Forbes Real-Time Billionaire List.
What is Jehoshaphat Research?.
Little is known about the company or the people behind it. According to its website it is operated anonymously and specialises in “forensic research on companies that are publicly traded". It has no listed phone number or address and a meagre 3000 followers on Twitter. The site also shows reports dating back about two years - mainly on US-listed companies.
Techtronic is Jehoshaphat’s biggest target in terms of market capitalization and the first in Asia.
The rout came mere weeks after the Hindenburg Report levelled fraud allegations against Gautam Adani's business empire and triggered an unprecedented crisis for the Adani Group. And while many analysts have spoken out in favour of Techtronic, others have linked it to the Adani-Hindenburg row in some ways.
“Given that this follows the Adani saga, just the allegations are enough to cause investor hesitation and the issue may drag on the stock price in the near term despite a modest rebound today. Focus will be on the earnings results where management will have a chance to provide greater detail," news agency Bloomberg quoted analyst Marvin Chen as saying.
(with inputs from agencies)
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