BREAKINGVIEWS-Best defence against short-sellers is to buy stock 09/12/2014 06:47 RSF
HONG KONG, Sept 12 (Reuters Breakingviews) - Short-sellers of Chinese companies are back, and shadier than ever. In the past fewweeks, two anonymous groups have trained their critical sights on Tianhe Chemicals, a Hong Kong-listed group, and Nasdaq-listed 21Vianet (VNET.O). Executives have tried to dispel doubts about their financial statements while railing againstmysterious critics. But they haven't yet tried the most effective riposte to those betting on a lower stock price: buying more shares.
There's a certain irony in groups refusing to identify themselves while claiming to promote corporatetransparency. And it's easy to understand the frustration of executives forced to respond to damaging allegations from detractors armed with little more than a website and a Twitter account. Yet even if companies were able to identify the peoplebehind the research groups, it's hard to prove that they set out to manipulate the market. Nor is suing for defamation much of a deterrent. Few companies want to give their foes the opportunity to defend their allegations in court.
Investors'willingness to give anonymous research groups the benefit of the doubt is also a symptom of the deep lack of trust in Chinese companies. In China, people can be imprisoned for investigating fraud as well as for perpetrating it. That helps explain why21 Vianet has seen its $2 billion market value halve since a group called Trinity Research raised questions about the Chinese data centre operator's accounting and past acquisitions.
Companies can respond by publishing detailed, point-by-point rebuttals, backed up by public documents, as Tianhe did on Sept. 11. Even then, however, some of the taint may linger when shares in the chemical company, which have been suspended since Sept. 2, start trading again.
21Vianet, in a statement yesterday, said the Trinity Research report contained “numerous errors, unsupported speculation and malicious interpretations of events.”
Not everyone is convinced by Trinity Research’s allegations. Details provided by 21Vianet management on the conference call regarding its two most recent acquisitions showed that Trinity Research’s analysis was “fundamentally flawed,” analysts at Canaccord Genuity Corp. wrote in a note to clients today. 21Vianet’s cash-burning investments on data center expansion highlighted in the Trinity Research report “is far from unusual or suspicious,” Canaccord said in the note.
“We will have to await the more detailed refutation of the report before we believe the stock will again trade on the fundamentals that our $35 price target is based upon.”
Your not an English Major Either- And probably not a stock person, what's your point?
I have read it, which is written by a short seller. What's your point?
Yah it's amazing how easy it is for them to beat down a company, SEC can't touch the accuser being they are in China