Friday, 13 March 2015

Markets also need negative viewpoints (2)

Quite good article by Reuters about companies being targeted by short sellers or negative reports, in particularly about Noble Group.

Not in the sensational "Short sellers cause havoc, causing huge losses to orphans and widows" kind of style that I (unfortunately) noticed several times in newspaper articles, but much more balanced.

"Noble's concession gives clout to maverick researchers"

Some snippets:

"Almost all of the investment research or opinions disseminated to the market fail to properly scrutinize listed companies. In fact, they are usually nothing more than a dressed up regurgitation of management drivel," Soren Aandahl, director of research at short-seller Glaucus Research, told Reuters.

Sell-side analysts - who recommend stocks to clients - often face a conflict of interest given the banks many work for seek advisory fees from the firms they analyze, Aandahl said.

Activist short-sellers such as Glaucus and company-watchers like Iceberg Research have stepped in to assume the role of corporate antagonists. Short-sellers sell borrowed shares, buy them back at lower prices and pocket the difference. To push a company's share price down, they bring to light, for instance, what they perceive as misleading accounting.

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