Olam

Olam: ADRs traded in the US saw some recovery, bouncing up from the previous day close of US$1.10 to US$1.25 (+13.6%). Meanwhile, in its analyst conference, Olam announced that it could fund operations for 18 mths if it got shut out of debt mkts. Co officials also said Olam would consider share buybacks if it felt its share price was at unfairly low levels. Olam note that it is quite apparent that the objective was to create panic amongst its shareholders, seeing a pattern in the way Muddy Waters and whoever they are working in concert with. Short selling in Olam shares rose to a record on Nov. 15 before Block made the comments at a conference in London on Nov. 19. We note that quite a couple of houses have downplayed Muddy Waters accusations, on basis of excessive biological gains and leverage. Add that most houses forecast their models based on core net profit, and even if you write-down Olam’s biological assets totally, the grp could still be able to weather the loss.