Olam

Olam: the firm's latest maneuver rings a bell to the tactic that HSBC deployed at the height of the financial crisis back in Mar '09. HSBC was then under attack by short sellers, who drove down its share price by 24% in a single day. This was despite HSBC launching an attractively priced rights issue to raise US$17.7b. Nevertheless, the bank pressed on with its cash call, confident that its vast legion of shareholders would stay loyal and lend it support when it was needed most. It was a daring gamble that paid off, as the bank's share price made a V-shaped recovery. This forced investors who had lent out their shares to the short sellers to recal them to subscribe to the rights issue, or face a big dilution to their shareholdings.