Sino-Forest Part 3: Downgraded only to see investors come its way


New York – Despite Moody’s downgrade to B1, Sino-Forest’s stock has an avid buyer in Richard Chandler’s Mandolin Fund.

A report published in June by short seller Muddy Waters caused the stock of Chinese timber company Sino-Forest to plummet. Various research firms have issued their opinions on the matter, the latest one being by Moody’s Investors Service which downgraded Sino-Forest to B1 (way below investment grade). To see other research providers’ opinions on this issue, please go to our article.

Sino-Forest commissioned an independent investigation into Muddy Waters’ allegations but the results will not be ready before two or three months. The environment as the investigation takes place is tense for Sino-Forest. A vice president and senior analyst at Moody’s was quoted saying that the recent ratings cut “reflects Moody’s expectations that Sino-Forest’s operations have been adversely impacted by the current investigations. The longer it takes for the investigation to complete, the greater will be the pressure on Sino-Forest’s liquidity position.”

Not everyone is spooked by Sino-Forest’s stock decrease or the turbulent circumstances around it. Today the news report that Investor Richard Chandler continues to increase his interest in the company despite the allegations against it and the ongoing investigation. Yesterday Mr. Chandler’s Mandolin Fund acquired 2.4 million Sino-Forest shares increasing its stake to 26.7 million shares. The company’s stock rose 11% in the Toronto Stock Exchange.

Independent research providers covering China have a lot of work to illustrate their clients on this matter and to provide them with valuable insights on this timber giant. Providers such as Access Pointe China or Wood Resources International can be of help for interested parties.



About Author

Leave A Reply