China's Least-Favorite Short Seller Targets Singapore

The short-seller who made his reputation by savaging Chinese companies is turning his attention elsewhere. Carson Block, 36, whose research helped erase almost $7 billion of market value in China since 2010, says Olam International, the Singapore-backed commodity merchant responsible for 90 percent of the world’s peanut trade, is a sham doomed to fail. “Comparisons to Enron are overused, but in the case of Olam, the similarities really are uncanny,” Block wrote in a Nov. 26 report to clients of his Los Angeles-based firm, Muddy Waters Research, which is shorting the peanut company. “We believe that the single biggest factor in Enron’s collapse was its use of accounting techniques similar to Olam’s value gains.” Olam’s U.S.-traded shares began a 20 percent plunge minutes after Block trashed the company at a Nov. 19 cancer benefit in London. According to Block, Olam uses noncash accounting gains to boost earnings, has been “burning cash,” and will need to raise or refinance as much as S$4.6 billion ($3.78 billion) of debt in the next year to stay solvent. Two days later, Olam, which has a market valuation of S$3.49 billion, sued Block and his firm for defamation in the Singapore High Court.

When he called out Olam, Block wasn’t just challenging the world’s dominant peanut company. He was also taking on Temasek Holdings, the Singapore sovereign wealth fund run by Ho Ching, the wife of the city-state’s prime minister. Temasek, which has S$198 billion in assets, is Olam’s second-largest shareholder, with a 16 percent stake. That stake has lost more than $100 million in value since Muddy Waters first questioned Olam’s finances.