NMC Health is trying the adrenaline-shot-to-the-heart defence against short-sellers. Following a duffing-up from short-seller Muddy Waters on Tuesday, the FTSE 100-listed hospital group’s shares have halved. But while it has rightly issued a swift rebuttal, NMC’s investors could yet do with a disclosure booster shot.
NMC’s vulnerability to shorts had already been flagged: its shares fell sharply in August when Muddy Waters, led by Carson Block, targeted litigation finance firm Burford Capital, an entirely separate company. On Tuesday Block questioned the value of NMC’s assets and cash balance as well as its reported profit and debt, accusing the company of overpaying for large assets. On Wednesday, NMC called the criticism of its financial statements “baseless”. On Thursday, it addressed the accusations point by point.
History suggests NMC Chief Executive Prasanth Manghat is right to offer detail. Shares in China Internet Nationwide Financial Services have fallen more than 95% since it failed to sufficiently refute detailed allegations regarding sham counterparties in a summary of an independent review in April 2018. In being more open, Manghat will hope NMC investors see it as more like chipmaker Advanced Micro Devices, whose products were last year accused by Viceroy Research of having security vulnerabilities. AMD acknowledged some flaws and said it would fix them quickly with software updates. Its shares are now at record highs.
No comments:
Post a Comment