Originally posted by resourceboom
Bubs there are plenty of times shorters are wrong, often they are correct on a stock being overvalued or produce a report and get a short term outcome, but often stocks recover like the 3 stocks you mention. I expect most of the damage for CTD is now done, and think the sp will recover after it consolidates for a while.
I have no holdings in Tesla but the battleground on that one is a classic. I think it’s a very risky company but the last quarter particularly slammed the shorts and made some famous ones go long. I prefer to be one the side of visionaries like Elon Musk even if he seems a little dangerous for the company.
I try and avoid battleground stocks but ACX was a good one for me (admittedly a takeover) and I think CTD will come thru in the medium term.
CTD has been shorted close to 10% of float before over the last 3 years and its been reported in trailing AFR news-stories, with specific short seller individuals outlaying their case more than once and with detail. Obviously in the past this did not end well for them, short sellers are wrong as often as they are right. The difference here is the boldness of the claims, the number of pages of the report, the amount of AFR articles with reference to previous VGI cases like SGH, and aggressive suggestions that the stock is overvalued by over 100-150%.
The key here is that the report is over 150 pages and wasn't made publicly available, ultimately the market is spooked, sells and asks questions later and has no recourse because few outside the financials industry as retail investors have the desire or ability to wade through 150 pages and verify everything. In this case they can't even view the report, which is utterly despicable seeing as it something that hugely effects them and VGI are laughably claiming they are doing this to help them. Everything VGI is presenting to the media and the way they are wording their claims with an openly snarky, condescending and arrogant tonedespite clear dishonesty in some cases does suggest that there are no mistakes here, they genuinely believe they can mislead or provide questionable information the market, cause giant moves in price and claim that its an issue of opinion if their claims miss the mark in accuracy.
Personally I do think there will be major legal action, the misstatement of key accounting principles in particular to suggest that the entire profit growth profile was due to accounting changes when its is clear it will influence the market is likely going to make them liable for damages if it truly was completely inaccurate.
Of course I am giving the benefit of the doubt to CTD at this point, but I'm also basing that view off what I've read from other investment bank and managed fun sources that have issued statements on the issue in the last week. It is fair to say that someone is going to be in for serious legal action because clearly there is a party involved that is misleading the market due to the claims on either side being so drastically at odds with major contrary implications depending on which are true.
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