Fighting back against DH Corp short sellers
Jonathan Ratner, 28 October 2015
Financial services firm DH Corp. is the latest Canadian company to come under attack from short sellers. The stock fell sharply on Monday after hedge fund Lawton Park Capital Management accused DH (formerly Davis + Henderson Corp.) of masking weakening performance with “desperate M&A and accounting tricks.”
DH has recovered some of those losses since, but Graham Ryding at TD Securities still sees a very attractive entry point given its current valuation. “The market reaction to short-seller concerns is misplaced,” the analyst told clients, raising his rating on DH to action list buy from buy.
Ryding also maintained a $47 price target on the stock, which represents upside of about 35 per cent, noting that his conviction in the company’s growth outlook and fundamentals is intact. DH management released its third-quarter results early in order to respond to issues raised by Lawton Park.
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DH stock hit hard by offensive from U.S. short seller
TIM SHUFELT, 27 October 2015
For the second time in a week, a U.S. short-seller has launched an offensive against a large Canadian company, triggering a surge in pessimism and a deep stock sell-off.
On Monday, shares of DH Corp., the financial services firm formerly named Davis + Henderson, swiftly fell in response to a bearish call by a little-known U.S. hedge fund. Over two trading days, the stock fell by as much as 25 per cent as the company fought to dispel the allegations.
A similar frenzy has gripped Valeant Pharmaceuticals International Inc.’s stock over the past week, after a report called the Canadian-listed company a potential “pharmaceutical Enron.” The two episodes could set precedents for U.S. short-sellers willing to stalk ever bigger game, said Jason Donville, chief executive of Toronto-based Donville Kent Asset Management, which owns Valeant shares.
“To trigger a panic on a stock is now relatively easy. If they can just get the ball rolling, it can go a long way down,” he said. “We’ve seen the playbook.”
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DH Corp. defends accounting practices, calls hedge fund report ‘misleading’
Alexandra Posadzki, 27 October 2015
TORONTO – Financial technology company DH Corp. is defending itself against what it calls a “false and misleading” report from a hedge fund that casts doubts on its growth prospects and past performance. The report by Lawton Park Capital Management alleges the Toronto-based company (TSX:DH) is making “desperate” acquisitions and playing “accounting games” in order to obscure its dwindling performance. The report takes issue with DH’s approach to accounting for its revenue and alleges that “numerous” insiders of the company have been selling their shares, which could indicate trouble brewing that the public isn’t aware of.
DH released its quarterly earnings report earlier than planned and bumped up its conference call to discuss its results, originally slated for Wednesday, to Tuesday morning in order to address the allegations. The company, formerly known as Davis + Henderson in the days when it was primarily known for printing and supplying paper cheques for Canada’s big banks, says investors should rely on its public filings and not the analyst report. DH’s chief financial officer Karen Weaver said the company follows “disciplined accounting practices” that are in accordance with the International Financial Reporting Standards.
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Cramer: Restore the Uptick Rule
Jeff Benjamin, 23 October 2015
Breakfast with Benjamin: TV stock barker Jim Cramer received a failing grade from a finance professor for a dismal 28% success rate in picking stocks.
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Northwest: Analysis of a Coordinated Short Selling Attack Against the Stock (NWBO, $4.69)
LARRY SMITH, 20 October 2015
Again I can see some people scoffing at my suggestion of such broad based criminal actions but consider the following. Martin Martola of SAC Capital was sentenced to 9 years in prison because he had paid one of the primary investigators in the phase 3 trial of Elan’s bapineuzumab in Alzheimer’s disease to learn of results before they were made publicly available. The clinical trial investigator tipped Martola that the phase 3 trial was unsuccessful and Martola and his employer SAC Capital executed trades that resulted in $275 million of profits. SAC’s founder Steve Cohen was charged with the same crime, but Martola refused to testify against Cohen and he was not indicted. However, SAC made a $1.8 billion settlement for criminal and civil settlements and agreed not to manage outside money. Continue reading “Article: Northwest: Analysis of a Coordinated Short Selling Attack Against the Stock (NWBO, $4.69)”
SEC Responses to Frequently Asked Questions Concerning Regulation SHO
The following answers to frequently asked questions were prepared by and represent the views of the staff of the Securities and Exchange Commission’s (“Commission”) Division of Trading and Markets (“staff”). They are not rules, regulations, or statements of the Commission, and do not have the approval or disapproval of the Commission.
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Steven Cohen returns to London after insider trading claims
Joanna Bourke, 07 October 2015
The US investment firm that oversees billionaire Steven Cohen’s wealth has agreed a deal to return to the UK, its new landlord has said. Two years after closing its London offices amid insider-trading allegations, Point 72 Asset Management will move to St James’s Square in London’s hedge-fund heartland.
The company plans to be operating out of the capital by the first quarter of 2016. It previously employed around 50 people in London. Continue reading “Article: Steven Cohen returns to London after insider trading claims”