Article: DH stock hit hard by offensive from U.S. short seller

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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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