Well-known short seller targets First Majestic Silver Corp
Jonathan Ratner, 01 September 2016
Canadian miner First Majestic Silver Corp. has become the target of well-known short seller Kerrisdale Capital Management. The hedge fund, founded by its chief investment officer, Vancouver-raised Sahm Adrangi, called the stock “absurdly overvalued” in a new report released on Thursday.
First Majestic, a Mexico-focused silver miner, has seen its shares climb nearly 250 per cent in 2016, as sentiment toward the mining sector rebounds along with precious metals prices. Kerrisdale, whose short-selling campaigns include ChinaCast Education Corp. in 2011 and DISH Network Co. in May 2016, believes First Majestic is “ludicrously expensive” relative to both its peers and its own history.
“This speculative frenzy – exacerbated by an ongoing, company-funded stock-promotion campaign – has gone too far: First Majestic’s valuation is now outrageously detached from reality,” the firm said in the report.
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Kerrisdale announces short position in First Majestic Silver Corp
Lawrence Delevingne, 01 September 2016
NEW YORK (Reuters) – Kerrisdale Capital Management now holds a short position in the stock and via options of First Majestic Silver Corp. FR.TO, according to a report released Thursday by the hedge fund firm.
Kerrisdale, led by Sahm Adrangi, wrote in the report that the Canadian mining company is in a “speculative frenzy” and that its valuation is “now outrageously detached from reality.”
Kerrisdale, which manages approximately $350 million and has lost money this year through July, said First Majestic Silver could fall between 70 percent and 80 percent from its current levels near $12 a share. The stock has gained approximately 267 percent this year through Wednesday.
U.S. listed shared of First Majestic fell more than 5 percent in early trading Thursday following news of the report. Adrangi declined to comment. First Majestic did not immediately respond to a request for comment.
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