LONDON Nov 20 Singapore commodities trader Olam
is not the only stock on shortsellers' radar -
higher-profile names such as Italian carmaker Fiat and
Brazilian oil group Petrobras are also being
Speaking at a conference, hedge fund managers including
Chris Cooper-Hohn - the founder of The Children's Investment
Fund (TCI), U.S. shortseller Muddy Waters, and Kynikos founder
Jim Chanos named stocks they saw as overvalued.
The Ira Sohn Conference in London's plush Mayfair district -
a charitable event that raises money for paediatric cancer
research - is seen in the United States as a must-attend event
for wealthy investors and a rare chance to hear the secretive
industry's top stock bets.
While comments by Muddy Waters have already sent Olam's
shares tumbling, TCI's Cooper-Hohn - known for high-profile
activist positions in companies such as ABN Amro and J-Power in
recent years - said Fiat was a good stock to short as he
believed it will need to raise further cash.
Shorting, a favourite tool of hedge funds, means betting on
a lower price for a stock.
Cooper-Hohn said Fiat, which owns sportscar maker Ferrari
and a majority stake in Chrysler, was burning through cash and
its debt levels were higher than the market believed.
"It is a bad company," said Cooper-Hohn. "People look at the
net debt of 5 billion euros ($6.4 billion), ex-Chrysler. We
think the gross debt is what matters ... we think it could be
nearer to 20 billion euros. We think Fiat needs to do a rights
issues as soon as possible."
Fiat was not available to comment. Last month, it sharply
cut its targets for the next two years and said 2012 net
industrial debt could hit 6.5 billion euros, up to one billion
above a previous projection.
In the wake of comment by Muddy Waters at the conference,
Olam International shares fell 7.5 percent in heavy volume after
the hedge fund, which is shorting Olam, attacked its accounting
practices - charges that the company dismissed.
John Armitage, chief investment officer of London-based
Egerton Capital, also told the conference he was short Olam
shares, saying the stock was "a great short".
Meanwhile, Kynikos's Chanos, a short-seller who anticipated
the collapse of Enron, said Brazilian mining company Vale
and state-led oil company Petrobras were "two of
(his) favourite shorts".
He said the government's influence over both companies was
"a form of state capitalism that is troubling" and could
disadvantage other shareholders. While both look cheap on
price/earnings ratios, they were "value traps", he said.
Neither company was available to comment.
Chanos said Vale was "basically a China story" which was
"expanding into the (mining) glut at the point at which demand
is about to fall".
Last month, Vale posted a 66 percent fall in quarterly
profit, prompting it to delay major mining projects and consider
the asset sales.
Meanwhile, Chanos said Petrobras shareholders were
"subsidising state policy" while its "finances remain
unimpressive. Every single dollar that is coming in is going
out, yet production is falling. That is not a business," he told
Last month Petrobras reported a drop in third-quarter net
income and September output. Analysts said that much of an
increase in wholesale gasoline and diesel prices was erased by