Over the last 12 months there have been a number of ASX shares being targeted by short sellers.
Here’s a quick summary of some key companies that are currently being targeted:
Corporate Travel Management Ltd (ASX: CTD)
This time last year this corporate travel specialist was hit with a short seller report by VGI Partners. It released a 176-page report to clients which identified 20 concerns in relation to the company’s operations. One concern was how the company can be twice as profitable as its rivals despite its customers being sophisticated buyers of travel services. VGI also suggested that the sizeable organic profit growth in its FY 2018 results may have been due to changes that management made in its accounting policies. It pointed to the interest earned on its cash balance as being suspiciously low. Whilst management has provided a comprehensive response and dismissed these allegations, its shares are still down by around 35% since the release of the report.
Rural Funds Group (ASX: RFF)
This agriculture-focused property group was targeted by Bonitas Research in August. The short seller described the company’s shares as worthless after alleging that the company has overstated its assets by 100% and fabricated rental income. Bonitas also alleges that Rural Funds Management had siphoned off $30 million from the Rural Funds REIT and labelled the company as a Ponzi scheme waiting to collapse. Rural Funds responded by outright rejecting these claims. It also pointed out that its accounts and asset valuations have been independently audited and signed off by auditor PWC.
WiseTech Global Ltd (ASX: WTC)
On Thursday WiseTech Global became the latest ASX share to be targeted by a short seller. J Capital released a report claiming that the logistics solutions company is overstating its profits. It alleges that “overstated profit in the three years since WiseTech listed may be as high as $116 mln. That would be an overstatement of 178%”. It also alleges that the company is overstating its organic growth and has doubts over its European business. WiseTech Global’s shares are currently in a trading halt whilst it prepares a response to the allegations.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of WiseTech Global. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and RURALFUNDS STAPLED. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.