Another Temasek Holdings stock bites the dust
Muddy Waters has shorted Olam, saying that it will fail because it is booking biological gains as profits which will not be realised. Olam has been taking on lots of debt to make acquisitions in its ambitious attempt to build up its supply chain and go into downstream business. However, as the commodity supercycle start to end and commodities prices become more volatile, it is having problems delivering value from such acquisitions, thus attracting short-sellers like Muddy Waters.
Although Olam put up a brave face declaring that its profits are real, we shall only know “when the tide goes out” as Buffett says. Coincidentally, another commodity player, Nathan Trinkler is also in difficulties. Do we need more evidence that the commodity supercycle has ended?