Sparks still flying over Harbin Electric
Emotions continued to run hot on Tuesday over Harbin Electric, the small-cap U.S. listed Chinese motor manufacturer, a week after a year-long management buyout process came to an end.
The company was finally taken private in a deal that paid $24 a share, but not before short-selling bloggers pummeled the stock to a 52-week low of $5.82 on June 16.
Short sellers including Andrew Left of Citron Research and researcher/journalist Roddy Boyd published research claiming the company was being run fraudulently. Harbin was one of many Chinese companies listed in North America that came under scrutiny earlier in the year.
In one of the most animated panel discussions this correspondent has attended in many a year, Harbin’s spokeswoman Christy Shue spoke up from the audience to attack Boyd, questioning his methods, asking him how he can trust his information.
Boyd, who sat on a panel organized by the law firm Loeb & Loeb, said he spends hours pouring over documents, speaking with competitors, suppliers, vendors, bankers, buyside investors, or anyone involved with a company to inform his viewpoint.
“I am a reporter. To be clear, the expression in America is, I call it as I see it and the companies I have written about: China Sky One (Medical), China Green…. ah, I’m sorry I’m not supposed to mention these, but China Sky One, China Green Agriculture, Harbin Electric, Jesus, I threw everything at them and got, you know, my head handed to me. You know, it is my job. No one likes me. My kids, no one likes me. No one likes me.”
“The point is I do what I do because, how would I put this, because I see wrongdoing. I don’t want to hurt people.”
He said he would not apologize for his research, but admitted that he was very hard on Harbin.
“And, I called them a fraud, and it was the first time in my life I ever used that word. And I am sticking to it, but boy oh boy I got proved wrong,” he said.
“I get a picture and the picture I got of a certain company that this lady (Shue) works for is, that wow, something entirely is not right. And yeah, I said it and I stuck to it, and hey it looks like I was wrong, the transaction went through,” said Boyd.
Shue accused the shortsellers of never trying to contact her in a meaningful way to respond to the allegations, saying that maybe they called one time in the middle of the night. Reuters tried on several occasions to contact Shue for an official response to the fraud allegations, but never got a response beyond a promise from an assistant to pass along the message once she returned from traveling.
“Unfortunately I did not know those occasions, to be honest. Maybe he has maybe talked,” said Shue, pointing at her assistant and then added: “He might have passed along but I did not have exact information. And sometimes I have the investor relations firm get back,” Shue told Reuters.
For the record, the IR firm did return my call, took down the questions but never gave an adequate answer.
In the back and forth with Boyd on Tuesday, Shue, who was awarded an an exit package worth nearly $2.3 million at the close of the privatization transaction, asked him how he can trust his information.
Here’s one part of the exchange:
Shue: “Another issue is, you say that companies in China are frauds. But how can you trust your information? Where did you get information? Maybe you get the information wrong.”
Boyd: “Your documents.”
Shue: “Documents were filed… How could the documents be wrong? You were just using your speculation to write about the company. You think that is the right way to do analysis?”
Shue was asked by this correspondent why Harbin did not simply sue the bloggers and researchers who called the firm a fraud.
“It is not my decision, so I cannot answer that question. It is the board decision. I am just the spokesperson of the company, so I don’t know why,” she said.
“We have been saying we reserve the right, we reserve the right to take actions against the short sellers who make false accusations,” she said, citing the company’s legal advisors.