TR EMERITUS

1. Muddy Waters is a well-known investment research and management firm. In 2012, Muddy Waters released a report on Olam International, a multinational agri-business company. The report claimed that Olam had overstated its assets and profits, and that it was headed for a debt crisis.

Following the release of the report, Olam’s stock price plummeted, leading to significant financial losses for shareholders. Olam vehemently disputed Muddy Waters’ claims, calling them false and misleading. The company launched a legal challenge against Muddy Waters in Singapore, but the case was later dismissed.
Overall, the Muddy Waters report on Olam sparked a heated debate in the investment community, and brought attention to the issue of corporate transparency in the agri-business sector.

2. The 2012 Muddy Waters report on Olam International was a comprehensive analysis of the company’s financial statements and business practices. The report raised several concerns about Olam’s accounting practices and its ability to repay its debts.

The key points of the report include:
* Overstated profits: Muddy Waters claimed that Olam had overstated its profits and understated its losses.
* Inflated asset values: The report alleged that Olam had overstated the value of its assets, including its inventory and fixed assets.
* Debt concerns: Muddy Waters argued that Olam had taken on too much debt, and that its debt-to-equity ratio was unsustainable.
* Poor corporate governance: The report also raised concerns about Olam’s corporate governance practices, including its relationships with suppliers and customers.

Muddy Waters concluded that Olam was a “fraud” and that its stock price was overvalued. The report was released in November 2012, and caused a significant decline in Olam’s stock price. Olam vehemently disputed the report’s claims and launched a legal challenge against Muddy Waters in Singapore.

3. Temasek Holdings, a Singaporean sovereign wealth fund, defended Olam International after the Muddy Waters report was released in 2012. Temasek, which is a major shareholder in Olam, publicly stated that it had full confidence in the company’s management and financials, and called the Muddy Waters report “baseless and unfounded”.

Temasek also supported Olam in its legal challenge against Muddy Waters in Singapore, which was later dismissed. Through its support, Temasek demonstrated its commitment to Olam and its belief in the company’s ability to overcome the challenges posed by the Muddy Waters report.

Overall, Temasek’s defense of Olam helped to alleviate some of the concerns raised by the Muddy Waters report, and helped to restore investor confidence in the company.

4. Above is the price chart of Olam as at 31 Jan 2023. After Temasek supported Olam in 2012, the stock price continued to decline but moderately. The stock did not recover.

Tan Kin Lian

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