This is something which is too interesting not to post about. World renowned shortist Carson Block has made public statements doubting Olam’s accounting methods. The words are indeed very harsh, ranging from comments like “Olam will fail” and recovering for investors will be negligible”. He seems to think that the company will not have anything left for equity shareholders.

This makes for an interesting case study as I take a quick look to see if any of these allegations are true.

There are 3 points made.

1. High leverage

2. Aggressive accounting on biological gains

3. Booking profits on transactions before it is clear how they would work out

Let’s first separate the facts from opinions. 1 and 2 are facts. The 3rd remains an opinion based on public information, unless he knows something which we do not. Although the research firm of Carson Block Muddy Waters has made headlines ...