Short sellers circle Alibaba amid SEC probe
Alibaba Group Holding Ltd (BABA.N), which disclosed it is under investigation for its accounting practices, has emerged as one of the short-selling community's favorite targets in the relatively short time it has been in the public market.
Noted short-sellers Jim Chanos of Kynikos Associates and John Hempton of Bronte Capital have been raising red flags since last year about the Chinese e-commerce giant's accounting practices.
Hempton told Reuters in an email on Thursday that Alibaba, which went public in September 2014, is "a real company" but "with questionable accounts." He added: "The ability to value it from the accounts is, thus, tricky."
Hempton said he believes shares will eventually "go down a lot - and get a takeover bid". A takeover would require deep pockets without an extreme decline - the company is currently worth about $190 billion.
Questions about Alibaba's growth rate and its relations with affiliated companies have dogged the firm for years. The latest investigation highlights how far Alibaba has to go to improve transparency, while a continuing acquisition spree creates uncertainty over its earnings.
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http://www.reuters.com/article/us-alibaba-accounts-shortsellers-idUSKCN0YH2RY
