WiseTech’s CEO wants regulators to look at short sellers as JCap strikes again
Link copied to
WiseTech (ASX:WTC) CEO Richard White wants the government to address short-seller attacks after JCap attacked his company last week.
J Capital released a report on Thursday accusing the company of manipulative accounting practices and the stock fell more than 10 per cent before being put into a trading halt until Monday.
It resumed trading today but JCap released the promised second part of its report and the company fell another 12 per cent before being halted again until Wednesday.
WiseTech is still substantially higher than when it listed in 2016 at $3.35. But the two reports have wiped more than $2.3 billion from its market cap.
The company formally responded on Friday evening. In a statement, CEO Richard White refuted the allegations and called on the government to address short-sellers.
“We acknowledge the right to differing opinions but we are deeply concerned about the extensive value destruction that can be wrought from short-seller reports that potentially damage our shareholders large and small and the integrity of investment markets,” he said.
“All shareholders should be aware that unconscionable attempts to manipulate the market exist and may continue. We thank our shareholders for their support and patience while we correct these erroneous reports.
“We would ask the relevant regulators and government, not just for ourselves but for the many listed Australian corporations regularly subjected to similar attacks to consider the complex issues raised and the damage caused by reports of this type issued by a US or overseas short seller.
“In this instance, the JCAP document is clearly marked not for use by Australian Residents and notes that it ‘does not constitute or contain and financial product advice’.
“However, the dissemination if its document and its contents in deliberate, wide and rapid distribution through many Australian conventional and social media outlets, investor advice portals and investor platforms, has the real and immediate impact of disrupting the orderly and efficient operation of the market.
“These types of actions have the potential to damage shareholders large and small, including many ordinary Australians and their retirement plans and hurting and distracting many high-quality Australian listed and owned companies in ways that are impossible to entirely circumvent in advance.”
White noted that despite the damage short-sellers could do, no standards applied to them.
“Whilst we, and other Australian listed corporations, are subject to stringent external audit, validation and verification, no such standard applies to these types of actors.
“Many of these attacks may be largely beyond the reach of our market regulators and operate in ways that are clearly at odds with our system of laws, our market, culture and society.
“We support investigations by regulators of attempts by short sellers to target ASX companies and in prosecuting unconscionable conduct.”
The company also used the announcement to refute the allegations made in the report. It accused JCap of erroneously misunderstanding, selectively presenting or misrepresenting its performance, product quality and customer satisfaction.
“We are a high growth company and profits have increased significantly since IPO along with revenue,” it declared.
The company noted JCap would profit from its fall and did not bother to inquire into them.
J Capital released the promised second part of its report this morning.
It began by responding to WiseTech’s rebuttal labelling it,” a well-worn playbook by cherry picking immaterial points to refute, remaining silent on major points and taking a high moral tone about short sellers”.
The rest of the report was dedicated to attacking its acquisitions. It said these had been ad-hoc made, over-paid and poorly managed.
While Richard White said these had been processing well JCap said,”This is to be blunt, bollocks”.
“Our interviews suggest that it is harming the companies it acquires by under-investing and jacking up prices on legacy platforms to force clients to move over to WTC’s Cargo Wise”.
“Because the acquired companies don’t produce the desired results, WiseTech has accelerated acquisitions to keep the growth narrative going”.
“We believe that when WiseTech slows or stops acquisitions, shareholders will realise they own a motley global collection of small, poorly integrated companies with dispirited staff”.
While it acknowledged the global shipping logistics market was $2 billion and WiseTech was the 2nd largest, it predicted it would hurt more than its competitors in a market downturn.