Rural Funds Group securities surged 41 per cent after trading resumed on Thursday, clawing back some of the value lost on Tuesday after coming under attack from activist short seller Bonitas Research.
The country’s leading listed rural property trust, which owns almost $1 billion worth of almond orchards, cattle farms, vineyards and other agricultural assets, hit back strongly at Bonitas, outright rejecting all its claims, including that it overstated its assets by 100 per cent.
RFF securities ended the day at $1.92, up 41 per cent.
They were suspended from trading on Tuesday at $1.36, following a plunge of 42 per cent, which wiped over $330 million from its market value.
Securities were briefly paused on Thursday, ahead of responsible entity Rural Funds Management releasing a recording of its investor webinar in response to Bonitas.
A RFF report released on Wednesday, responded in detail to the Bonitas claims, with the conclusion that the short seller’s report was “entirely without foundation”.
The group issued a statement on Thursday labelling Bonitas a”short activist with an acknowledged financial interest in a declining RFF security price”.
RFM has appointed Ernst & Young to independently investigate the matters raised by Bonitas. RFF’s accounts were audited by PwC.
Managing director David Bryant said he had contacted ASIC on Tuesday morning to “invite them to take a look at all our records”.
“The report accuses us of fraud, and that comes as a surprise. We absolutely deny it. My response is that our accounts are 100 per cent accurate,” Mr Bryant said.
Hedge fund founder and well-known short seller John Hempton from Bronte Capital appeared to back Rural Funds via Twitter.
“I am a short-seller – and I like a good short report. But I intensely dislike a bad one,” he tweeted.
“Glaucus were great and the job they did on Blue Sky was excellent. The Bonitas report is highly questionable. There are fairly easy to spot questions. Alas this discredits shortsellers,”
Bonitas hit back at the RFF’s staunch defense.
“On a hosted webinar Q&A, David Bryant repeatedly fell back on the credibility of PwC to certify the accuracy of its reported financial statements.
“We have been in this business a long time, and remind readers that not once has there been a public market fraud that didn’t trick an auditor into signing off on its historical reported financial statements,” Bonitas Research said.
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