Samsonite has been accused of “massaging earnings” by hedge fund Blue Orca Capital, sending its stocks plummeting 20 per cent in yesterday’s trading.
The world’s largest suitcase manufacturer, which also trades online and has a standalone store in London, froze its stock on the Hong Kong exchange to prevent it dropping further but has returned to trading today.
Blue Orca has now short sold it stock, while alleging that Samsonite had “concealed slowing growth… massaged earnings and inflated margins”.
It added: “Samsonite should trade at a discount to its peers because of corporate governance concerns regarding its audit profile, dodgy related party transactions between the company and Indian entities controlled by the chief executive and his family, and chief executive Ramesh Tainwala’s resume fraud of claiming to be a doctor when he is not.”
In response to the accusations, Samsonite’s chairman Timothy Parker said the report “contained the opinions of a short seller whose interests may not be aligned with those of shareholders in general, and that it may be intended specifically to undermine confidence in the company and its management, and to harm its reputation”.
He added that he reserved the right to take legal action against the hedge fund and that he intended to “draw a line under this matter as quickly as possible, and move on to focus on … the future growth of our business”.
Blue Orca is run by the Texas-based Soren Aandahl and has developed a reputation for taking on Asian-Pacific companies.