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Noble falls to lowest in 17 months as post-Iceberg rally erased

Wednesday, March 11, 2015 - 14:27

[SINGAPORE] Noble Group declined to its lowest level in 17 months, wiping out gains since the commodities trader rejected criticism of its accounting practices and directors including Chairman Richard Elman bought shares.

Noble fell as much as 5.4 per cent on Wednesday before trading down 1.1 per cent to S$0.925 as of 1:43 pm in Singapore. Shares are heading for the lowest close since October 2013, erasing a 8.2 per cent advance last week spurred by the trading house's rebuttal to allegations from the anonymous group Iceberg Research and stock purchases by Elman and chief executive officer Yusuf Alireza.

Noble says it uses accounting methodologies based on International Financial Reporting Standards and Iceberg's claim that US$3.8 billion of fair-value gains are overstated is "false." Noble will accelerate efforts to increase transparency, Mr Alireza said last week.

"While Noble has made more disclosures about how the company accounts for financial derivatives, investors aren't very comfortable," Soo Hai Lim, a Hong Kong-based money manager at Baring Asset Management (Asia), said by phone. "It's a very complex business." Noble spokesman Stephen Brown didn't immediately reply to an e-mail seeking comment.

The stock has tumbled 22 per cent through yesterday since Iceberg published its first report on Feb 16, making Noble the worst performer on the Straits Times Index this year. The Singapore equity gauge fell 0.8 per cent in that span.

The slump has prompted stock purchases by company directors, with Elman buying 4.8 million shares on March 2 at S$0.9354 apiece and Alireza picking up 5 million shares at S$1.0058 each three days later. Director Richard Paul Margolis bought 130,000 shares at S$1.005 the same week.

While 10 of the 16 analysts covering Noble have buy ratings, price targets have been cut since Noble posted an unexpected fourth-quarter net loss on Feb 26. Brokerages tracked by Bloomberg predict Noble's share price will rise to S$1.33 in the next 12 months. That compares with an average forecast of S$1.43 before Iceberg's first report was published.

BLOOMBERG