BNN reports that the reason CRH medical has dropped on Friday and again today is due to a short-seller issuing a negative report.
I hold a very small position in the company. While it would be more prudent to wait for the earnings report on Wednesday, I have added to my position this morning on hearing the reason for the drop. It is still a very small part of my portfolio (roughly 0.6%). But is still meaningful to me in terms of absolute dollars.
My own report indicated that the value ratios were inconclusive with a high P/E then at 30 but that was offset by high growth and a high ROE.
I have not seen the short-seller report and don’t know if their views have validity.
I have no issue with someone issuing a very negative report. The very purpose of the stock market is to “discover” true value. It would be hypocritical to be “okay” with reports that are designed to push stock prices up and then cry “foul” about short sellers. If the short-sellers are correct that the stock is over-valued or worse that the company has been inflating its earnings or has an unsustainable business model then the sooner the stock can be pushed to its true value, the better.
If you or I hold over-valued stocks, we do not deserve to be somehow protected from news that would drive the stock price down. If bad news is withheld then we could in the meanwhile sell our shares to others. That would not be fair.
BNN hosts spent a lot of time in the fall of 2015 beating up the Valiant short-seller Andrew Left. He was later proved to be 100% correct. I never heard BNN apologise for that. Short-sellers did not bring down Valiant. It was over-priced and ran by unsrupulous people and deserved to come down hard. (As I partially recognized in my own Sell report on Valeant before it peaked).
Now, it is unfortunate that short-sellers can target a company with no good reason and make money and then move on. But so can bullish “shills” especially for smaller companies.
If there is nothing to the short sellers case then CRH should be unaffected in the medium term and this will be nothing but a buying opportunity.
If the short-sellers are correct then so be it. I do not view validly held negative opinions as an “attack”.