A large Singapore-based fund has increased its stake to nearly 15% in Chinese forestry company Sino-Forest (TRE.TO), which has been accused of fraud, sending Sino-Forest shares higher in early trading on Wednesday.
The Mandolin Fund, run by New Zealand-born billionaire Richard Chandler, disclosed on Wednesday that it bought more than 5.3 million shares of Sino-Forest on July 26.
The Mandolin Fund, run by New Zealand-born billionaire Richard Chandler, disclosed on Wednesday that it bought more than 5.3 million shares of Sino-Forest on July 26.
The fund’s move explains a sharp rise in Sino-Forest’s share price on Tuesday, when the stock climbed more than 20% before ending the day up almost 12% at C$7.12.
Shares of Toronto-listed Sino-Forest have fallen more than 60% since the beginning of June following accusations of fraud leveled by influential short-seller Carson Block and his firm Muddy Waters.
Sino-Forest has denied any wrongdoing and it has asked a committee of independent directors to investigate the matter. The company expects the review, which began in early June, to take up to three months to complete.
The stock plunged as low as C$1.29 in mid-June after billionaire fund manager John Paulson, previously Sino-Forest’s largest shareholder, dumped his entire stake in the company.
But the stock has won a reprieve as speculators and large funds such as the Mandolin Fund and Boston-based Wellington Management Co have decided to buy in.
Just a week ago, the Mandolin fund disclosed that it had boosted its stake in Sino-Forest to more than 10%. Since then Sino-Forest’s shares have risen more than 70%.
They were up 8.6% at C$7.73 in on Wednesday morning on the Toronto Stock Exchange.
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