{ "docId": "019dd923-622c-750b-8b96-063645a867ac", "docSlug": "ad39e81239e4", "documentTitle": "Olam International Ltd. (SGX:O32)", "authorId": "51_Muddy_Waters", "authorName": "Carson Block", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2012-11-27 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 17, "pageCount": 133, "prevPage": 16, "nextPage": 18, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "dense", "nDataPoints": 40, "notes": "The slide uses financial data tables to challenge the company's stated accounting practices regarding margin accounts.", "elementsJson": [ "paragraph", "data_table" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b96-063645a867ac/17", "deckHref": "/decks/019dd923-622c-750b-8b96-063645a867ac", "deckJsonHref": "/decks/019dd923-622c-750b-8b96-063645a867ac.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b96-063645a867ac#slide-17", "components": [ { "bbox": null, "kind": "callout", "text": "It is odd that as Olam’s sales and inventory have grown substantially, its quarter end margin balances have gone negative three times.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-25b3-7229-bef8-4215c2ab8c12", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "Margin Accounts with Brokers: S$234 million", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-25b3-7229-bef8-465569a91609", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.72, "x": 0.14, "y": 0.53 }, "kind": "paragraph", "text": "It is also very interesting that the margin accounts and amounts due to brokers changed in two quiet footnote restatements of margin (with changes of over S$1 billion in the FY2008 figures):", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "09e55801-3c77-42b6-a5ed-44ae49c85ba0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.11, "w": 0.72, "x": 0.14, "y": 0.16 }, "kind": "paragraph", "text": "Olam has suggested that it does not need margin with its brokers because it has begun to net off its transactions on a daily basis; however, for the reasons suggested above this does not seem to be correct. Additionally, if it indeed started to net off its accounts, then why did it substantially increase its margin at brokers in Q1 2013 from a net liability of S$141 million as of Q4 2012 to a net asset of S$234 million (which happens to coincide with Olam's recent debt raising)?", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2c31d135-f913-4d63-965f-cd9f19fe6b63", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.72, "x": 0.14, "y": 0.09 }, "kind": "paragraph", "text": "is questionable how Olam can hedge with negative net margin at its brokers. We therefore suspect that Olam drew down its margin accounts just before the end of the quarter in order to appear to be more liquid than it really is.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "cad81d1e-8a61-491f-953a-071b7331407f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.72, "x": 0.14, "y": 0.28 }, "kind": "paragraph", "text": "Olam first ended a quarter without margin in its brokerage accounts in Q3 2011. Below is the ending broker margin balance by quarter since Olam went public. It is odd that as Olam's sales and inventory have grown substantially, its quarter end margin balances have gone negative three times.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e2480bb7-387d-4192-916e-87dbef8d2146", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.56, "x": 0.22, "y": 0.6 }, "kind": "table", "text": "Margin Account Restatement", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2362e014-3c76-4104-b952-f3c284b7120a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.71, "x": 0.15, "y": 0.39 }, "kind": "table", "text": "Margin Accounts with Brokers by Quarter", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8235ad6a-bfbf-4b1b-b925-3f597bbcd86f", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "7f7eca48-2576-4522-a19f-42f419fe8164", "evidence": "The slide explicitly questions the validity of financial reporting and suggests manipulation of liquidity metrics.", "confidence": 0.9 } ], "arcBeats": [ { "to": 50, "from": 11, "beatId": "bbf191d5-c2cd-433e-9eaf-b22bfec7e6b2", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "The Struggle", "beatSlug": "overcoming-monster-the-struggle", "evidence": "Detailed critique of Olam's accounting practices", "position": 1, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [ { "to": 20, "from": 10, "name": "The Reveal", "slug": "05-the-reveal", "bestFor": "Product launches, strategic pivots, unexpected findings", "matchId": "1c7944d6-7b78-442f-b56d-e49c84e46309", "evidence": "Detailed analysis of Olam's financial statements", "position": 0, "objective": "Reveal Olam's accounting irregularities", "structure": "Setup the Question -> Build Suspense -> The Big Reveal", "confidence": 0.7, "description": "Build mystery and anticipation, then deliver a surprising or powerful conclusion" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }