Anta Sports hits back at short-sellers, as Lululemon founder takes a stake
Blue Orca Capital, a somewhat notorious short-seller that has caused pain for major companies like Samsonite in the past, has Anta Sports in its sights. But the Chinese sporting giant isn’t going down without a fight… and at least one industry giant (Dennis Wilson, the founder of Lululemon Athletica) seems to think Anta has what it takes to succeed.
Anta’s share price has appreciated by 31% so far this year
Source: Yahoo Finance
Texas-based Blue Orca questioned some of Anta’s financial metrics last Thursday, claiming that the stock was overvalued. Amongst the figures it picked out for discussion were store productivity. Anta has hit back, saying it “vigorously denies the speculations,” which it has branded “inaccurate and misleading.” It added that (despite Blue Orca’s protestations to the contrary) it is unaware of any information that should be disclosed to “avoid a false market in the company’s securities,” and said it is reserving the right to take legal action against the short-seller.
Wilson, of Lululemon fame, isn’t the only observer who thinks Blue Orca may be barking up the wrong tree. Adrian Chan, an analyst at Daiwa Capital Markets, says that the short-seller’s claim that Fila China’s productivity couldn’t be meaningfully compared with its counterparts in Korea and Taiwan. In a note, he wrote:
“This thesis is similar to that of GMT Research's short-sell report on Anta in June 2018, comparing Fila China's sales growth with Fila Korea's royalty income, which was subsequently debunked by Anta's management as inaccurate and misleading due to the misinterpretation of the JV's economic structure.”
Linus Yip, chief strategist at First Shanghai Securities, is more impressed by the money Anta’s just raised than Blue Orca’s comments against it. He told reporters: “as a vote of confidence, a cash injection is more powerful than speech.”
Dominion holds Anta Sports in its Global Trends Luxury Fund.
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