Hong Kong Billionaire Horst Julius Pudwill’s Fortune Drops After Short-Seller’s Attack

Horst Julius Pudwill, the cofounder and chairman of Techtronic Industries, saw his net worth tumble more than $670 million over the past two days after a little-known short-seller accused his power tool company of manipulating its profit and using fraudulent accounting practices.

Techtronic’s shares suffered their biggest daily drop since January 2012 on Thursday when they plummeted almost 19% on the Hong Kong stock exchange. The stock recovered some of its losses by Friday’s afternoon session when it was trading at HK$78.9 ($10), a 5.3% gain from a day earlier. Pudwill’s net worth now stands at $4.5 billion, according to Forbes Real-Time Billionaire List.

Techtronic was targeted by Jehoshaphat Research when it released a 60-page report on Thursday accusing the Hong Kong-based company of “inflating its profits dramatically for over a decade with manipulative accounting.” The short-seller is forecasting that Techtronic’s results in 2023 will be a “disaster,” adding that its stock has “60-80% downside.”

“The company vigorously denies all the allegations made in the report as it contains multiple defamatory, biased, selective, inaccurate and incomplete statements,” Techtronic said in a stock exchange filing on Thursday. “The company reserves its rights to take legal actions against Jehoshaphat and/or those responsible for the allegations and the publication of the report.”

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A chorus of analysts came to Techronic’s defenses. J.P. Morgan wrote in a report that Techronic’s improving profit margin was supported by its early investment in battery-powered cordless products and an agile product cycle, among other factors. Meanwhile, Daiwa Capital Markets called most of Jehoshaphat’s claims “unjustified,” adding that Techtronic remains its “preferred pick.”

Jehoshaphat didn’t immediately respond to a request for comment. The firm said on Twitter on Friday that its website was temporarily down following a cyberattack.

Jehoshaphat’s attack comes on the heels of the $100 billion rout of billionaire Gautam Adani’s Adani Group, which was targeted by another short-seller that accused the Indian conglomerate of corruption and stock manipulation.

Techtronic was cofounded in 1985 by Pudwill, who had been an engineer at Volkswagen in Germany before moving to Hong Kong. Today, the company manufactures power tools and floor-care products under brands including Hoover, Milwaukee and Ryobi. The company’s revenue and net profit both jumped 10% in the first half of 2022 from the same period a year, coming in at $7 billion and $578 million, respectively. Techtronics is set to publish its annual results next week.

Source: https://www.forbes.com/sites/zinnialee/2023/02/24/hong-kong-billionaire-horst-julius-pudwills-fortune-drops-after-short-sellers-attack/