Hanergy: Bulk of Stock Collapse Occurred in Less Than a Second; Trading pattern echoes similar move seen in May 2010 ‘flash crash’
JACKY WONG And SCOTT PATTERSON
Updated May 22, 2015 6:11 p.m. ET
The collapse of a Chinese solar company’s shares this week was caused by a sudden wave of rapid-fire sell orders that sank the price in less than a second.
An analysis of trading data by The Wall Street Journal and interviews with market participants and analysts shows that the selling began with several large sell orders on Wednesday. Those orders were then followed by a wave of erratic computer-driven trades that sank the company’s stock by more than 25% in fractions of a second. Continue reading →
A Glimpse At The Market Endgame: How China’s (Formerly) Richest Man Crashed His Own Stock When He Tried To Sell
Tyler Durden on 05/22/2015 18:17 -0400
On Wednesday, we reported on what was certainly the biggest market news of the week when in under one second, Chinese solar company Hanergy Thin Film crashed by nearly 50% due to what are still unknown reasons. As a reminder, before its crash and indefinite trading suspension, Hanergy’s market value was higher than all other listed Chinese solar companies combined and six times the value of First Solar, the biggest producer of thin-film solar panels.
Aside from the dramatic move, the reason why the wipeout of this tightly held stock was particularly memorable is because it took with it some $14 billion or nearly half of majority owner Li Hejun’s $30 billion fortune, who as we reported previously, is China’s richest man, having recently overtaken Alibaba’s Jack Ma. Or rather was.
A quick tangent into how Li built up his stratospheric paper wealth on very short notice. Continue reading →
Did Anti-Corruption Campaign Lead To Plunge In Hanergy Shares?
Posted By: Mark MelinPosted date: May 22, 2015 02:58:26 PMIn: BusinessNo Comments
A Chinese-based solar company with a history of unusual trading activity that hard garnered a $39 billion valuation crashed in value Wednesday, erasing $19 billion in value. The crash comes shortly after Hanergy Thin Film Solar Group Ltd. Chairman Li Hejun boosted the size of his short exposure in the company he leads on the same day he adding long exposure. Speculation is the price plunge might be related to an anti-corruption probe in China, a topic that was discussed in a recent hedge fund investment letter.
Odd Hanergy long / short behavior precedes stock price plunge
Bloomberg reports that Li added 26.4 million shares at an average of HK$7.28 each on May 18, citing to two separate filings to Hong Kong Exchange. This long exposure comes as he increased his short exposure to 7.71 percent to 5.81 percent of the share’s float on the same day.
Li has not provided explanation regarding his short position, a Business Insider report notes, pointing out that Hanergy’s biggest client is its parent company, Hanergy Holding Group. The holding company was reported to have used its ownership in the solar company to take out a bank loan that it has failed to repay.
Such related party relationships have been sharply questioned by activist Hedge Funds in the past leading to rapid prices crashes, but no activist activity is documented to have been behind Wednesday’s 47 percent drop in the stock price. As previously revealed on ValueWalk, New York-based Lakewood Capital announced they had shorted the stock in their April 23 letter to investors, calling the company “perhaps the most astonishing stock in the entire market today.” Continue reading →