A record number of shares in Olympus Corp. are being bought and sold through Japanese margin-trading accounts as investors seek to capitalize on volatility amid a scandal over payments to advisers.
The number of Olympus shares being held through margin accounts has surged to a level not seen since at least 1997, according to data from Japan Securities Finance Co., a provider of loans and lending services.
Olympus has lost almost half of its value since Michael C. Woodford was fired as president on Oct. 13 after calling for a probe of $687 million (¥53 billion) in payments during a $2 billion (¥150 billion) takeover in 2008.
“The volatility of Olympus is rising and the share price is likely to swing wildly in both directions,” said Kenichi Hirano, a general manager and strategist at Tachibana Securities Co. “Investors see this as a rare opportunity to gain big profits in the short term.”
Olympus, a maker of endoscopes and cameras, dropped 49 percent on the Tokyo Stock Exchange from the time the scandal broke through the end of trading Thursday.
A PricewaterhouseCoopers audit commissioned by Woodford before he was fired said the company may face regulatory and legal scrutiny over payments made to advisers in the 2008 purchase of Gyrus Group PLC. Olympus, which confirmed the magnitude of the payments, said the report was misleading and speculative.
Holdings in margin accounts that profit when the stock gains, known as long positions, surged as much as 94 times to 8.68 million shares since Oct. 13, the Japan Securities Finance data show. Short positions, which bet on declines, soared 10 times during the same period.
The average ratio of long positions to short positions over the past five days jumped to 1.3, the highest since December, the data show. That compares with an average ratio for the three months to Oct. 13 of 0.1 times, meaning 10 times as many shares were being sold short as long.
“For speculators who see the market as just a place to play money games, Olympus provides a great opportunity for huge profits,” said Mitsushige Akino, who oversees about ¥46 billion at Ichiyoshi Investment Management Co. “They are playing it the same way they did with Tokyo Electric Power Co., which plummeted after the devastating earthquake and nuclear power accidents.”
Long positions over shares of Tepco surged as much as 20 times and short positions soared 18 times in the five business days following the March 11 temblor. Tepco’s share price has fallen 86 percent since the day before the disaster, while its 30-day historical implied volatility is still almost 10 times higher than it was on March 10. Tepco shares jumped 36 percent Thursday, the most since the earthquake.
U.S. investor wants info
New York KYODO
A U.S. shareholder in camera maker Olympus Corp. said Thursday it has sent a letter to the company asking for details of acquisition deals questioned by Michael C. Woodford before his recent dismissal as its CEO.
“We have many questions about the M&A procedures at Olympus, specifically how the prices of these acquisitions were determined, who was involved in making the key decisions, and how much effort went into conducting due diligence on the target companies,” said Harris Associates L.P. “We are particularly concerned about the relationship between Olympus management and the unnamed outside consultants who advised them on these deals,” the U.S. investor said.
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