Mandolin raises its stake in beleaguered Sino-Forest to 15%

Mandolin's purchase explains the 12% rise in Sino-Forest's share price on Tuesday. The purchase comes one week after Mandolin increased its holding in the company by 1% to 10.9%. That transaction, combined with Boston-based Wellington Management also upping its stake, saw Sino-Forest's stock climb 12% to C$4.80, in what was then a 52-week high.

The share price is still down 60% from the beginning of June when short-seller research firm Muddy Waters accused the company of overstating its assets and defrauding investors by routing funds off the books through a web of intermediaries. Sino-Forest denies any wrongdoing and has asked a committee of independent directors to investigate the matter.

However, the negative sentiment was enough to persuade hedge fund Paulson & Co. to exit its stake in the company, citing uncertainty over public disclosures and financial statements. Paulson was said to have owned nearly 35 million shares, which implies a paper loss of more than $500 million.

Sino-Forest's counterpart China Forestry, which is among The Carlyle Group's portfolio companies, was suspended from trading in February over potential auditing irregularities.

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• Topics
• Greater China
• Industrials
• Investments
• Paulson & Co
• The Carlyle Group