EDINBURGH — Shares in the Resilient group of Real Estate Investment Trusts (REITs) have been battered following allegations of complex insider deals to massage the financials and manipulate stock prices. Resilient has fobbed off allegations of dodgy dealing behind the scenes, suggesting that short-sellers are being opportunistic. But analysts aren't buying the spin. The problems started for Resilient, Fortress, NEPI Rockcastle and Greenbay when investment house 36ONE and Arqaam Capital started digging around into why Resilient companies appear to be overvalued. Forensic precision uncovered an astonishing series of transactions among a group of connected people. From a distance, it is looking a lot like the Resilient group has been scamming investors, though Resilient insists nothing untoward has gone on within its bosom. Investors in South African property funds are vulnerable right now, with a big weighting of Resilient across portfolios. You can read the 36ONE report here on BizNews (scroll down). The 36ONE analysis is the third controversial report to hammer South African stocks in recent months. Viceroy Research has released two reports - one on Steinhoff and one on Capitec - indicating creative accounting. Steinhoff is under investigation in Germany for financial irregularities while Capitec has denied allegations it has been hiding losses. - Jackie Cameron
By Loni Prinsloo and Thembisile Dzonzi
Read also: Meet Viceroy’s Fraser Perring, after exposing Steinhoff, has more SA stocks in his sightsIt is “not quite fair” to single out only short sellers as some long-only money managers and analysts are raising the same concerns, Michele Santangelo, a money manager at Independent Securities, said by phone from Johannesburg. “More and more people are citing the same sort of issues with regards to the Resilient stable and I think its making a lot of investors nervous.” Resilient shares rose 1 percent to 101.01 rand in early Johannesburg trade Tuesday, snapping two days of losses. Fortress fell 2.1 percent, extending a three-day decline to 14 percent. Rockcastle fell 0.6 percent and Greenbay rose 3.7 percent.