TechnologyOne Limited is an Australian-based company that is engaged in the development, marketing, sales, implementation, support, and distribution of financial management and enterprise software solutions. The Company has operations in New Zealand, the United Kingdom, the South Pacific, and Malaysia.
It has been reported this morning that TNE has emerged as the latest short-attack target of research firm GMT Research which is based in Hong Kong. GMT is known for its reports on names such as CIMIC (CIM) and Treasury Wine Estates (TWE) and its reports have realistically not panned out even if the reports themselves did significant damage. It does seem to be an effective playbook to take a short position and then release a negative report which damages the credibility and reputation of the firm being targeted.
TNE’s CEO Edward Chung has responded, stating there is no credibility to the claims. Interestingly, the report came out on 24 June despite the press getting hold of it only now, but we are aware of the damage this sort of report can inflict so we are keeping a close eye on the situation to see if we need to make a discretionary call.
TNE is now up almost 20% from our entry in January which is even more impressive when you consider the ASX 200 is down roughly 18% in that time, and it remains one of the higher quality names on the ASX. The stock remains a hold as part of the Value Strategy.
