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Twiggy spurns ‘short-sellers’

Fortescue Chief Executive Officer Andrew Forrest aboard the first train loaded with iron ore. Photo: FMG

Fortescue Metals Group chairman Andrew ‘Twiggy’ Forrest has hit back at suggestions from analysts that he should sell some (or all) of his 33% stake in the company, as the iron ore price dipped below FMG’s reported ‘break-even’ mark this month.

In a candid interview with Fairfax the colourful executive fired back at the reports, insisting the company’s critics were spreading the rumours in an attempt to drive down the share price.

“I have a very secure position,” Forrest was quoted by the Sydney Morning Herald on Tuesday. “My wife and I don’t give away hundreds of millions of dollars to charities … if we’ve got any security issues at all.

“So the hedge funds starting the rumourtrage really need to take that into account when they start rumours.”

Forrest believes short-sellers are targeting FMG.

Short-sellers are individuals or companies which, having sold a stock, aim to drive the price of that stock down to then buy it again at a lower price – effectively earning a profit in the short term, and leaving the potential for more profits down the road if the price rebounds to its proper, natural value.

“I just think people who start rumours which cause detriment to Australian companies [by] having a go to try and make a trade of their rumour are immoral,” Forrest reportedly said, “and such traders should have a good hard look at themselves.”

Forrest said FMG would “play the long game,” and said investors should “look beyond the market rumour and tomorrow’s share price.”

Analysts last week said Fortescue should look to sell off some of its assets in order to handle its debts, as the price at that time dipped below US$53 a tonne, which is around the point of FMG’s reported ‘break-even’ mark – indicating the miner could soon (or may already) be selling iron ore at a loss.

Analysts at that time also suggested Forrest may look for an escape route out of FMG. But Forrest doesn’t look to be quite so skittish.

“If you’re setting seven-year money, you set it on [what] the company is going to look like over the next seven years,” he was quoted by Fairfax.

“You play a long game, and not be concerned by what might appear in the markets in the morning.”