L&L Energy Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chinese coal miner L&L Energy (Nasdaq: LLEN  ) were looking sooty today as they slumped as much as 18% in intraday trading on heavier-than-average volume.

So what: The stock's dive today was driven by a post on blog aggregator SeekingAlpha alleging "accounting irregularities" at L&L. Specifically, the author highlighted formatting errors in SEC filings, what he believed to be insufficient disclosure about restated cash balances, and the tarnished record of the company's auditor.

Now what: The author definitely has a dog in this fight, as he noted that he's planning to enter a short position on L&L's shares. Of course L&L is certainly not a new target. Back in December of last year, CNBC's Herb Greenberg sent the stock reeling after raising concerns about its management team. Over the past six months, the stock has lost nearly half of its value.

As far as short cases go, this one is relatively mild and the market seems to be taking notice of that. After a hefty downward spike, the shares recovered substantially and are down 8.3% as of this writing.

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Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies men tioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.


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  • Report this Comment On May 31, 2011, at 3:59 PM, Medicalrecordman wrote:

    Well with a massive short-interest, I look for shorts to throw hit pieces out there, even if they are total crap, as last week's 1hr 42min investor meeting presentation was extremely powerful. LLEN is adding 2 million tons to their warchest and several "very accretive" acquisitions. If I were short, I'd be slinging mud as well to get myself out of future looming trouble.

  • Report this Comment On June 01, 2011, at 9:33 AM, TMFCop wrote:

    It seems the author of the Seeking Alpha story is retreating from his article. While standing by the "truth" of what he wrote, he is no longer going to publish the rest of the planned articles in the series.

    http://totallyinvested.com/?p=166

    Rich

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