Here is what's bugging Noble amidst Olam-Muddy Waters saga

Its 3rd largest shareholder just slashed his stake.

According to OCBC, Noble Group could continue to encounter pretty muted investor interest in the near time as the recent Olam – Muddy Waters saga brings increased scrutiny to commodities-related companies, especially those with “complicated” business structures.

Here's more from OCBC:

But some market watchers expect to see a lingering longer-term impact as some investors – the high net-worth individuals in particular – could take a step back from financing the industry until the saga involving Olam gets resolved.

Separately, investor sentiment was also affected by the recent share sale by Noble’s third largest shareholder (Noble Group’s vice chairman emeritus Harindarpal Singh Banga) who sold 225m shares at S$1.10, reducing his stake from 5.7% to 2.3%.

There was no reason given for the share sale, although we note that it came shortly after its 3Q12 results which were below consensus.

Nevertheless, we note that chairman emeritus Richard Elman picked up 7.3m shares at S$1.0803 each, further increasing his stake to 21.4%; CEO Yusuf Alireza also picked up 7.3m shares at S$1.0803 each and he now holds a 0.11% stake in Noble.

While we expect the move to restore some confidence in the company, we still expect the commodities sector to face increased volatility in the near to medium term.