By Kim Da-ye
Retail investors became the latest victim of Kolon Industries’ defeat in an overseas lawsuit.
A U.S. district court in Virginia found Thursday (KST) that the Korean chemical and industrial materials company stole trade secrets from U.S. outfit DuPont on Kevlar aramid fiber.
DuPont was awarded $919.9 million (1.02 trillon won) in damages.
Kolon vowed to fight the court’s decision, saying that the verdict is “the result of a multiyear campaign by DuPont aimed at forcing Kolon out of the aramid fiber market”
That couldn’t stop investors’ massive-selloff of the Korean firm’s shares. Its stock crashed 14.97 percent to 76,100 won as soon as the market opened Thursday, and fell 9.99 percent to 68,500 won Friday.
Foreign and institutional investors had been selling Kolon shares well in advance as the lawsuit risks magnified.
Between Aug. 1 and Sept. 14, foreigners unloaded its shares except for three sessions, reducing their stake from 23.07 percent to 19.90.
Institutional investors had been actively buying shares until the end of August, but dumped them through September.
Retail investors, called individuals here, apparently picked the shares up on what they regarded as a good discount.
While foreigners are believed to have had better access to information on the lawsuit in the U.S., Kolon is partly responsible for delayed disclosure.
Kolon made the disclosure of the defeat Thursday only after the Korea Exchange (KRX) asked it to confirm media reports on the lawsuit.
On Aug. 29, the firm said in its first-half report that the result of the lawsuit is difficult to forecast and will make a disclosure immediately if any decision regarding the verdict and damages is made.
Third parties including securities firms’ research units didn’t help either.
Bookook Securities issued a report on the day of the verdict that recommended buying the shares because they were undervalued and suggested a target price of 130,000 won.
Various analysts said Friday that investors shouldn’t over-react to the trade secret case because the 1-trillion-won in damages is the maximum amount, and it is unlikely to be imposed.
“Kolon may be found innocent in the appeals court or the amount of the damages could be altered,” Hwang You-sik, an analyst of Meritz Securities, said.
Kevlar aramid fiber is a high-strength synthetic fiber originally developed by DuPont in 1965 and used for body armor by the police, military vehicles and even offshore oil and gas facilities.