Iceberg Research

Dismissal of Noble Group’s CEO, Yusuf Alireza

May 31, 2016

Mr Alireza was recruited by Noble Group four years ago after he left Goldman Sachs. His first day as CEO of this large physical trader was his first day in the commodity business. The learning curve has been a particularly painful experience for the company’s shareholders: the share price fell by 76%. Noble dramatically underperformed the other traders that can be short or long commodities. The trader even underperformed many producers that are structurally long.

Although Mr Alireza played a major role in Noble’s collapse, the dubious accounting practices, especially the commodity contracts fair values did not start with him. The level was already suspiciously high under the previous CEO, Ricardo Leiman. He also found Noble in poor shape after his predecessor made investments in sugar assets at the very wrong time. However, Mr Alireza could have walked away from a company increasingly dependent on accounting alchemy to hide bad results. Instead, he manipulated the financial statements even more aggressively, and the fair values grew even faster. The auditor, Ernst and Young, allowed Noble to discreetly exploit every accounting loophole to give a fundamentally misleading representation of its profitability. Noble was able to “manage” its bottom line, something CEOs dream of. The board of directors, the institutional investors, etc. were particularly passive. Mr Alireza received not less than 75 million stock options.

Problems started in February 2015 with our reports. Mr Alireza vigorously defended his company, hired infamous spin doctors Bell Pottinger, multiplied defamatory statements, and embarked on a full-scale campaign against “malicious” researchers and short sellers. Capital markets watched this embarrassing show for one year: a former Goldman Sachs working in a trading firm who complained that the market was unable to value things correctly. Yancoal overvalued by 48 times its market value on Noble’s balance sheet? No problem: it’s because it’s illiquid. The commodity contracts suddenly impaired by $1.1b while the company had been immune to impairments? No this does not mean they were overvalued, absolutely not…

Mr Alireza’s reaction to criticism was particularly aggressive and many investors immediately understood that something was wrong with this company. For the journalists who were asking critical questions, Noble had one answer: a letter from its lawyers. Even an NGO received legal threats. For the press, it has been very difficult to cover this company normally. Mr Alireza claimed he wanted to defend shareholders against Iceberg. In reality, he wanted to stifle free speech. If he had any respect for his shareholders, he would have disclosed the remuneration he received for his extremely poor performance. Noble does not comply with the Singapore Governance Code’s recommendation to disclose individual remuneration of senior management.

Mr Alireza is not done with Noble. Some statements made by the former CEO create some legal exposure for him. From misleading declarations on the financials to defamatory statements about us, we have always been surprised by how careless Mr Alireza was when he spoke in public.

The firing of the CEO was long overdue. However, this does not solve the financial crisis at Noble.


  1. Noble have always been dodgy. Circumvented brokers and stole their rightful commission during the early days.

    1. We think our arguments are now validated. It is up to the stakeholders to understand that they cannot trust this management or this auditor. If they think things have improved in terms of transparency, they are wrong and can only blame themselves for future losses.

  2. Hi Iceberg. Looking forward to your analysis on why Noble is doing a rights issue and selling their best asset (US gas). I am unable to understand the following. Why do such an expensive rights issue at one third of market price if company has no liquidity issues and they will anyway raise USD 1.5 billion from sale of US asset. Did the banks just give them bridge financing in the latest round and not really roll over the debt? Why does the company need 2 bn of cash when it is going into an asset light model. What will they use the cash for? Pay dividends?
    Why is Elman reducing his stake. Is it a sign that Noble is overvalued even at 11c? If Elman knew the company better than anyone else (and hopefully he does), he should be underwriting the whole deal and looking to increase his stake?
    Bonds have rallied like there is no tomorrow. If they sell US assets, is company not effectively left with no assets, their biggest earning generator gone. Why is the bond, especially the perpetual bond, rallying so much. And sell side buffoon analysts are changing their recommendation to Buy.
    I dont understand what is going on and sell side analysts havent got a clue. Look forward to some answers from Iceberg.

    1. AK, you bring excellent points. The refinancing did not solve Noble’s liquidity issues. They got $1b cash but the $2b borrowing base is not a simple loan: drawings can be made only against sufficient collateral. On top of that, many suppliers are very cautious with Noble and cut credit. Noble’s liquidity is tight. We also think the banks want to reduce their exposure and offload the risk to shareholders.

      Indeed Elman could reinvest more money in Noble. He does not.

      Bondholders should ask themselves what Noble’s cash generation is exactly, now that the assets are sold one by one, including NAES a rare good asset.

      As long as senior management and the auditor (EY) are in place, stakeholders should not expect any transparency from this company.

  3. Bye Alireza, welcome Randall.

    this insanity has not stopped:

    “Mr. Alireza has helped guide Noble through a very challenging period, moving the company to an asset-light, merchant-focused model”

    -Does the asset-light model excuse trading co. like the Noble to not produce any retained earnings ?

    “With this transformation process now largely complete, Mr. Alireza considered that the time was right for him to move on.” -Noble Group OfficialPR

    -Instrumental in wasting more than $2.68B in free cash flows since 27 months.

    Let me tell you something; the Big N has a lot of paper, more exactly a NON-AUDITED $2.617B Net Fair Value Gains on commodity contracts $3.1B AUDITED (with some non-realized-profits booked over 10 years in the future) for a $3.4B balance-sheet equity.

    The new entrants in commodity finance from the country of tulips precisely Raiffeisen Co-op Bank (what they now brand as Rabobank), ABN Amro are relatively small in sizes are set to learn the positive skew of commodity lending.

    They are simply left with the leftovers that the nobody wants to quote.

    Simon Jacques

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