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Noble goes full-court press on critics, to limited effect

A worker walks among coils of galvanized steel at a steel factory.
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After months of critics' attacks and stock slides, Noble Group clocked a marathon presentation Monday - stretching more than three hours, not including the open microphone for questions that went on for another two hours - but it isn't clear the message went the distance.

"Our priority has been, first and foremost, maintain the support of our stakeholders, which we have, and continue to do business as usual," said Yusuf Alireza, Noble's chief executive officer. "Our banks have supported us," he said, noting that Hong Kong-based Noble, Asia's biggest commodities trader, has more than $50 billion in available credit.

As part of the presentation's exhaustive description of its major business lines and projects from the company's division chiefs, Alireza noted that Noble's top 15 shareholders had remained unchanged over the past six months and that these investors had raised their stakes to 73 percent of the company from 68 percent previously.

But that show of support hasn't helped the stock weather a pile-on from critics, with shares down more than 60 percent since then-anonymous Iceberg Research set off the scrimmage in February when it published a report, alleging that the Singapore-listed trader's accounting treatments were "unusual," result in "fabricated" profit and "intentionally misleads credit agencies and investors."

Read MoreNoble accounts cleared but jobs to be cut

Noble has consistently and vehemently denied the allegations and has taken multiple steps to improve its disclosures to investors, including commissioning an independent review of its accounting from PricewaterhouseCoopers (PwC), which found Noble's accounting was in line with international standards.

After its publication earlier this month, critics immediately heaped criticism upon the PwC report, with claims that included questioning whether it was truly independent and that it didn't address concerns over Noble's mark-to-market valuations of contracts.

At the presentation, which was also webcast, Noble independent director Paul Brough noted that while PwC didn't revalue the contracts - a key criticism of the review - it did evaluate the processes. Brough also noted the company would adopt all of PwC's recommendations "without reservation."

In a sign of frustration with Noble's critics, Alireza said he felt it was unlikely PwC would compromise its reputation by failing to deliver a thorough review.

On Tuesday the stock gained a bit of support, rising as much as 5.5 percent in early trade, before erasing some of those gains to trade down around 1.1 percent in late afternoon trade as markets around the region lost ground in the wake of another selloff in mainland China markets. That was after dropping 7.1 percent Monday.

Analysts found the presentation thorough, but not necessarily new news.

"For us [analysts], it's not a very big surprise," Wei Bin, an analyst at Maybank Kim Eng, said, noting he regularly meets with company management as part of his research. "But for the retail investors, it was a quite good opportunity for them."

But while Wei Bin was impressed by the depth of the presentation, he wasn't certain the message got through.

"In the Q&A, it seemed most investors were not quite convinced," he said. "Obviously, the company has made quite [a] big effort in terms of explaining their business model, but the problem is the company is so big and complex that it's hard to fully understand it."

Read More Has Noble finally sailed clear of Iceberg attacks?

Some saw benefits to the company explaining its diversity.

Noble laid out "the breadth of the business and demonstrated how much more diverse the business is today versus four years ago," said Conrad Werner, an analyst at Macquarie. "The message was delivered successfully."

Part of the message involved highlighting that on a volume basis, most of its business comes from the U.S., not China. Concerns about China's slowing economy and declining demand for commodities have damped investor interest in the country.

Noble also noted plans to build up its metals platform in China, in part because the bear market in commodities has shaken out smaller players in the business, actually improving margins for the remaining players.

Noble also confirmed that it has hired former big-name Citigroup dealmaker Michael Klein, who now runs his own M&A advisory, to help the company review options for its businesses; the options could include selling businesses once considered core.

To be sure, sell-side analysts have said all along that the negative research reports mostly cited information that was publicly available and often highlighted in their own reports.

Noble's stock price performance also hasn't differed too much from its peers. Glencore, for one, is down more than 40 percent so far this year as the entire sector takes a hit from a nearly five-year-long bear market in commodities. Glencore is due to report its half-year results on Wednesday.

But despite the long presentation, critics appear undaunted.

Short seller Muddy Waters, for one, merely tweeted on how it viewed Noble's comments on its balance sheet from April to now: "#NobleGroup 4/17 "Our balance sheet has never been stronger or more liquid" 8/17 "We must first and foremost strengthen our balance sheet." Muddy Waters didn't return an emailed request for comment sent outside normal office hours.

The Muddy Waters comment, however, appears to be based on a misquote of Alireza's remarks that was published online by Singapore newspaper The Straits Times and then later corrected.

Iceberg declined to comment on the record, but postings on its Twitter account suggest it's not entirely done gnawing one of its bones about the PwC report, noting that it didn't review the valuations. But Iceberg may be letting go of a bit of the Noble controversy ahead; it said via email that it will publish reports on another company soon.

Noble has said it had identified Iceberg as Arnaud Vagner, a disgruntled ex-employee it fired in 2013; the company filed a lawsuit against Vagner in Hong Kong, alleging "conspiracy to injure." Iceberg has previously refused to confirm or deny whether Vagner is a principal.

Another critic, Robert Medd, a partner at independent research house GMT Research, initially said via email he missed the presentation entirely. In a second email, he said his "quick look" at the five-hour presentation didn't answer his questions about getting improved disclosure on matters including how much of the company's net present value (NPV) gains are from businesses not yet in production.

It may be a hard slog to regain retail investors' confidence.

After the three-hour presentation was completed, the first shareholder at the open microphone was doubtful.

"After listening to what you've presented, it's like a godsend company," said the shareholder, who identified himself as Mr. Lau. "The first thing you have to do now is really, really answer the questions raised by your critics instead of trying to evade," he said. "The market has no confidence."

To be sure, it's entirely possible, Noble might not be able to entirely win over critics.

After the presentation's long response to critics' claims the company doesn't have enough disclosure, one shareholder complained about information overload.