Securities fraud class action litigation has been filed on behalf of purchasers of the common stock of A.O. Smith Corporation (“A.O. Smith” or the “Company”) (NYSE: AOS). If you purchased the common stock of A.O. Smith between July 16, 2016 through May 16, 2019, inclusive (the “Class Period”), you may move the court for appointment as lead plaintiff by no later than July 29, 2019.
You may retain Lieff Cabraser Heimann & Bernstein, LLP, or other attorneys, as your counsel in the action. Recognized by the National Law Journal as one of the nation’s top plaintiffs’ law firms, Lieff Cabraser is committed to safeguarding the rights of investors and upholding the integrity of the market. We have significant experience and a successful track record of representing institutional and individual investors in securities and financial fraud litigation.
A.O. Smith investors may choose to have Lieff Cabraser review their claim by completing the contact form below. You can also call Sharon M. Lee of Lieff Cabraser at 1-800-541-7358 to discuss the litigation.
Background on the A.O. Smith Securities Class Litigation
AOS, incorporated in Delaware and headquartered in Milwaukee, Wisconsin, is a leading manufacturer and marketer of water heaters and boilers. The Company has two primary operating segments, North America and China, the latter of which accounted for one-third of the Company’s sales in 2018, exceeding $1 billion.
The action alleges that, during the Class Period, Defendants made repeated false statements about AOS’s earnings and sales in China, and the prospects for future sales and earnings in that market, artificially inflating the Company’s stock price.
On May 16, 2019, J Capital Research USA LLC (“J Capital”), a research firm with a short interest in AOS stock, released a well-documented, 66-page report, based on extensive interviews and investigation in China, that AOS fueled its Chinese growth through a previously undisclosed Chinese partner named Jiangsu UTP Supply Chain (“UTP”). UTP is purportedly involved in almost every aspect of AOS’s Chinese operations, and may be responsible for as much of 75% of AOS China sales, by allowing AOS to inflate its gross margins though distributor-financed “channel stuffing.” This channel stuffing enabled AOS to report growth that was no longer working, by pushing UTP and distributors to take on more inventory than they needed, which hid AOS’s sales decline. In addition, J Capital revealed that AOS’s claim to have $539 million in unencumbered cash balances in China is likely false, and that AOS probably used that cash for distributor loans to prop up sales.
On the release of J Capital’s May 16, 2019 AOS report, the price of AOS common stock declined $3.02 per share, or 6.27% from a closing price of $48.12 on May 15, 2019, to close at $45.12 per share on May 16, 2019, on elevated trading volume.