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Gerry Harvey just lost A$100m in a day, buys Harvey Norman shares amid rout

Gerry Harvey's Harvey Norman is probably the best insulated Australian retailer from any Amazon threat.

OPINION: Harvey Norman shares tanked badly on Monday, and the only thing we know for sure is that the Gerry Harvey-run retailer will be getting one hell of a please explain notice from the ASX. 

Shares dropped more than 8 per cent on Monday - wiping hundreds of millions from its market capitalisation - with no obvious explanation for the rout. 

Gerry himself should be looking for an answer given his personal wealth was down more than A$100 million (NZ$109 million) on the day. He even tried to shore up the share price, buying two million shares for A$8.7m and posting a notice to the ASX within hours.

But what caused the rout?  Let's go through what we do know. 

Harvey Norman directors including managing director Katie Page have sold A$2.6 million worth of shares this month

READ MORE: Harvey Norman's billionaire boss has a message for tax stirrers: "Piss off"

Long time Harvey Norman executive David Matthew Ackery issued a directors notice earlier on Monday, announcing he had sold A$1.5m worth of shares to pay off an ANZ loan which was secured against his stake in the retailer. 

It was the second share sale by a director in less than a week with Gerry's wife, Harvey Norman CEO Katie Page, selling some stock last week.  

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Trading in the stock has been heavy since she announced her sale. 

The other news of interest on Monday was some research from Credit Suisse predicting who would be road kill when Amazon finally comes to Australia. 

Harvey Norman gets a mention, but the impact would not be as bad for the retail giant as would be for rival businesses like JB HiFi, Myer and Super Retail.

Harvey Norman is probably the best insulated from any Amazon threat, according to the Credit Suisse report.

Could it be the markets got scared by a report in Saturday's Australian Financial Review by Neil Chenoweth? 

It raised fresh questions about the byzantine structure that governs Harvey Norman's franchisee business and the transparency of the company's accounts.  

Especially in relation to the jaw dropping 110 franchise operations which fail each year, and how the losses of these failed shops are recorded in its accounts. 

It certainly would have emboldened the short sellers Gerry was lambasting at the company's AGM in November, and if the reports of ASIC's interest in Harvey Norman's accounts are true - the market might just be waiting for the other shoe to drop. 

Sydney Morning Herald

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