News.com.au – Takeover target Ausdrill has blamed a fall in the company’s share price on hedge fund selling after comments from suitor Macmahon that its bid was unlikely to succeed.

Ausdrill said that it believes selling from hedge funds accounted for the "majority" of the "large number" of shares traded in the belief that Macmahon’s offer would fail.

The drilling contractor’s share price sank 20 per cent from a closing price of $2.50 on Tuesday to close at $2.00 yesterday.

Ausdrill chairman Terry O’Connor said the impact of hedge fund selling on the share price was likely to be "short term" and that the price did not reflect the group’s excellent outlook and earnings.

Shares in Ausdrill gained nine cents to $2.09 by 10.41am (AEST), while Macmahon put on 1.5 cents to $1.815.

Macmahon is offering 1.65 of its own shares for every Ausdrill share, valuing the company at $511 million at Macmahon’s previous closing price of $1.80.

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News.com.au- Iron ore tycoon Andrew Forrest is under attack from international hedge funds in a co-ordinated short-selling blitz against his Fortescue Metals Group — a campaign that has caused the company’s stock, and the executive’s paper fortune, to slump by more than 37 per cent in just over a month.

The company’s broker, Southern Cross Equities, has sent a note to clients that leaves no doubt as to why it considers the stock has fallen: "FMG shares have been subject to an aggressive and co-ordinated shorting campaign from a high of $13.15."

The stock went as low as $7.91 on Tuesday but by Thursday had rebounded to a $8.70 close on a day of particularly heavy trading, with 45.5 million shares going through.

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