Market Overview

Muddy Waters Starts Coverage of Focus Media With "Strong Sell"

Share:

Noted research firm Muddy Waters, which specializes in coverage of controversial Chinese stocks, has initiated coverage of Focus Media Holding Ltd. (NASDAQ: FMCN) report with a “strong sell” rating.

In a note, Muddy Waters cited “significant overstatement of the number of screens in its LCD network and its Olympus-style acquisition overpayments” as reasons for the “strong sell” rating. Shares of Focus Media are down almost 23% on the news and have changed hands at nearly quadruple the average daily pace of the past three months.

The Muddy Waters report isn't short on damning comments about Focus Media, including saying the company “has been fraudulently overstating the number of screens in its LCD network by approximately 50%..”

The firm says its “shows that FMCN has claimed to acquire, write down, and dispose of companies that it never actually purchased. Investors should be concerned about to where cash actually moved in these transactions, and about the integrity of reported results.”

FMCN insiders have also sold $1.7 billion worth of the stock since 2005, the Muddy Waters report says. Before today, the stock was up 12% year-to-date.

Posted-In: Analyst Color News Short Sellers Short Ideas Initiation Global Hot Intraday Update

 

Related Articles (FMCN)

View Comments and Join the Discussion!

Super Committee Failure: Another Ride on the Roller Coaster

It's Not a Vegetable. It's DiGiorno!