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Muddy Waters Responds to Focus Media

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Muddy Waters posted on its website on Tuesday, reiterating its Strong Sell rating on Focus Media (NASDAQ: FMCN) and countering statements made by the company in a call last week.

After Muddy Waters released its initial 80-page report on the company, the stock sold off sharply. Muddy Waters has a noted track record of exposing fraudulent Chinese companies.

Most recently, Muddy Waters exposed issues with Sino-Forest (OTC: SNOFF). The company was subsequently delisted and has been halted by Canadian regulators—but not before inflicting massive losses on a variety of investors including noted hedge fund manager John Paulson.

In the call last week, Focus Media defended itself and stated that Muddy Waters' allegations were fraudulent.

On Tuesday, Muddy Waters fired back stating, "FMCN's response admitted that our estimate of fewer than 120,000 LCD screens showing full motion video advertisements is correct…FMCN at best prompted investors to think it had more motion displays than it does, and at worst fraudulently overstated the size of its LCD commercial display network. Both possibilities raise concerns about the health of this business line."

Muddy Waters' Carson Block is set to appear on CNBC between 2 and 3 pm.

Currently, Focus Media is trading at $16 per share, down over 5.80% on the session.

Posted-In: Carson Block CNBC John PaulsonNews Short Sellers Rumors Media Trading Ideas Best of Benzinga

 

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