Short Seller Muddy Waters Mentioned in Mindray Medical International Filing
On Wednesday, CNBC reporter Herb Greenberg tweeted, “Just when I thought I had seen everything: Chinese co $MR warns a report by an outfit @muddywatersre is a ‘risk.'"
Greenberg was referring to an SEC filing released on April 30 by Mindray Medical International (NYSE: MR). In its 20-F filing, Mindray Medical specifically mentioned equity research company Muddy Waters in the risk factors section. Mindray Medical did not mention Muddy Waters in it its previous 20-F filing.
Muddy Waters Research is an organization widely known for writing reports that expose alleged fraud in Chinese companies trading on US stock exchanges. The research organization often short sells these Chinese companies before publishing such negative reports.
Mindray Medical stated in the filing, “Various equity based research organizations, such as Muddy Waters Research, have published reports on China-based companies after examining their corporate governance practices, related party transactions, sales practices and financial statements that have led to special investigations and stock suspensions on national exchanges.”
However, Mindray Medical did not admit that any scrutiny by organizations like Muddy Waters would be justified. The medical device company instead said the scrutiny could, “regardless of its lack of merit,” adversely affect the firm.
By specifically mentioning Muddy Waters in its filing, Mindray Medical might be suggesting that a report is forthcoming. Since Muddy Waters initiated coverage on China MediaExpress Holdings with a Strong Sell on February 3rd, the stock has fallen more than 50%.
Shares of Mindray Medical International traded up around 0.1% Wednesday.
Disclosure: At the time of this writing, I did not hold positions in any companies mentioned in this post, nor was I commissioned by Muddy Waters Research.
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