Short Seller Torched $8 Billion Firm, But Still 'Lost Money' On Its 'Best Research': 'Took Way Too F*&^ Long'

In financial markets you may be right, but time is a crucial factor that can result in losses even if you have correctly predicted an event.

It occurred to Muddy Waters Research, an American short-seller company that undertakes investigative research on public companies. It targeted the shares of the Chinese aluminum producer China Zhongwang Holdings CHZHF in 2015, when the company had a market capitalization of $8 billion.

The Hong Kong Stock Exchange said on Thursday, April 6, that China Zhongwang Holdings will be delisted on April 13.

Muddy Waters wrote on Twitter's official profile that this was the "best research ever," but that they still lost money after defending themselves in the resulting litigation.

"It took way too ******* long," it said. The company also received congratulatory messages for uncovering the fraudulent firm.

One of the most recent calls from the short seller targeted DLocal Ltd. DLO, accusing the firm of being a scam. "We found a series of lies that the company has told, along with accounts it has altered to corroborate the lies," Muddy Waters said in its short report. 

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From Earth to the Moon... and Back Again

Zhongwang's rise was nearly as remarkable as its demise. It prospered in the 2000s as China's burgeoning real estate sector produced significant demand for its building materials.

It grew to become the largest manufacturer of aluminum extrusions in the People's Republic of China and the world's second-largest. From 2014 to 2017, the firm's success made business founder Liu Zhongtian the richest man in northeast China.

In 2017, Zhongwang secured the notable acquisition of SilverYachts, an Australian superyacht builder. 

The tide began to turn in September 2017, when the U.S. Department of Commerce assessed that some aluminum shipments from Zhongwang to the U.S. violated anti-dumping rules enacted in 2010.

Alan H. Price, chair of Wiley Rein’s International Trade Practice, claimed that "Chinese producers have engaged in an effort to evade the antidumping and countervailing duty orders on aluminum extrusions" and the decision of the U.S. Department of Commerce "will help to address some of the most egregious evasions."

Liu Zhongtian resigned in 2017 after being labeled "a corrupt businessman" who stole billions in U.S. levies on Chinese goods.

Immersed in weak corporate governance, Zhongwang has not reported financial results since 2021, alleging concerns with subsidiaries, and filed bankruptcy in September 2022, leaving more than $60 billion in debt.

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