Industry Investment management Number of employees 1-10 Type of business Privately held company | Key people Carson Block Headquarters California | |
Profiles | ||
Muddy Waters Research LLC is a privately held due diligence based investment firm that conducts investigative research on public companies while also taking investment positions that reflect their research. The firm has exposed accounting problems and fraud at several companies, primarily in China but also in other countries in Asia, Europe and North America.
The firm is best known for spotting fraud at Sino-Forest Corp, a Canadian-listed Chinese company whose stock fell 74 percent before it eventually filed for bankruptcy protection in March 2012. In 2014, Canadian authorities outlined criminal fraud charges against Sino-Forest and its executives. Prominent investors including Maurice Greenberg and John Paulson lost significant amounts of money on Sino-Forest.
History
Muddy Waters was founded by Carson Block, an American short-seller. The company is named after the Chinese proverb “ 浑水摸鱼 ” "muddy waters makes it easy to catch fish." In January 2015, the firm raised an initial $100 million for its investment strategy. Block has been described by Bloomberg News and others as "one of the most successful bears" in the market today.
In 2011, Block was named as one of the 50 most influential people in finance and investing by Bloomberg Markets Magazine. Before founding Muddy Waters, Block ran a Shanghai-based self-storage company called "Love Box Storage." He also wrote the book "Doing Business in China for Dummies," was an attorney at Jones Day in Shanghai and an adjunct professor at Chicago-Kent College of Law.
In addition to Sino-Forest, Muddy Waters also reported on NQ Mobile, a Chinese-based cybersecurity and mobile application company. In October 2013, Muddy Waters published research claiming NQ Mobile had "fictitious" customers and revenues. In April 2015, the co-CEO of NQ Mobile, Omar Khan, stepped down after the stock had fallen nearly 84 percent. He has also released reports on companies including Noble Group, Focus Media, Olam International, Groupo Casino, Orient Paper, China Media Express, Bank of the Ozarks, Rino International, Bolloré, American Tower Corp. and TeliaSonera.
On his process for finding wrongdoing at companies, Block has been quoted saying "It's a bit like solving a puzzle. You're really trying to find the pieces and how they match together to make a clear picture of just what the company is doing."
Block appears frequently as a commentator on Bloomberg Television, CNBC and the BBC. He has written op-eds in the Wall Street Journal, Financial Times, and The New York Times on various topics related to improving corporate governance and market transparency.