Muddy Waters Research
Muddy Waters Research

Muddy Waters Research LLC is an American privately held due diligence based investment firm that conducts investigative research on public companies while also taking investment positions that reflect their research.[1] 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.[2]

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.[1]


Muddy Waters was founded by Carson Block, an American short-seller.[3] The company is named after the Chinese proverb “muddy waters makes it easy to catch fish” (渾水摸魚).[4] In January 2015, the firm raised an initial $100 million for its investment strategy.[1]

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.[5] 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.[6]

In April 2016 Muddy Waters turned against German MDAX listed company Ströer SE & Co. KGaA. Among other things Muddy Waters accused Germany’s biggest advertising company of violation of IFRS accounting directives and claiming that digital organic growth rates presented by the company were faulty,[7] resulting in a loss of its stocks by 25{ae90547d17d4d74b17007ee836a04674fd006933c139011dc78eb03c100070a7}, with prices falling from €52 to just under €35 within 45 minutes of a TV presentation by Muddy Waters on the company. Shortly after German Federal Financial Supervisory Authority inquired the case suspecting overstepping of ethical and legal lines by Muddy Waters Capital. One aspect dealt with Muddy Waters failing to report the build up of a short-position exceeding 0,5{ae90547d17d4d74b17007ee836a04674fd006933c139011dc78eb03c100070a7} of stocks in due time. According to German financial law this notice has to be given at least one day after creating a short-position within that limit. According to public prosecution office Muddy Waters has overstepped that time period by five days. Since June 2017 public prosecution department of Frankfurt am Main investigates the case with respect to alleged market manipulation by Muddy Waters in the case of Ströer.

In August 2016, Muddy Waters released a report claiming that pacemakers and other implantable medical devices made by St. Jude Medical were highly vulnerable to hacking.[8] St. Jude Medical denied the claims made by Muddy Waters, stating that they were “false and misleading” and sued the firm for defamation.[9] In January 2017, the U.S. Food & Drug Administration and the Department of Homeland Security released the results of an investigation into St. Jude’s cybersecurity vulnerabilities, which confirmed the findings of Muddy Waters.[10]

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.”[11]

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.[12][13][14]

On June 29, 2017, Muddy Waters opened research into Prothena Corp PLC, a biotech company whose leading product the shortseller claimed was commercially unviable.[15]

In August 2019, Muddy Waters announced that it was short Burford Capital,[16][17] citing issues, as Muddy Waters saw it, with Burford’s fair value accounting practices.[18] In December 2019, Muddy Waters announced it was short NMC Health.[19]

In January 2020, Muddy Waters warned that Luckin Coffee, what they termed a “fundamentally broken business”, fabricated its sales and expenses whilst management cashed out on the stock; on April 2, the company admitted that its COO and subordinates significantly fabricated corporate metrics, sending the stock down over 70{ae90547d17d4d74b17007ee836a04674fd006933c139011dc78eb03c100070a7}.[20]

In May 2020, Muddy Waters announced that it is short GSX Techedu Inc. (GSX US).[21]

In November 2020, Muddy Waters announced that it is short JOYY Inc (NASDAQ: YY).[22]

In March 2021, Muddy Waters announced that it is short XL Fleet Corp (NYSE: XL US).[23]

See also

  • Citron Research
  • James Chanos
  • Short selling
  • Sino-Forest
  • Olam International
  • The Big Short

  • Official website Edit this at Wikidata

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