Get To Know Muddy Waters Carson Block

Somehow I got my hands on the first report Muddy Waters issued on a Chinese company that it recommended shorting the very day that it came out. Since then I've followed each successive report and have been quite impressed. How can I not be? Each stock Muddy Waters has written about has subsequently crashed, with a couple of delistings. Plain and simple they have been correct each time as far as I can tell.


So when I read the article below I have to admit to being very surprised about Mr. Block's background. Nothing in it suggests to me that he should have any great skill outing fraudulent Chinese companies.


Have a read and see what you think:


Carson Block, the enfant terrible short-seller who obliterated $3-billion in market value from what was once the largest Canadian-listed forestry company, scoffs at his enemies and detractors.


The founder of Muddy Waters LLC, which published a June 2 research report alleging Sino-Forest Corp. is a “fraud” and a “multibillion-dollar Ponzi scheme,” leans back and smirks when asked about those who deride his work.


Sino-Forest chief executive officer Allen Chan has called Mr. Block a self-interested “shock jock” whose research is “inaccurate and unfounded.” Dundee Securities analyst Richard Kelertas, before abandoning coverage of the company pending the publication of an independent investigation, labelled the Muddy Waters report “a pile of crap.”


Over the course of a three-hour interview at a busy chain restaurant in Marina del Rey, Mr. Block becomes increasingly pointed as he responds to the claims of his adversaries, finally adopting a whiny, snivelling tone to mimic his critics’ condemnations.


“The company is saying ‘you don’t understand the tree business.’ The analysts say ‘oh, he doesn’t understand our industry,’” he says.


“You know what industry I do understand pretty well, it turns out? The fraud industry. So I don’t need to know trees to know fraud,” he says.


Sino-Forests insists it is no fraud, and charges Mr. Block’s “inaccurate, spurious” report was aimed at generating big profits from his short position in the company’s shares.


Canada’s capital markets have rarely encountered a character like Carson Block: Irreverent, elusive, and able to devastate a Chinese company’s share price with a single research report.


As a naysayer to the Chinese equity boom, he has fouled the punch bowl at a party that many investors hoped would be the next big thing. His work has cast a pall over the hundreds of Chinese companies that have flocked to North American markets in recent years promising investors a way to cash in on China’s roaring economy.


Mr. Block has shown that at least some of these businesses are not what they claim to be. Over the past 13 months, his Muddy Waters reports – which rely on his own business experience in China as well as unconventional investigation tactics (such as misrepresenting himself in face-to-face and telephone discussions with Chinese companies), have shattered the share price of most of his targets. Some, including Rino International Corp. and China MediaExpress Holdings Inc., have been delisted from major U.S. exchanges.


For remainder of article:


http://www.theglobeandmail.com/report-on-business/managing/the-lunch/carson-block-the-man-who-felled-a-forestry-giant/article2099190/page1/