Muddy Waters sinks another Chinese stock
Muddy Waters strikes again.
The short-selling research outfit based in Hong Kong has long been targeting Chinese companies (many trade as ADRs) that it thinks are overpriced--or are downright fraudulent. The firm created huge headlines last year for its research on Sino Forest, which tanked dramatically after Muddy Waters released a series of reports accusing it of fraud. That led to huge losses by the likes of John Paulson.
In its latest research, the firm accuses a company called New Oriental Education of "lying to shareholders about its store growth and financial performance," notes Forbes.
The stock of "the largest provider of private education services in China" plunged 30 percent, the lowest since 2007. "This nose dive was preceded by a 34% drop in stock price yesterday after the company revealed that S.E.C was investigating its financial statements. All in all, the stock has depreciated 57% since yesterday morning–this means that the CEO Yu Minhong, a Forbes billionaire with an estimated net worth of $1.05 billion as of March, saw his fortune shrink by at least $330 million in just two days."
The report also suggested that the company's auditor at Deloitte might resign.
- here's the article