Short seller Muddy Waters targets NQ Mobile (3)

Another interview with Carson Block of Muddy Waters regarding NQ Mobile, interesting are the following quotes:

"... all of these China frauds that we have seen, the fraudsters don't get punished. The Chinese don't punish them ..."

"... nobody in China gets in trouble for defrauding US investors ..."

"... in some cases they get rewarded for defrauding US investors ...."

If we replace "US" by "Malaysia" or "Singapore", will the above still hold true? I am afraid it will.

But should Malaysia or Singapore then list companies of China on their share exchanges?

Prince Frog as quiet as a mouse, NQ’s "Top Ten Lies", China Minzhong's earnings dive

I wrote before about "Prince Frog", it is already more than 2 weeks and the company has still not officially replied, worrisome. The longer it takes, the higher the chance the company is indeed a fraud.


Regarding NQ Mobile, targeted by Muddy Waters, the latter has written a new report called "NQ’s Top Ten Lies Since Friday". It can be found here. I am not an expert in this matter, but I did speak to someone knowledgeable in this area, and he told me that NQ Mobile was suspicious for a longer time, that there were enough rumours regarding the company.


Regarding China Minzhong, which was targeted by Glaucus, the company announced its quarterly results.

This looks like a nice picture:

But this not, earnings are down by 60%:

And this one is rather strange:

Cash up a lot, but borrowings also, why would a company want to borrow so much money if it has RMB 1.57 Billion in cash?

Indofood has acquired 89% of the company, we will have to wait how that will work out.

These are tough times for China based companies listed overseas, but they only have themselves to blame, in my opinion. Conservative accounting, a healthy dose of transparency and rewarding the shareholders through sizeable dividends would go a long way to battle the sceptical observers. But I haven't seen much of that lately.

Short seller Muddy Waters targets NQ Mobile (2)

NQ Mobile has responded through a conference call "to address False Allegations".

Both Carson Block from Muddy Waters and Omar Khan from NQ Mobile were interviewed by Bloomberg. The transcript of these interviews can be found here.

Short seller Muddy Waters targets NQ Mobile

Article on Dealbook's website:

After Muddy Waters Report, NQ Mobile Falls by Half

When the stock market opened on Thursday, NQ Mobile, a Chinese mobile security company, had a valuation of $1.1 billion. Just hours later, half of its value was erased.

Call it the Muddy Waters effect. A short-selling firm known for its scathing reports on Chinese companies, Muddy Waters released a harsh assessment of NQ Mobile on Thursday, calling it a “massive fraud.”

NQ Mobile immediately experienced a stomach-turning plunge, with its shares falling more than 50 percent. The stock, which opened the day at $23 a share, fell as low as $8.46 before recovering slightly to close at $12.09. The company is listed on the New York Stock Exchange.

In its research note, Muddy Waters argued that “at least 72 percent of NQ’s purported 2012 China security revenue is fictitious,” saying the company was a “zero.”

“NQ’s largest customer by far is really NQ,” Muddy Waters, which is run by Carson C. Block, said. The note added that the company’s “future is as bleak as its past,” and that its “acquisitions are highly likely to be corrupt.”

In a statement, NQ said the accusations were “false,” adding that it would issue a more detailed response before the market opens in the United States on Friday.

“NQ Mobile will respond quickly, transparently and forcefully to these false allegations regarding our company,” the statement said.

Muddy Water's report can be found here.