【Native Speaker每日综合训练—37系列】【37-06】经管 Muddy Waters

小蘑菇开始打怪

内容：AceJ&小蘑菇开始打怪   编辑：小蘑菇开始打怪

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写在前面：
Hello，大家好，我是刚刚加入小分队工作组的蘑菇，非常意外能够加入小分队，从二月底第一次跟小分队，到现在都三个月了，在小分队收获了很多，所以周二晚AceJ问我要不要加入工作组，我感到非常惊喜...虽然...我此时此刻还欠着作业...我错！...
我之后会负责每周四经管部分，今天是第一次发稿还有很多不熟悉的地方，从昨晚的找材料到现在的排版，每一步都感觉之前的成员你们真的太不容易了！还有多谢AceJ一直帮我教我~
今天的内容是关于Muddy Waters，是一家做空机构，前几年查出了好多在美上市中概股的财务造假问题。因为最近在做关于它的案例分析，所以干脆就找了类似文章~

Part I: Speaker

Taking Business Back from Wall Street

Source: Harvard Business Review

http://blogs.hbr.org/2014/05/taking-business-back-from-wall-street/

[Rephrase 1, 10:09]

小蘑菇开始打怪

Part II: Speed

NQMobile: Was Muddy Waters Wrong This Whole Time?

BY Jayson Derrick|April 30, 2014

[Time 2]

An independent investigation led by accounting giant Deloitte and law firm Shearman & Sterling have thus far found no evidence that NQ Mobile (NYSE: NQ) has engaged in any fraudulent activity.

The independent investigation stemmed from accusations by Muddy Waters, an investment research firm that “peels back the layers” to uncover either business fraud, accounting fraud and other fundamental problems that company's may go to great lengths to hide.

Muddy Waters initiated coverage of NQ Mobile with a Strong Sell with a price target of less than $1.

Strong Accusations

“NQ is a massive fraud,” Muddy Waters wrote when coverage was initiated on October 24. “We believe it is a “Zero”. At least 72 percent of NQ's purported 2012 China revenue is fictitious."

"NQ's largest customer by far is really NQ. Our research estimates that NQ's real market share in China is only about 1.5 percent, versus the approximately 55 percent it reports. We estimate that its China paying user base less than 250,000, versus the six million NQ claims.”

Since Muddy Waters initiated coverage, NQ Mobile fought to defend itself. So far it has failed to fully reassure the investment community that allegations of fraud are 100 percent false.

An independent committee was set up in early November to investigate Muddy Water's claims. The company retained Shearman & Sterling, a global law firm and a forensic accounting team at Deloitte.

On Wednesday NQ Mobile issued a statement saying that that Deloitte and Shearman & Sterling's investigations into Muddy Waters' fraud allegations are nearly complete.

[255 words]

[Time 3]

Coming Out Clean

“The Investigation Team, comprised of Shearman and Deloitte, has conducted a far-ranging investigation of NQ's business activities, financial records and cash, major business partners in China and overseas, and major acquisitions in order to examine the allegations made in Muddy Waters' October 24, 2013 report (and in six subsequent reports and letters issued through January 13, 2014),” the company said in its press release."

"The investigation, which has been under way for six months, is nearly complete. The Company's management and staff have been cooperating fully with the Committee and the Investigation Team throughout the investigation.”

According to the investigation's findings thus far, it is possible Muddy Waters got something wrong.

“The Investigation Team has thus far found no evidence that the Company engaged in the fraudulent conduct that was alleged by Muddy Waters,” said the report.

Muddy Waters at this time has not made any public statements regarding the investigation's findings.

NQ Mobile will report the final results of the investigation when it publishes its annual report.

Shares of NQ Mobile soared more than 17 percent just after the opening bell on Wednesday.

[187 words]

Source: Yahoo Finance

http://finance.yahoo.com/news/nq-mobile-muddy-waters-wrong-151347883.html;_ylt=AwrSyCW.74VT2XsA0TqTmYlQ

When fund managers get lazy

BY A.M| Jun 29, 2011

[Time 4]

CORRECTIONS: This post incorrectly identified Muddy Waters as a Canadian hedge fund and Sino Forest as a Chinese company. In fact, Sino Forest is Canadian. Muddy Waters' background is obscure, but the firm is registered in Hong Kong and is better described as a research shop than a hedge fund.

MUDDY WATERS, a Hong-Kong-based research shop, scored a spectacular success earlier this month after accusing Sino Forest, a Canadian timber company operating in China, of doctoring its accounts. Muddy Waters had shorted Sino Forest stock, which is listed on the Toronto Stock Exchange, and made a tidy profit as the price fell. Other hedge funds are keen to repeat the trick. But while Muddy Waters engaged in painstaking research, according to today's Wall Street Journal, many other funds are hiring Hong-Kong-based firms to “fish” for dodgy Chinese firms.

There is no dictionary definition for a hedge fund, but generally an investor would expect the fund manager to be using his or her expertise and judgment to seek outsize returns. The fishing strategy outlined in the WSJ, on the other hand, seems to involve nothing more than exploiting economies of scale, and taking advantage of the regulatory flexibility afforded hedge funds.

It would be inefficient for an individual investor to fish for a Chinese company worth shorting. Although Sino Forest shows the payoffs can be large, a needle-in-a-haystack fishing exercise has a low probability of success. However a hedge fund, with the combined resources of many investors, and a healthy dose of leverage, may have the resources to pay for research into hundreds of firms. Unlike a mutual fund, the hedge fund also has no limitations (other than its financial resources) on taking short positions. It is in a position to fully exploit the fruits of any research.

[297 words]

[Time 5]

There is certainly skill and expertise involved in such a strategy—researchers apparently include a former Interpol corporate crime investigator—but it's all in the hands of the Hong Kong firm. The hedge funds simply hire this expertise. Does that matter if the strategy reaps returns?

I would say yes. Because the fund is not relying on proprietary information, what is to stop other people using it? If a Hong Kong research firm discovers a firm with phantom profits, it will surely short the stock before passing the information on. Presumably there is also more than one hedge fund paying the research firm to fish. What is to stop the research firm selling any information it recovers to the highest bidder, or, indeed, supplying it to all of its clients, at a cost?

Muddy Waters' shorting strategy has inevitably raised some hackles. But if its claims about Sino Forest turn out to be true it will have performed a useful exercise. In the meantime the episode has led exchanges the world over to scrutinize the accounting practices of their own Chinese listings. Given the hot competition between exchanges for Chinese IPOs, that is probably a good thing.

The same cannot be said about funds paying research firms for fishing exercises, at least where hedge fund investors are concerned. It may aid price discovery if real information is discovered. It may also spread panic about well-behaved Chinese firms. Any returns to investors will be more down to luck than the skill of fund managers. If I were an investor in such a firm, I would be asking what I was paying management fees for.

[274 words]

Source: The Economist

http://www.economist.com/blogs/freeexchange/2011/06/hedge-funds-china

RINO's Stock Price Plunges Into Muddy Waters As Research Report Claims Stock Is Scam

BY Tyler Durden | Nov 10, 2010

[Time 6]

Before CSCO defecated the bed, today's most notable downside mover in the market was RINO International, a relatively recent addition to the US stock market, which in the past 2 years has gone from over $50 to $2, and recently was trading $15.66, until small research company Muddy Waters Research came out with a 30-page brutalizing report this morning, which once it made the rounds, sent the stock into a tailspin, closing down 15%. In a nutshell, Muddy Waters believes the company is a dud, and has initiated the company with a Strong Sell and a $2.45 price target (likely backed by a solid short position, but hey: if they are right, they deserve to make money). And cursory view indicates Muddy may actually be generous in their PT.

The research company notes: "[RINO] reported 2009 revenue of $193 million. In reality its revenue is under $15 million, and its management has diverted tens of millions of dollars for its own use. We value RINO based on the cash we believe remains in the company after the most recent raise." After reading the report, we tend to agree that report author Carson Block may be on to something, and that this stock has a very material probability of dropping another 80% over the next several weeks or months as the downside case gathers momentum.

The report's highlights:

•        RINO’s FGD sales (60% to 75% of revenue) are much lower than it claims. We found that many of its customer relationships do not exist.

•        Chinese regulatory filings show that RINO’s consolidated 2009 revenue was only $11 million, or 94.2% lower than it reported in the US. We show that the Chinese numbers are credible.

•        RINO’s accounting has serious flaws that are clear signs of cooked books.

•        RINO’s management is draining cash from the company for its own business and personal uses. The management is in flagrant breach of its VIE agreements, which require it to pay income to RINO (as opposed to taking it).

•        RINO’s balance sheet has an astonishingly small amount of tangible assets for a manufacturer. Rather, it is filled with low quality “paper” assets that balance out the inflated earnings, and likely hide leakage.

•        RINO is not the industry leader it claims to be in the steel sinter FGD system market. Rather, it is an obscure company in a crowded field, and is best known for its failed projects. Its reported margins are two to three times what they really are. Its technology is sub-par.

•        We are not sanguine about management “borrowing” $3.2 million to purchase a luxury home in Orange County, CA the day that RINO closed its $100.0 million financing

[443 words]

Source: Zero Hedge

http://www.zerohedge.com/article/rinos-stock-price-plunges-muddy-waters-research-report-claims-stock-scam

小蘑菇开始打怪

Part III: Obstacle

Muddy Waters, one of the most prominentwhistleblowers of Chinese companies, is looking to make a long-term bet, but sofar, the candidates just haven't been right.

How Muddy Waters spots fraud in China

By Hibah Yousuf| May 2, 2012

[Paraphrase 7]

NEW YORK (CNNMoney) -- Investing in China can be complicated, to say the least. Just ask Carson Block, the founder of Muddy Waters Research, known for his keen eye for spotting fraudulent accounting practices at Chinese companies.

Block first noticed a deep-rooted problem within Chinese companies, particularly those listed on U.S. and Canadian stock exchanges, less than two years ago. At the request of his father, who was seeking to invest in small Chinese companies, Block looked into Orient Paper (ONP), a paper manufacturer and distributor based in the Hebei province and listed on the American Stock Exchange.

After digging into the company's financial documents and visiting a manufacturing plant, Block issued a report calling the company a fraud, alleging that it misappropriated tens of millions of dollars and overstated its revenue, assets, inventory and profit margin figures.

He sent his report, which highlighted Muddy Waters' bet against the stock, to just 50 acquaintances in the investment world. It went viral, and Orient Paper's stock sank almost 40% in the three days following the report's release.

Following the Muddy Waters report, Orient Paper hired an advisory firm to conduct a third-party investigation of its accounting. The investigation didn't find any evidence supporting Muddy Waters' claims, but shares of Orient Paper are still down more than 60% since the day the report came out.

Block said that in the days after his first report on Orient Paper, he was contacted by a number of investors that praised his research and Muddy Waters for being the first to "successfully prove a Chinese company's fraud."

They also told him that Orient Paper was just the tip of the iceberg.

"My assumption at the time was there could be a few other Chinese companies that were frauds and were connected to some of the same people in the background at Orient Paper, but I was really underestimating the problem," said Block.

Muddy Waters: Be wary of Hong Kong listed Chinese companies

Since then, Muddy Waters has set its sights on many other Chinese companies. It has issued scathing reports and taking short positions against a slew of companies including Focus Media (FMCN), Rino International (RINO), China MediaExpress (CCME) and Duoyuan Global Water (DGWIY).

Rino and China MediaExpress have subsequently been delisted from Nasdaq while Duoyuan has been delisted from the New York Stock Exchange. Focus Media has refuted Muddy Waters' allegations and the stock has rebounded so far this year.

But Muddy Waters' most prominent takedown was of Chinese timber company Sino-Forest last year. The firm's accusations of fraud triggered a massive sell-off in shares of the Toronto-listed company before they were eventually suspended. The drop in Sino-Forest's price forced hedge fund high roller John Paulson to book deep losses on the stock.

Though Muddy Waters is continuing to research more Chinese companies, Block also said his firm has been probing companies "outside the China realm" and will likely take a short position on a non-Chinese company sometime this year, potentially in another emerging market.

"I tend to be a little bit skeptical of what I've seen in emerging markets," said Block. "There seems to be a lot of froth there, and where you see that, you typically find wrongdoing and fraud, and that's our expertise."

Chinese stocks: 'Not for the faint of heart'

Some clear warning signs Block watches for?

"Too many mergers and acquisitions at one company are definitely a red flag," said Block.

"Companies trying to raise cash when they appear to have a lot on their balance sheet is also an issue."

Block has also found it useful to scrutinize members who sit on the board of directors at Chinese companies, as well as those who are major investors -- a tactic Block used to formulate his short position on Focus Media.

Finally, Block says he also watches to see how companies respond to criticism -- whether it be accusations of fraud or otherwise.

"If a company responds to a short seller's claims by brushing them off and saying that it will continue to run its business and in turn, void any investor concerns, it generally turns out that the short seller is wrong," said Block. "But when a company starts buying back shares, that's not necessarily a positive."

China's hottest companies

Block is wary of share repurchase programs because they only act as a "Band-Aid" in terms of boosting a company's stock. They also force the company to "squander" a portion of its cash, he said.

Though Muddy Waters is known mainly for highlighting stocks it doesn't like, Block says the firm has been looking to make a bet on stocks it wants to buy for the long-term. It just hasn't found one yet.

"There were a couple of candidates that came across our radar screen for long positions, but when we scratched the surface, there were some concerning issues," said Block. "We're still looking for the right company, so we'll see."

While it's not a fool-proof safeguard, Block said one of the top priorities for a long-term investment would be quarterly dividends.

"It takes more than that. But [a dividend] is the No. 1 criteria," he said.

[859 words]

Source:CNN Money

http://money.cnn.com/2012/05/02/markets/muddy-waters-carson-block/

cherry6891

哈哈 欢迎 顺便占个座~~~~~~~~~~ 文章很精彩
看楼下Ace多支持 瞬间秒杀首页

Obstacle： 6’06’’

Muddy watercompany is a company to spot fraud accounting practice.

The exampleof ONP

ONP isjust an tip of iceberg, many Chinese companies have accounting problemespecially Hong Kong listed companies

Scrutinizingthe members of board of directors and paying attention to the major investorsis a useful way to find problems

Too many mergers and acquisitions at one company aredefinitely a red flag (这句什么意思？)              short seller 卖空者

Time2 2’10’’

Muddy wateraccused the fraud market share in China and fake revenue

However,an independent investigate by third party found no evidence that NQ mobile tookpart in fraudulent activity

time 3 the investigate team have not found evidence of fake number of NQ
Maybe Mudder water's accusations are wrong
Time4 the background of MW is hedge fund,which support the research of many companies and exploit the fruit of result
Time5 hedge fund paid research firms to fish
And fund short that stock before research firms inform the information
Time 6 give an example of RINO
How MW report influence the stock price of RINO

疏离无罪

楼上的ACE 刷了好多楼 →_→
欢迎小蘑菇，支持

Speaker: Capital flow is the blood of economy.So Financial system is the heart of the economy.Large banks are center of the financial system and the heart of the economy.But too large heart may be a problem.Now many companies and management level have to do sth to meet wall street's expection,even they don't want to do.The wall stree will evaluate their performance.Most action may be helpful in short-term,but a disaster in long-term.This harm is not real harm,they will tell you it's earning management.Power shapes what we think and what we do.And in economy world,financial system plays this power.US economy is vast,we need focus more things other that financial system from walls street.

01:43
An independent investigation has found no evidence that NQ Mobile has engaged in any fraudulent activity.NQ was accused by Mudddy Water for it fraud before.

00:46
The investigation is complete and no evidence is found.Muddy Water seems to be wrong in this case.

02:04
Muddy Waters made much profit from stock market by accusing Sino Forest.And this stimulates more funds to fish Chinese firms.Define the hedge fund.

01:31
This strategy need skills and expertise.But to get profit,more complex things need to be done.And also these actions may hurt other companies.

01:51
A report from Muddu Water shut down the stock of Rino.

04:26
Describing a case of Orient Paper made by Muddy Water to show how this companies works.
Orient Paper is just a tip of iceberg.Many Chinese companies have similar problems.Several cases were made by Muddy Water.Some warning signs:Too many mergers and acquisitions,cash flow,member of borard,respond to critism.
Muddy Water tris to invest in long-term now.But until now,it does not find a suitable one.

小蘑菇开始打怪

我不知道怎么删楼。。。
--------------------
这不用说谢谢楼主了。。

speaker:

the capital flow is the blood supply of the economy

in the view of wall street, earning is the basis skill of financial management

power-ship shape the way we think and behave

we did keep the balance before, so why we cannot do this now?

environmental regulation

time2:

MW suspect NQ has big business fraud for it fakes the revenue and the customer relationship

D and S&S are now investing the claims of MW

time3:

after 6 months investigation, it seems that NQ do not have the fraud as MW has said

MW has not made any public statement responding to the research

time4:

MW’s new action on Sino brought it a big amount of money

the definition of hedge fund and the function of it

hedge fund is a position to fully exploit the fruits of any research and it has no limitations compared to mutual fund

time5:

if the action of MW is failed then it just performed a useful exercise

MW’s uncovering of fraud leads us to scrutinize the accounting practices of our own Chinese listings

time6:

MW points out that RINO has great financial fraud

RINO has less revenue than its balance sheet and most of its customer relationship is fake

the management of RINO is bad

time7:

MW’s former merits on the Chinese listed company whose stock prices are declined after MW made the claims

some points can reflect the company’s financial position: mergers and acquisitions, cash flow, the members of the board of directors

MW is trying to find a stock to invest in the long-term, but it has not found yet

wnj2611339

----Speaker
1. The meaning of the American economy having an enlarged heart.
2. How does the fact that companies' increases in sizes and profitability does not match what they contribute may harm these companies. Several examples.
3. The reasons why people would like to harm their companies just to meet Wall Street's financial targets.
4. The American economy is not balanced now, but it can be as it used to be , as long as we help the rest of the economy create value, and combine the rest of the economy to achieve the competenance of the American economy.

----Speed
[Time2] 1'40''
Muddy Waters strongly accused NQ Mobile of conducting fraud, however,  no evidence was found to prove NQ's fraudulent activities.
[Time3] 0'57''
After a 6-month far-ranging investigation into NQ's business activities,  no evidence was found to prove fraud in NQ.
Meanwhile, Muddy Waters haven't given any response to such results, while NQ's shares soared.
[Time4] 2'30''
对hedge fund的知识不大懂，一开始理解起来挺吃力的
Muddy Waters is a research shop registed in Hong Kong, and it successfully accused Sino Forest of doctoring its accounts.
No clear dictionary definition for a hedge fund is given.
It is inefficient for an individual investor to fish for a Chinese company worth shorting.
[Time5] 2'26''
Muddy Waters can gain from its shorting strategy, but this strategy has raised some hackles.
The strategy may aid price discovery if real information is discovered, and may spread panic about well-behaved Chinese firms.
[Time 6] 2'02''
RINO International has become today's most notable downside mover in the market.
According to Muddy Waters, RINO's revenue for 2009 was quite overstated, and its management has taken huge amount of money from the company for its own use.
The highlights in research company's report.

----Obstacles 5'28''  
Muddy Waters Research have been noticing the problems within some Chinese companies, since 2 years ago.
Muddy Waters successfully caught a small Chinese company ONP, and reported the company's fraud, leading to a huge decline of ONP's stock, even the third-party investigation, which proved the innocence of ONP couldn't help.
Muddy Waters has become the first to "successfully prove a Chinese company's fraud", and it has spoted several other Chinese companies, some of which has been dislisted from the New York Stock Exchange.
However, Sino-Forest has become Muddy Waters's most prominent takedown, though Muddy Waters will continue research other emerging market in areas apart from China.
Block was skeptical of a company's business activities that he thought were warning signs.

hhd0530

掌管 6        00:07:57.59        00:17:58.75
掌管 5        00:02:39.97        00:10:01.16
掌管 4        00:01:52.70        00:07:21.18
掌管 3        00:02:10.66        00:05:28.48
掌管 2        00:01:16.46        00:03:17.81
掌管 1        00:02:01.35        00:02:01.35

time 2
MW: NQ engaged in fraudulent activity

time 3
MW may be wrong

time 4
WM is a hedge fund so it can short the stock and get profit

time 5
advantages of the short startege: find the real value of the company bases on he managers

time 6
WM said that RINO's stock price is too high and will drop down soon

Ostacle
How MW find the fraud company?
B first found deep-rooted problems in USA and CAN stock exchange
then he dig into firm documents and plants to find fraud companies
the set up a advise firm to search for the thire part investion
MW was praise and it is the first firm to find fraud
he then search other companies in HK, especially Sf
After that, he also do research in no-CHN market
1.companis raise money are likely to be fraud
2.they also focus on broad of company and major investor
3. how companies respond to criticism is also important:if is says will continue to make revenue, it is likely fraud
they are now finding right company

locece

文章很有趣呀,先交作业,明天再来看一遍. 不是金融专业的外行表示看着很热闹

Time2: 1'05''  Muddy Water wrote that the NQ is massive fraud and reported the wrong share on China. Deloitte has conducted an investigation on NQ and has not find any evidence.

Time3: 0'37'' The investigation is nearly completed and shows no evidence of the fraud. Muddy water has not made any comments on the investigation. NQ plans to report the final result once it publish the annual report.

Time4: 1'28''
Muddy Water has gain a large profit from shorting the Sino Forest company and many other hedge funds want to repeat this trick.

Time5: 1'06''

Time6: 1'44''
Muddy water conducted an investigation that shows RINO  is a dud and claims many false information about the company's profit and operation.

Obstacle: 3'33''
A research company muddy water has successfully spotted several fraudulent practices at Chinese companies and in turn causes these companies lost the value in the stock market.
Carson Block, the founder of Muddy Water research finds the fraudulent practices are not rare in Chinese companies and points several red flags of such companies.
Muddy water has been looking to make a bet on stocks it wants to buy for the long-term and has not found one yet.

pengruoyu0812

占！！~~~

Time2(1:34)
Firsly, an independent investigation led by S&S have found no evidence that NQ has engaged in fraund activity.
However, Muddy Waters calimed NQ was a massive fraud.
Then a committee led by S&S invetigate the claims of Muddy waters,and the investigation is going to complete.

Time3(0:54)
talk about how the committee conducted the investigation, and the committee found Muddy Waters had get sth wrong.

Time4(1:42)
the Muddy Waters accused Sino Forest of doctoring its accounts.
many founds are hiring frims to fish dodgy chinese firms
hedge fund has fewer limitations, so it can combine resources of many investers to pay for research into many firms.

Time5（1:48）
if the claim turns out to be true, it will spread panic among other firms. what the investors gain is luck instead of skills of managers.
有点没读懂…………

Time6(1:51)
Muddy Waters came out with a report accusing the Sino's fraud this morning.

Obstacle(5:42)
Block, the founder of Muddy Waters, said chinese have deep-rooted problems in accounts.
He digged into the company's financial ducuments and report the company's fraud.
After the report, the stocks of the company will sank a lot. then the author take Sino as an example.
Block will pay his attention to non-chinese company, and he said the respond of company is important.
Block is looking for stock that the company will buy for long-term, but he hasn't found one yet.