Muddy Waters may be best known for spotting fraudulent accounting practices across Chinese companies, but the short-selling firm has made its first call against a U.S. company.
Muddy Waters, run by Carson Block, issued a "strong sell" rating on American Tower, a Boston-based wireless and broadcast tower provider, and valued the company at $44.57 per share -- down 40% from its current price.
"AMT has serious challenges domestically and internationally that have not been factored into the stock price," Muddy Waters said in its report. "It has engaged in a value destroying binge overseas, and we have identified a significant material misstatement in the company's accounts that could amount to fraud."
Shares of American Tower (AMT) initially tumbled more than 4% following the report, but began to recover in the afternoon, with the stock down less than 1.5%.
Though the reaction in the stock was fairly mild, American Tower gained plenty of attention among traders on StockTwits.
Hoping that Muddy Waters might be as successful as it has been in the past, some traders quickly took short positions -- a bet on the stock declining.
It remains to be seen how significant of an impact Muddy Waters' call will have, but the firm has been a fairly influential opponent in previous cases.
Its most prominent takedown was of Chinese timber company Sino-Forest in 2011. Muddy Waters' 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 led to deep losses for hedge fund high roller John Paulson, whose fund owned a large stake.
But some Wall Street experts came out in defense of American Tower. Analysts at Pacific Crest said Muddy Waters' report was "incoherent," and recommended buying the stock. But some StockTwits traders remained skeptical.
American Tower could not be immediately reached for comment.
Shares of Focus Media (FMCN) spiked Monday after the Chinese company said it is considering a $3.7 billion deal to go private from a group of investors that includes its CEO Jason Nanchun Jiang.
The bid, which offers an almost 15% premium to Focus Media's closing price last week, also includes investors like private equity firms the Carlyle Group (CG), CITIC Capital Partners, FountainVest Partners, CDH Investments and China Everbright.
Shares of the MOREHibah Yousuf - Aug 13, 2012 1:39 PM ET
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