Muddy Waters Research, the short-focused research firm helmed by Carson Block, has announced another position in Chinese timber company, Superb Summit.
“We are short Superb Summit International Group Ltd. (1228.HK, “Superb”) because virtually all of its reported 2012 and 2013 revenue belongs to a different company, its recent acquisition of a stake in coal liquefaction company Beijing Jinfeite (“JFT”) is utterly without substance because JFT is effectively a one-man operation, and Superb has an unbroken seven-year track record of completely failing in every new line of business it has purportedly pursued. In short, Superb’s raison d’etre is being a public company,” said the report.
In fact, Block has said that Muddy Waters can find no record of Superb actually owning any forest at all — no coal company, no timber, no real revenue.
All of the companies 2012 and 2013 revenue is attributed to another subsidiary, Tianjin Libao. But Muddy Waters can’t find any record of that either.
“There were no changes to Tianjin Libao’s Legal Representative, directors, manager, or supervisor from December 2007 until February 2014. In China, when one company buys another, there are usually changes to at least one of the aforementioned positions — otherwise, it would be hard to actually exercise control of the acquired company,” said the report.
You may recall that Muddy Waters’ most infamous short was Sino Forest, another timber company which ultimately filed for bankruptcy. Even some really smart Wall Streeters got caught on the wrong side of that deal, including John Paulson of Paulson & co.
Block’s most recent public short position is in Chinese mobile ad company, NQ Mobile, which is down 53% year to date.
Here’s what Superb’s stock is doing.