Photo: Russell J. Smith via Flickr
Muddy Waters just issued an open letter to Chinese semiconductor company Spreadrum, in which it now has a short position.The stock is already tanking.
Interestingly, there were indications last week that something was about to happen in connection with the China-based company.
“Traders are citing some negative rumblings about China-based Spreadtrum Communications, although nothing specific has surfaced,” StreetInsider reported last week. “With China-based companies being taken down one-by-one, it wouldn’t be surprising if someone posted a negative blog on the company in the next few days.”
Meanwhile, yesterday, the shareprice of a Chinese company called Yuran tanked purely on the rumour of a Muddy Waters report.
The research firm is known to market its reports earlier than the publish date. It did so with its Sino-Forest takedown, so it’s not far-fetched it did the same with its Spreadtrum letter, or at least spread the word it was looking at the company.
In this latest open letter to Spreadtrum, Carson Block, head of Muddy Waters, queries the company on a range of financial statements made by the company, as well as the reasons behind executive departures.
In particular, Block cites “2010 and 2011 numbers” as eliciting the “gravest” concern.
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