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Monday, November 21, 2011

Carson Block / Muddy Waters - on Focus Media

Carson Block / Muddy Waters is out with their latest short thesis on Focus Media (NASDAQ: FMCN). It is worth noting that after they took down Sino Forrest the independent audit committee came out with a report saying they found no wrong doing (trading is still halted on this name - as they are still sorting through the mess).

Muddy Waters research centers around a significant overstatement of the number of screens in Focus Media's LCD network and acquisition overpayments. The $1.1 billion in write-downs from its acquisitions exceed one-third of FMCN’s enterprise value. FMCN insiders have sold at least $1.7 billion worth of stock (two-thirds of FMCN’s enterprise value) since FMCN’s IPO. At the same time, the insiders and their business associates further enrich themselves by trading in FMCN assets, while costing FMCN shareholders substantial sums of money.

Pretty interesting read - already has driven FMCN down 30% in the first couple hours of trading. Enjoy.

FMCN Strong Sell

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