Earlier this month, Muddy Waters founder Carson Block published a report describing Sino-Forest as "a Ponzi scheme...investing for the 23rd century." The note did not have a positive effect on the company's stock price and major shareholder John Paulson ended up pulling his entire investment. Appearing on Bloomberg TV earlier today for a little post-mortem, Block wanted to get a couple things straight.
1. The S&P downgrade of Sino-Forest bonds? Bull shit.
"I'd think that it's a bit of a cop out on the part of S&P. We published this almost a month ago. The company has had a microphone and a platform to respond. When it has opened its mouth, the company, the stocks and bonds have gone lower. Rather than having anything confidence inspiring to say, they have continued to spook investors. S&P may want to hang this on us, but I have a feeling that is really a cover for, at least in part, their own assessment that there are significant risks that are company specific not related to market perception and Muddy Waters."
2. The mistaken impression some people have that he's a ninja assassin? Also bull shit.
"I am getting uncomfortable, actually, with this idea that we are ninja assassins that are going to take this stock price down a huge percentage within minutes or days. What I would like to do to protect investors is that I would like to point out the issues and start a dialogue and get people thinking about these red flags before we come out with a report that sends the stock down 70%, 80%."