Carson Block made his reputation making bold bearish calls. Now he thinks another company is a short.
Carson Block, founder of Muddy Waters Research, made his reputation making bold bearish – and ultimately correct – calls against names like Sino Forest, Focus Media, and other Asian companies.
However, his most recent short call on American Tower has so far failed to persuade investors to sell the stock in a meaningful way, as the chart below shows.
American Tower July 2013
But, he's hoping that will soon change.
In a 118-page research report, Block lays out his case for why he is short American Tower with a $44.57 price target. One of the main reasons given has to do with what he claims are discrepancies in its books, saying:
“There is an approximately US$250 million discrepancy between what AMT claims to have paid for the acquisition of towers in Brazil, and the actual selling price. AMT claimed to have paid US$585.4 million for the towers, but the real price was close to US$300 million. If AMT is aware of this discrepancy, it would amount to fraud. We have provided our research to the SEC.”
The day Block released his report, American Tower CEO James Taiclet appeared on CNBC’s “Mad Money” to respond, saying Block didn’t see all the numbers. Taiclet then went on to say:
“It’s completely wrong and the associated allegation of fraud is really concerning to us. That’s why we felt we just couldn’t let this stand – because it’s wildly and completely inaccurate and easily provable. And we went ahead and provided that proof, both to the public markets today and to the SEC.”
(See Jim Cramer interview Taiclet: After controversial ‘sell case’ American Tower goes 'Mad')
In his first appearance since American Tower released earnings, Block tells Talking Numbers that the company’s subsequent 8K filing did not adequately address his charges in his view.
He also offers some other criticisms of the company and, as a bonus, he weighs in on the Herbalife fracas. To hear that and more, clidk on the link above.