Fushi Copperweld Says Muddy Waters Wrong on Output, Financials
Stock Chart for Fushi Copperweld Inc (FSIN)
Fushi Copperweld Inc. (FSIN), a maker of copper-clad metal wire, said assertions by short seller Carson Block that it overstated production and may have falsified financial statements are untrue.
The Beijing-based company said the report, released yesterday by Block’s Muddy Waters Research as a narrated slide show, was “vague and non-specific” and reflected no prior discussions with the company, according to a statement today.
Fushi “denies all of its claims,” according to the statement. The stock, listed on the Nasdaq Composite Index in August 2007, has dropped 4.5 percent this week and 17 percent this year. It climbed 5.4 percent yesterday $6.22 following release of the Muddy Waters report as 6.6 million shares were traded, 16 times the three-month daily average.
Chinese companies have faced increased scrutiny in North America after Block alleged Sino-Forest Corp. (TRE) overstated assets, Longtop Financial Technologies Ltd. was delisted by the New York Stock Exchange following a probe by U.S. regulators, and China MediaExpress Holdings Inc. lost almost all its value as its auditor quit.
Muddy Waters Research said Fushi “presents a high risk of fraud” and that it overstated production at one of its factories by almost 13-fold. Its 2008 and 2010 financial statements may be inaccurate, according to the posting.
Block didn’t return an e-mail seeking comment. Zachery Kouwe, a spokesman for the short seller, didn’t return an e-mail and a phone message.
Sino-Forest fell 89 percent from June 1 through June 21 last year after Block said the Ontario- and Hong Kong-based timber owner overstated the value of its assets. It filed for bankruptcy protection last month. Focus Media Holding Ltd. lost 39 percent on Nov. 21 after the short seller said the Shanghai- based company overstated its ad network and the value of acquisitions. It has since rallied 60 percent.
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