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Muddy Waters Losing Support in Stock Market on Latest Calls

Carson Block, the short seller and analyst who sparked a 74 percent drop in Sino-Forest Corp. shares when he said the company misstated its business, is finding it harder to attract believers to his latest research.

The 35-year-old lawyer who founded Muddy Waters LLC gained credibility in June when he told investors that Sino-Forest overstated its timber holdings. Block’s reports on Chinese companies shook investors in the world’s fastest-growing major economy and helped erase more than $5 billion of market value. The calls caused losses for John Paulson, the billionaire who got rich betting against subprime mortgages, and former American International Group Inc. Chief Executive Officer Maurice “Hank” Greenberg.