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Muddy Waters says it has short position on Noble Group
HOT on the heels of the blogger Iceberg Research, short-seller Muddy Waters has entered the foray, attacking Noble Group for its accounting policies despite the commodities group's rebuttals.
"Muddy Waters is short Noble Group Limited,'' Muddy Waters said, adding that Noble has been free cash flow positive only four out of 20 years.
" - in other words, it literally generates positive free cash flow once every five years! According to Bloomberg, since 1997 Noble has raised from banks and markets net US$7.7 billion. Noble's debt is now almost four billion dollars. (A recent estimate, which Noble has not contested, is that due to repo-style transactions, Noble's intra-quarter debt is approximately $3 billion greater than reported),'' it said.
"We are really short Noble's management. With a company as complex and opaque as Noble, there is no way for investors to definitively answer certain key questions. It becomes a question of how much investors should trust Noble's management to be straight with them. Noble's management has adamantly insisted that its accounting is conservative, and by implication, is reflective of reality. We do not believe Noble's management.''
At 11.33am, Noble is trading around S$0.865 each, down 4.5 cents, or almost 5 per cent. More than 62 million shares changed hands.
READ UPDATE: Noble completely rejects Muddy Waters' allegations