We resume our campaign to expose ANTA’s fraud, and have several more pieces planned that will expose other inconsistencies and lies. In this piece though, we first take stock of the lies in ANTA’s responses to our pieces last week. Muddy Waters has been exposing frauds for nine years, and never once have we been accused by a regulator of lying. Yet, in almost every single instance of our accusing a company of fraud, the company denied our conclusions. Regardless, of the 14 PRC-based companies we have previously shorted due to research conclusions of fraud published on our website, six have been de-listed, one has been halted for almost five years, two have been later acquired by managements at premiums (one subsequently paid a significant regulatory settlement), two are down over 90%, two more are down significantly, and only one other stock is up. That’s 11-3 by our reckoning. Nine of these wins are knockouts (down over 90%, de-listed, or in suspended animation).
So with ANTA we see the same pattern: We present evidence of fraud (in this case, well over 100 pages and counting), the company denies it, and surrogates come out to defend the company. In this case, the company has shifted almost all of the burden of defense to the ever-pliable sell-side, effectively turning some analysts into little more than sock puppets. Ordinarily, managements have no effective downside to trying to lie their way out of fraud accusations – there is usually no increased regulatory penalty or shareholder opprobrium, so lying in the fact of fraud accusations becomes one of the most asymmetric bets a management can undertake. In ANTA’s case, it has outsourced much of the lying to the sock puppets, effectively mutualizing the reputational risk. We now address these lies-in-response.
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