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After controversial ‘sell case’ American Tower goes 'Mad'

Wednesday, 17 Jul 2013 | 7:01 PM ET
AMT Corp. CEO on Muddy Waters report
Wednesday, 17 Jul 2013 | 6:45 PM ET
American Tower Corporation CEO Jim Taiclet speaks to Mad Money's Jim Cramer about a report by Muddy Waters that says his company is "dramatically overvalued," and allegations his firm overpaid on water towers in Brazil.

(Click for video linked to a searchable transcript of this Mad Money segment)

On Wednesday, American Tower landed on Cramer's radar after a firm known for short selling suggested the stock was significantly overvalued.

Immediately American Tower went 'Mad.'

That is the company's CEO James Taiclet turned to Mad Money with Jim Cramer to set the record straight.

Background

In a somewhat controversial note posted on its website, the investment firm Muddy Water cited a slew of negative catalysts which they believe have not been factored into the stock price.

Those catalysts ranged from a belief that international growth will not benefit this company as expected, to potential accounting discrepancies involving transactions in Brazil.

The firm also cited insider selling from CEO James Taiclet, which Muddy Waters interpreted as a lack of faith in the sustainability of the business.

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Due to these and other catalysts, Muddy Waters wrote, "We rate American Tower a strong sell and value it at $44.57 per share, representing downside of 40%."

Communication Tower
Michael Betts | Photographer's Choice | Getty Images
Communication Tower

Response

American Tower CEO James Taiclet told Cramer the allegations and inferences made by Muddy Waters are 'completely wrong.'

"Normally we wouldn't respond to such an ill-informed report but it's completely wrong and the associated allegation of fraud is something we couldn't let stand."

Among the more serious issues is a suggestion of accounting discrepancies. Taiclet however says the Muddy Waters report writer didn't fully understand the way in which the company funded its transactions in Latin America, which he said was reviewed by top accounting firms.

And he added, "we intend to provide to the SEC any and all bank records needed to set the matter straight. In fact, we are filing a formal 8K with the SEC to lay out all the facts."

On a related note, Taiclet also told Cramer his stock sales. "are part of a a standard selling plan as new options come in each year."

Cramer's Insights

"You have to draw your own conclusion," Cramer said. "But I regard the Muddy Waters reports as inflammatory. And I want you to know that if the company files an 8k with the SEC and it's not in fact true, the company will face consequences. "

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