Wall Street

'Strong sell case' for American Tower, says Muddy Waters

David Paul Morris | Bloomberg | Getty Images

Short-selling firm Muddy Waters, best known for aggressively pursuing Chinese companies, Wednesday launched its first U.S. target: wireless company American Tower.

Muddy Waters said in a research note on its website that a host of factors make a "strong sell case" for the company, which operates thousands of communications towers.

"Based on our research, AMT assets should be impaired by at least $1 billion," Muddy Waters said in its note, adding that the company's investments in India, Brazil, Ghana and Germany offered "very low return[s]."

American Tower did not immediately respond to a request for comment.

Muddy Waters claims the company suffers from weak corporate governance and a lack of hedging for foreign exchange exposure. The firm also said the CEO's option exercises show "a lack of faith" in AMT's stock price.

The targeting of American Tower is noteworthy, given that Muddy Waters rose to prominence by shorting international companies. The Wall Street Journal, which first reported on Muddy Waters' AMT short, quoted a source saying founder Carson Block is concerned the company is overvalued and too exposed to emerging markets.

In 2011, Muddy Waters made waves when it bet against China's Sino-Forest. Muddy Waters then targeted New Oriental last year, which plunged initially 33 percent after the short-seller alleged that its accounts were fraudulent.

American Tower shares fell about 1.2 percent on the New York Stock Exchange.

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