Macquarie gets into a mud fight

Macquarie Group has found itself advising what the upstart Hong Kong research house Muddy Waters has alleged is the "Olympus of China".

Macquarie Group has found itself advising what the upstart Hong Kong research house Muddy Waters has alleged is the "Olympus of China".

Muddy Waters, which gained notoriety by highlighting alleged financial irregularities in the Toronto-listed Sino Forest this year, has now turned its focus to the Nasdaq-listed Focus Media Holding Ltd.

Focus Media's stock tumbled 39 per cent the day Muddy Waters initiated its coverage last month with a strong-sell "because of significant overstatement of the number of screens in its LCD network and its Olympus-style acquisition overpayments".

But the company, which claims to have 116,026 LCD advertising screens on the sides of buildings across China, hit back, claiming the research house did not properly understand its business. "The report's allegation regarding the number of LCD display network screens in the company's network is incorrect and reflects a misunderstanding in the types of devices used by the company and their method of calculation," Focus Media said.

The company also rejected claims by Muddy Waters that it "claimed to acquire, write down, and dispose of companies that it never actually purchased". "FMCN has written at least 21 acquisitions down to zero and then given them away for no consideration," the Muddy Waters report said.

Focus Media said the "allegations in the report amount to no more than a questioning and second guessing of the motives and business judgment of the Focus Media management".

Macquarie has advised Focus Media on several deals. And it is not only Focus Media that has corrected Muddy Waters. On Bloomberg television, Macquarie's head of China research, Jiong Shao, said he still had an "outperform" recommendation on the stock. "They [Muddy Waters] have nothing at all to back their points," he said.


The main online avenue for the 10,500 unit holders in the MFS-founded and now Jenny Hutson-managed Premium Income Fund to vent their spleen, share gossip and air their grievances has been deactivated.

After more than 9000 posts, about one million thread views and more than three years since its first posting, the administrator of the Aussie Stock Forums website has shut down its "thread" related to Wellington Capital.

"The reason for the removal is due to continued threats of defamation action against this forum by Jenny Hutson and Wellington Capital," the website's administrator said in a message to several members of the forum over the weekend.

"This is not my battle and the Wellington Capital thread is peripheral to ASF's core purpose."

Over the years, the Wellington thread on the forum has coughed up a lot of information on Hutson and her management of the shrunken mortgage fund that at its peak held about $1 billion of unit-holder deposits.

The thread for example was quick to report of the hiring of extras (at $26.63 an hour) for a unit-holder meeting in June, where an alternative investment manager was seeking support to dump Hutson's Wellington as the manager of the Premium Income Fund.


UGL Ltd, headed by Richard Leupen, helped put an end to the misery of one the London Stock Exchange's worst performers of recent years, by announcing its purchase of the real estate advisory business and agent DTZ for #77.5 million ($118 million).

Since late 2006, DTZ's share price has dipped from 845p to 7p, making even some of Australia's best-loved market dogs look like darlings. Mind you, it was still not doing as badly as Centro Properties.

The deal means UGL will buy DTZ's trading operations and the debt-laden shell of the London company will go into administration.

It was as recently as October that things really fell off the cliff for DTZ's share price. DTZ's former chief executive Paul Idzik said in July (one month before he quit): "It has been another difficult year but I am encouraged by the continued advances that have been made."


Some economists will be waiting for more than just the Reserve Bank's decision on official interest rates at 2.30 this afternoon.

They might be keen for some news on whether the RBA has given more thought to rescheduling future board meetings.

At last month's Australian Business Economists annual dinner, Westpac strategist Rory Robertson probed the RBA's governor, Glenn Stevens, on whether he had thought about changing the date for what has become the biggest clash on the horse punting and interest rate calendar.

"Would it be possible, over time at least, since the bank seems to insist on moving every Melbourne Cup day, is it possible to move that to either the first Monday of November or the first Wednesday perhaps?" Robertson asked.

Stevens cooly replied that moving the date was "probably a bit extreme" given that the meeting had been held on the first Tuesday of November for 30 years. "It's actually pretty hard to make changes to the date with our board members who are on very busy schedules," Stevens said.

"On one or two occasions when I've wondered whether we could do that it was all too hard, so I can't see us changing, which isn't of course a guarantee that there'll be a move every time ... past performance [is] not necessarily a guarantee of future performance."

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