Muddy Waters Founder May Launch Short-Selling Hedge Fund

Nov 26 2012 | 12:52pm ET

The founder of research firm Muddy Waters, whose attacks on a Chinese timber company cost Paulson & Co. some $100 million, is mulling a hedge fund of his own.

"It's something we've thought about," Carson Block told Reuters TV in advance of the Reuters Global Investment 2013 Outlook Summit, which begins today. "The short answer is maybe."

Block has said he's considered a short-selling hedge fund "for a while" as he seeks to find ways to profit from his calls on Chinese companies. His most notable may have been against Sino-Forest Corp., which he claimed lied about the value of its timberland holdings. Paulson, which owned more than 14% of Sino-Forest, lost some $105 million when the company's stock cratered in the aftermath of Block's pronouncement last year; Sino-Forest filed for bankruptcy in March.

Block, who said he recently moved from Hong Kong to California after receiving death threats, told Reuters he recently met with hedge fund legend Michael Steinhardt. "He was saying, 'I shorted more stock than anybody else alive. But net-net over the years, I am flat on my shorts."

While Muddy Waters trades Blocks' own capital, he distributes his research for free.


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