Value proposition

Due Diligence-Based Equity Research that Identifies Overseas Chinese Stocks Poised to Move 30% or More

The Chinese have an old proverb,“浑水摸鱼” (muddy waters make it easy to catch fish). In other words, opacity creates opportunities to make money. This way of thinking has been part of Chinese culture for centuries, and it is institutionalized in the modern PRC.

Western investors and their regulatory systems are inherently unprepared for muddy waters environments. Moreover, Harvard-educated Chinese analysts based in New York usually have little more in common with Chinese company managers than you do. As a result, many sub-par Chinese companies find ways to game the system and trade at inflated values. At the same time, a number of well-run and well-positioned companies are underappreciated because their managements, often abandoned by RTO or IPO sponsors, are awkward with foreign investors.

Muddy Waters Research sees through appearances to a Chinese company’s true worth. Our American directors are entrepreneurs who’ve made asset intensive investments in China. Through their successes and struggles, they’ve developed the knowledge and contacts to navigate China’s muddy waters. Our analysts are likewise veterans of China’s business trenches, and understand how business is really conducted in China.

Muddy Waters Research’s due diligence-based approach differs from that of conventional equity research. Before building financial models and making valuation assumptions, we deconstruct the company to understand to what degree key investment assumptions are true. At the same time, we bridge the cultural divide that can exist between a disillusioned Chinese CEO and the foreign investment community. Through our processes, we identify Chinese companies listed overseas whose stocks are over or undervalued by at least 30%.

Our research is available as a subscription service to institutional investors. We are also available for confidential due diligence engagements.