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What: Shares of Focus Media (NAS: FMCN) plunged after its audit committee published the first of two studies regarding the number of screens showing its ads. Focus Media operates an outdoor digital advertising network in mainland China and Hong Kong.
So what: The report is an attempt to respond to fraud allegations published last month by short-seller Muddy Waters. At issue, the firm says, is a gross overstating of the number of television screens showing Focus Media ads. Muddy Waters also accuses the company of overpaying for acquisitions in order to mask losses.
Now what: Focus Media still expects another third-party report, but the initial findings -- that Focus Media's published network data is essentially correct -- throw cold water on Muddy Waters' assertions. You just wouldn't know it from the stock action. Do you believe the report? Would you buy shares of Focus Media at current prices? Let us know what you think using the comments box below.
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At the time thisarticle was published Fool contributor Tim Beyers is a member of theMotley Fool Rule Breakersstock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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