Muddy Waters joins Iceberg in slamming Noble’s tremendous debt

Noble’s share price falls on fresh allegations.

Just when you thought the worst is over for Noble Group, another infamous short seller has taken aim at the commodity trader’s “opaque” financials.

Muddy Waters Research--notorious for targeting Olam in 2012--released a report today accusing Noble of understating its debt and failing to generate positive free cash flow for several years.

The report claimed that Noble’s debt is now almost four billion dollars. The report also highlighted the fact that Noble has been free cash flow positive only four out of 20 years.

Muddy Waters stated that it has a short position on Noble Group because it seems “to exist solely to borrow and burn cash.”

“We are really short Noble’s management. With a company as complex and opaque as Noble, there is no way for investors to definitively answer certain key questions. It becomes a question of how much investors should trust Noble’s management to be straight with them. Noble’s management has adamantly insisted that its accounting is conservative, and by implication, is reflective of reality. We do not believe Noble’s management,” stated Muddy Waters.

"Noble management manipulates financials and investors when the pressure is on. The problem for investors is that given how prodigiously Noble chews up cash, the pressure is always on," the report added.

Noble’s share price took a fresh hit after the release of the report. Noble has declined 5.5% as at 1:25pm Thursday, and is one of the most actively traded stocks on the mainboard.