Why Montage Technology Group Ltd. Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our thesis.

What: Shares of Montage Technology Group, Ltd. (NASDAQ: MONT  ) fell 10% Friday after short-selling firm Gravity Research issued a report accusing the fabless semiconductor company of fraud.

So what: In the 27-page report issued Thursday afternoon, Gravity Research insists it believes Montage is "grossly overstating its revenue," citing "overwhelming evidence" that its largest distributor is a shell company established by a senior Montage employee to help fabricate Montage's financial results.

The accusation comes less than a month after Montage provided encouraging preliminary fourth-quarter results, which caused the stock to jump more than 15% in a single day.

Now what: Montage issued a statement in response today, saying it believes the accusations are without merit and contain "numerous errors of fact, misleading speculation, and misinterpretation of events." What's more, Montage promised it will release additional information "in due course" to refute Gravity's allegations.

Given the potential negative repercussions if Gravity's allegations aren't proven false, I'd prefer to stay on the sidelines until Montage releases that information. On that note, I'll admit it's mildly alarming Montage hasn't already released at least some specifics regarding which details Gravity got wrong -- especially considering Montage just announced pricing of a follow-on public offering of more than 5.3 million new shares last week.

If the company truly has nothing to hide, it should have no problems swiftly refuting the report.

Consider the nine solid stocks in this free report
In the meantime, there are many other great, well-established companies out there in which investors can put their money to work. So where should you look?

One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks, as a group, handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks, in particular, are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2829679, ~/Articles/ArticleHandler.aspx, 12/20/2014 9:27:24 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement