The commotion surrounding Muddy Waters and Olam has been the latest talk of the town. Muddy Waters said that Olam has accounting discrepancies and it has since released a 133-page report on why it feels as such. Olam retorted and defended itself in a 45-page report. Muddy Waters has said in its report that Olam is a “black box” just like Enron, which collapsed in 2001. The purpose of this post is not to dissect the reports, as many other capable accountants and analysts have already done that, but rather to educate readers on how to avoid investing in such companies. I’m not surprised that Olam has attracted the attention of Muddy Waters. The debt levels of Olam are astronomical and cash flow from operations and free cash ...