A former NQ Mobile Inc (NYSE:NQ) bull has dialed down his enthusiasm in the company—completely. Regulatory filings show that Oberweis Asset Management Inc, the firm managed by Jim Oberweis, closed out its position in the controversial Chinese company sometime during the third quarter.

Oberweis versus Muddy Waters

It appears that after more than a year of accusations from short-selling firm Muddy Waters, Oberweis has changed its view of NQ Mobile. Carson Block, founder of Muddy Waters, has been accusing the Chinese company of accounting fraud.

NQ Mobile
NQ Mobile Inc. NQ

In last year’s third quarter, Oberweis doubled down on its stake in NQ Mobile Inc (NYSE:NQ), adding to the approximately 990,100 shares it held to bring its stake up to 1.8 million shares on Sept. 30, 2013. This means that as of Sept. 30 of last year, Oberweis was NQ’s second-biggest shareholder, according to data collected by Bloomberg.

What a difference a year makes

During this year’s third quarter, Oberweis emptied its holdings of all the nearly 1.35 million shares of NQ Mobile it had previously held, finishing the slow selloff it had begun prior to the quarter. In the firm’s December 2013 letter to investors, a copy of which was reviewed by ValueWalk, Oberweis management called NQ Mobile Inc (NYSE:NQ) possibly “the best Christmas gift” they could have given to their investors.

They also called Muddy Waters’ initial report on the Chinese company “bunk,” and “nonsense,” saying that they decided at that time to essentially “load up the truck” because they believed NQ Mobile had “high growth prospects, a strong balance sheet, and an absurdly cheap stock valuation.” Specifically, regarding NQ Mobile, the letter stated:

Very rarely do we fi nd ideas with high growth prospects, a strong balance sheet, and an absurdly cheap stock valuation.
That is, you can’t usually have your cake and eat it too. In one case, however, you can!

Obweiss noted further:

Buying NQ shares at $13 may be the best Christmas gift we can give you. On behalf of our clients, we have already bought another 900,000 shares after the report came out, bringing OAM’s client ownership to over 1.8 million shares.

And:

NQ has set up a special independent committee comprised of a world-class legal team and a forensic auditing team.
This investigation will be complete in a couple of months. We believe that once complete, NQ shares are very likely to trade materially higher than their current price of $13. Management has announced they’d personally be buying back shares. Shares trade for 10x forward earnings with 30% growth.in Hong Kong from their convertible debt offering in October). Net of the convertible bond proceeds, NQ has $2.60/ADS in cash. You don’t have to believe in the Tooth Fairy, but some basic due diligence will likely convince you that Muddy Waters’ fear mongering has created an exceptional mispricing in the market.

Shares of NQ Mobile are trading at $7.39 at the time of this writing. The stock has not reached double digits during the entire quarter, so the firm likely lost money on the investment.

Tired of waiting on NQ Mobile?

A big question now is whether Oberweis is just the first of many investors that will abandon ship on NQ Mobile Inc (NYSE:NQ). The company still has three quarters’ worth of financial filings to release as it deals with continuing accounting problems. Earlier this month, NQ told investors that it intended to file its three quarterly reports as soon as possible, without giving an exact time frame.