Charles Zhang
Long/short equity, value, special situations, contrarian

Is WSP A Fraud?

After spending 10 years researching and investing in Chinese companies, fraud detection has naturally become a fundamental skill. I researched many privatization deals and earlier this year I came across a buyout deal involving WSP Holdings (NYSE:WH). On the surface it was a solid management-led buyout with reputable advisors and law firms drafting the documents, but a little more research showed that there were many red flags. I decided the company and the buyout deal were too risky to invest in. And the profit spread to the buyout price was 2.9% at that time which was clearly underestimating the risks. On the other hand, shorting the stock was a bit expensive and without a catalyst, the payoff can...

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