To the unwary, Pingtan Marine Enterprise (NASDAQ:PME) appears to embody the best of the Chinese economic miracle: rapid growth, low valuations, and seemingly limitless future possibilities. Unfortunately, the shining growth story is clouded by worrisome bookkeeping, a corporate structure that seems designed to circumvent investors' legal claims, and huge related-party transactions that seem to transfer assets from shareholders to the CEO's family. While management has gotten rich from Pingtan Marine Enterprise, American investors will probably end up losing most or all of their money.
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Fish images in this article taken from the corporate website. Above, conger eels.
The long thesis
Pingtan's long thesis is as follows: initially, the fishing industry in China was highly...