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China MediaExpress Holdings, Inc. (OTCPK:CCME) has topped the most viewed list at #1 on the List of Short Interest over at Nasdaq.com. The day before, it ranked #1 on the Forbes China “Up-And-Comers” list of China’s best small businesses.

China MediaExpress has already signed contracts with many prestigious global and Chinese domestic companies or their distributors such as Apple (NASDAQ:AAPL), Sony (NYSE:SNE), Toshiba (OTCPK:TOSBF), Adidas (OTCQX:ADDYY), Nike (NYSE:NKE), Samsung (OTC:SSNLF), Phillips (NYSE:PHG), Skyworth, Supor and others, to feature their most popular products on SWITOW and is expecting others to join the platform.

I just wanted to see if I could find any reason at all to sell.

My friend who runs the Trading China Website puts it best: "The risk here in Chinese micro-caps is not that one or two China stocks get hit, but that some kind of scripted action, involving Barron's and TheStreet.com, Greenberg and CNBC, a bunch of newly founded "research firms" and several bloggers like Tyler Durden, act in concert to successfully kill demand for China stocks. And with an expected drop in the general markets in the second half of January, our stocks might drop twice as hard and they all will celebrate their successful attacks, tell the world how right they were, and secretly lock in their profits.

"They will pose as saviors who bring justice to fraudulent Chinese communists, and save good, innocent American investors from falling into a 'trap.' Every single case of fraud, and there will be more, makes their case stronger. It's like a game -- in an environment like this it just seems too easy to play, and they have jokers up their sleeves, like the announced SEC investigation."

What my friend doesn't realize is that I know first hand that the news staff at TheStreet.com is not permitted to hold positions in stocks. I am not sure about the rest of them. That said, I'm not on the staff at TheStreet.com; I'm a guest contributor and receive no compensation. I do this for fun/free and wouldn't consider it if I wasn't allowed to own stocks, as owning stocks is probably my favorite thing in life right now.

As for CCME:

  1. It’s a dividend stock.
  2. It’s a growth stock.
  3. It’s a value stock.
  4. It’s a short squeeze.
  5. It’s marginable.
  6. It’s optionable.

I would point out the following: In my opinion, it appears that Herb Greenberg reverse-engineers his mental framework and incorrectly uses the scientific method. That is to say, he starts with the conclusion that all Chinese companies are fraudulent, and then works backwards to develop negatively biased arguments against them, some of which he makes up (or perpetuates from other sources that have made it up). Good logic does not start with the conclusion in mind that every Chinese company is a fraud, and then work back to come up with allegations. You must first start with the hypothesis that Chinese stocks are fraudulent and then seek to disprove it, or you must start with the hypothesis that Chinese stocks are real and try to disprove it. But starting with what you perceive to be the conclusion and then working backwards to develop your argument to support that conclusion is the wrong way.

It's also worth noting that Greenberg's pessimism is priced into the stocks. They come at a discount because nobody believes they are real, except the companies, the auditors, and those who will likely become the next generation of "successful investors."

Disclosure: I am long CCME.

Source: China MediaExpress Draws Interest - Some of It the Wrong Kind