Sino Clean Energy: Who Lied About the Weather?

May.12.11 | About: Sino Clean (SCEIQ)

To me, watching the drama of Sino Clean Energy (SCEI) vs. the short sellers playing out in the stock market is way more intriguing than watching any theatrical drama on a silver screen. The battle between the short sellers and the company has been intensifying and - believe it or not - the most recent fight is on whether it rained between April 20 and April 29 in Tongchuan, Shaanxi Province, China.

After the short sellers provided four-months-long surveillance videos that showed little activities in the Tongchuan facility, the company provided to the public its own surveillance videos at the Tongchuan facility during the mentioned period that did show trucks running in and out the facility.

The short sellers pointed out that the weather during the period was not rainy, but the videos provided by the company showed rainy weather so the videos provided by the company must be fabricated. And on Wednesday, the company produced a weather data certificate from a local organization and two transcripts of telephone conversations with local meteorologists that support the weather conditions captured by the company provided video.

This just becomes so fascinating. They cannot both be telling the truth – one of the parties lied. And yet, the thing that they do not agree on is something that should not be a secret at all – it is weather after all, and the almighty Internet should have recorded the answer to this million-dollar question somewhere.

Ask Google and ask Baidu. And that is what I did.

Method 1:

Searching “Historical Weather Data” in Google lead me to a website called, which recorded historical weather data. While I was not able to find data for Tongchuan, a third-tier city in China, I could find Xi’an, a second-tier city 50 miles to the south and the famous home to the Terracotta Army.

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The data for April recorded a rain event on April 20 and April 26 in the controversial period. Further digging into the daily data showed light rain from 10am to 2pm on April 20 and light rain at 4am in April 26. The May data showed a rainy May 1day/night and early morning May 2.

A customized report for the dates from April 20 to April 29 can be found here and the screenshot is shown below.

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Method 2: Using Search Engine Cache

Another way to check the past weather is to get cache pages from search engines.

For example, the Chinese phrase "2011年4月21日铜川天气" stands for "2011 April 21st Tongchuan Weather". Copy and paste it into Baidu, and it will yield some search results. Since the links are mostly for weather forcast and clicking into them will typically take you to the future weather, the trick here is to click on the cache links instead, as shown in the next screenshot, to get the cached historical search results.

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Below is a screenshot for the first cache link, which shows sunny weather forecast through the whole week of April 21. Language skill is obviously not needed in understanding the content here.

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The information provided above is not meant to tell the investors which party lied to you - the company or the short sellers. But rather, I offered the investors methods to independently perform their own research on something that is verifiable from third parties - you don't need to rely on the company or the short sellers.

Same Trucks?

The short sellers also noted in the rebuttal that in one of the videos two tankers were used repeatedly to cheat the eyes of the investors.

IFRA’s video analyst notes that there appear to really be only 2 CWSF tankers in most of the videos. In the 4/23 14:08 camera 1 video these two tankers appear to drive in circles onto the scale. The 1st, 3rd, and 5th tankers are the same truck. The 2nd and 4th tankers are the same truck. Loop the video for yourself a couple times and you can easily verify this.

Well, I followed the advice and watched the video myself. I drew my own conclusion, but I am not drawing one for other investors. However, below shows the screenshots from the video and investors can help themselves.

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With the research I performed, I had an idea of who lied to the investors and I took my side, which is my disclosure.

Disclosure: I am short SCEI.