Seeking Alpha
Value, growth, long-term horizon, medium-term horizon
Profile| Send Message|
( followers)  

The Securities and Exchange Commission cautioned investors on June 9 about buying stakes in Chinese-based companies when they gain listings through reverse mergers, avoiding the regulatory and investor scrutiny of initial public offerings.

The following companies are based in China and gained listings on U.S. exchanges after conducting reverse mergers, in which a publicly traded shell corporation is purchased, according to data published by Bloomberg.

To create this list, we started with about 50 Chinese reverse mergers. We then collected data on short seller trends, and identified 5 companies that have seen a sharp increase in shares shorted over the last month.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.


Short sellers seem to think these reverse mergers are in trouble--do you agree?

1. Hollysys Automation Technologies, Ltd (NASDAQ:HOLI): Industrial Electrical Equipment Industry. Over the last month, shares shorted increased from 4.78M to 5.85M, a change that is equivalent to 4.68% of the 22.88M share float.

2. Harbin Electric, Inc. (NASDAQ:HRBN):
Industrial Electrical Equipment Industry. Over the last month, shares shorted increased from 7.52M to 8.30M, a change that is equivalent to 4.64% of the 16.80M share float.

3. Cogo Group, Inc. (COGO): Diversified Electronics Industry. Over the last month, shares shorted increased from 670.80K to 1.29M, a change that is equivalent to 3.06% of the 20.25M share float.

4. China Information Technology, Inc. (NASDAQ:CNIT): Application Software Industry. Over the last month, shares shorted increased from 1.22M to 1.78M, a change that is equivalent to 2.22% of the 25.28M share float.

5. Zhongpin, Inc. (NASDAQ:HOGS): Food Industry. Over the last month, shares shorted increased from 4.12M to 4.41M, a change that is equivalent to 1.02% of the 28.30M share float.

(Short seller data sourced from Yahoo Finance)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Top 5 Chinese Reverse Mergers Being Targeted by Short Sellers