Adam Gefvert's Instablog A CFA Charterholder, Adam is an independent investment consultant and stock trader, with a lean towards biotech and technology stocks. He looks for mispriced and misunderstood securities and situations. Adam's goal on Seeking Alpha is to share various viewpoints and investment/trading ideas with other non-biased investors. He graduated from UC Santa Barbara and resides in New York City. You can follow him on twitter @shiningboy Adam Gefvert http://seekingalpha.com/author/adam-gefvert/instablog Regarding Silveira, Diamond Food's Late Director http://seekingalpha.com/instablog/745844-adam-gefvert/239778-regarding-silveira-diamond-food-s-late-director?source=feed 239778 By definition, a CEO is a leader, has self confidence, is optimistic, and is able to adjust to situations. In my opinion, there are only 3 reasons for a 61 year old CEO to commit suicide.

Read this article: http://bit.ly/sOvpah for a further description of why people commit suicide.

1. He has an untreatable, painful, illness and wants to end life quicker rather than prolong the agony.

2. A member or members of his family died and he can't go on without them.

3. His life is inevitably going to turn for the worse, and he would rather end it than try to adjust to a new, inferior lifestyle.

1 and 2 can be easily proven, and the fact that no one has mentioned them as reasons, leaves the 3rd one. Diamond Foods would do anything it could to stop a drop in the share price, so if it knew 1 or 2 is the reason, they would have said it. 

For #3, the most likely reason for having an inferior lifestyle would be to have to go to jail, or live a disgraced life outside of jail. Or maybe he had a gambling problem. Either way, it leads to a likelihood that he committed fraudulent acts with Diamond Foods. Another question is if he had a drug problem, but that also could be easily proven from an autopsy.]]> Sat, 26 Nov 2011 20:33:46 -0500 By definition, a CEO is a leader, has self confidence, is optimistic, and is able to adjust to situations. In my opinion, there are only 3 reasons for a 61 year old CEO to commit suicide.

Read this article: http://bit.ly/sOvpah for a further description of why people commit suicide.

1. He has an untreatable, painful, illness and wants to end life quicker rather than prolong the agony.

2. A member or members of his family died and he can't go on without them.

3. His life is inevitably going to turn for the worse, and he would rather end it than try to adjust to a new, inferior lifestyle.

1 and 2 can be easily proven, and the fact that no one has mentioned them as reasons, leaves the 3rd one. Diamond Foods would do anything it could to stop a drop in the share price, so if it knew 1 or 2 is the reason, they would have said it. 

For #3, the most likely reason for having an inferior lifestyle would be to have to go to jail, or live a disgraced life outside of jail. Or maybe he had a gambling problem. Either way, it leads to a likelihood that he committed fraudulent acts with Diamond Foods. Another question is if he had a drug problem, but that also could be easily proven from an autopsy.]]> Earnings Preview: Survey Says Pandora Has A Tough Road Ahead http://seekingalpha.com/instablog/745844-adam-gefvert/238320-earnings-preview-survey-says-pandora-has-a-tough-road-ahead?source=feed 238320 Many high flying stocks have come down to earth after earnings this quarter. The market seems to not have any tolerance for companies that sacrifice earnings for higher revenues and higher investment in its business.

Stocks that have come under fire for these practices after earnings are:

1. Amazon (AMZN): Down over 10% after earnings
2. Salesforce (CRM): Down over 10% after earnings.
3. Youku (YOKU): Down over 10% after earnings.
4. Open Table (OPEN): Down 8% after earnings.
5. Green Mountain (GMCR): Down over 20% after earnings.
6. Netflix (NFLX): Down over 30% after earnings.

It's because of this that I thought Pandora (P) might suffer the same fate since it's in the same category. Its earnings will be reported after the market closes on 11/22. I wanted to get deeper information on the company before I made any decision. I conducted a survey with random people in my social circle regarding Pandora without saying whether I was bullish or bearish on the stock. If anything, I acted like I was positive on Pandora. Soon enough, I found that there was a strong theme to the survey, and that was..."Spotify, Spotify, Spotify!"

The following are some responses from 14 people who live in the New York City area when asked if they use Pandora and like it (in no particular order).

1. 65 year old male: "I think Pandora is toast. I don't use it at all anymore, I moved to Spotify about a month ago. (Is it easy to use?) It's very easy. You know, it's (Spotify) not a new service, its been in Europe for many years, it's just new to the United States."

2. 30 year old male: "I think Pandora will do well. All the other internet radio sites say "it's like Pandora" when talking about their features. That means Pandora is the one to beat."

3. 25 year old female: "No, I usually just purchase and download songs to my ipod."

4. 37 year old male: "No, I generally don't listen to music."

5. 27 year old male: "I tell my friends to use Spotify. Pandora has been around for awhile and is now on its way out. There are plenty of other "create your own station" programs out now, Pandora doesn't do anything special."

6. 35 year old male who works at a radio station: I asked if he used Pandora, he said "yea". When I asked what he thinks is the best internet music program, he said without hesitation: "Spotify."

7. 26 year old male: "I pretty much only use Pandora. I can jailbreak your iPhone and that will give you free unlimited Pandora music with no ads."

8. 65 year old male: "No I don't use Pandora or internet radio. I don't personally know anyone who does, no one has mentioned Pandora to me. One thing I hear mentioned a lot on the radio station I listen to in my car is Spotify, that seems to be the next internet radio big thing."

9. 23 year old male: "I mostly listen to Spotify, but sometimes Pandora. I listen to Pandora about twice a week. I think Pandora's ads are pretty good, better than most online advertising."

10. 31 year old male: "I used to use Pandora, but because they repeat the same songs over and over, I use iHeartRadio when I workout. See" (and he showed me the app on his Android). When I asked him if he used the "create your own station" feature it has like Pandora, he said "no" he's never tried it.

11. 27 year old male: "I don't use it much, but my co-worker listens to it all day at work. Why do you ask, are you looking to start your own internet radio site? I know this guy who is creating one."

12. 32 year old male: "As a musician who records frequently and is actively a part of whats left of the recording industry I feel like I can answer these questions well. I never listen to pandora anymore but used to when it first came out and it was the only website of its kind.  I'd put it on when guests came over cause it kept streaming the tunes without me having to keep running back to the computer and youtubing something new.  Now with playlists that's not a problem though. I listen to music off youtube cause there's many versions of songs to choose from, great playlists already made up, it's free and if you want you can watch a visual with the song too. Bottom line is it's just not that hard to imitate what Pandora does.  Most of the people I know use Youtube, Grooveshark or Spotifi.

13. 35 year old female: "I don't use Pandora, I listen to my playlists on Youtube."

14. 67 year old female: "Hmmm, Pandora, yea I think I've heard of that. No, I don't use it or know anyone who has, but I'm older, you should probably ask my daughter. (But you use Netflix right?) Yes, I use Netflix and listen to the radio."

15. 31 year old male (a DJ): Pandora is super rad..not sure on the ratings. Other big name internet radio stations for Electronic Music are Digitally Imported dot com, Proton Radio dot com, Frisky Radio dot com, Pure dot fm, the radio stations listed however do not have the super functionality that Pandora has.  

From Employees Point Of View

Looking at Glassdoor.com, I saw some comments from Pandora current and previous employees. Now, granted most employees who post on Glassdoor are disgruntled, these comments are not the right kind of disgruntled for a shareholder. A shareholder would like to see: "too much pressure, pay too little, too many hours" kind of complaints. Not too many of the complaints are in that direction. Here are some tidbits from Glassdoor.com, Pandora company reviews:

Past employee (posted May 9, 2011): "Pandora has a non-existant company culture.There is also a general sense of dysfunction due to "growing pains." The company hasn't scaled key departments in a functional way that serves employees in the the ways that they should, specifically HR. They've also made some bad, incompetent hires in key roles."

Current employee (Oct 7, 2011): "The other review mentioning that there is no company culture is spot on. If there used to be one, its gone. Upper management is indeed disconnected, and many of the upper management staff are engaged in full-on turf wars that are hurting the company's growth and employee moral.
If Pandora lasts through 2013 without going out of business, getting acquired, or completely changing their business model, I'll be astounded."

Past employee (Sept 11, 2011): "Upper management and the sales organization is completely unorganized. The company has no solid long-term vision and lacks in initiatives to get to profiitbility. Some of the maagement is just rude. They just want to be the cool company rather than be professionals and have drive to get to profibility."

The bottom line is that these employees feel that Pandora isn't organized and isn't driven by profits. This isn't a good thing for a company, and the stock market currently has no tolerance for companies that don't respect the bottom line. Dividend stocks are the most popular now. During a bull market like the dot com boom investors didn't care about profits because they were looking into getting rich in the future. Now, with investors struggling, they are looking to find returns in the now.

Ad Quality

Another aspect an investor needs to look at is quality of ads. Pandora must pay a tenth of a penny in royalties for every song played. Office workers who spend all day working and listening to Pandora might not be the best ad listeners because they aren't giving them their full attention. They're probably tuning the ads out.  Also, the vast majority of Pandora's audience is between the ages of 15 and 35. That demographic has less spending money than the older crowd.

Pandora's CEO, Joe Kennedy, recently said he wants "fair share" of radio ad dollars. Based on what was sold last quarter, Pandora should get double the ad dollars compared to the rest of radio advertising based on the amount of listening time. What I think is missing in the puzzle, is talk radio has a personal connection to its listening audience, unlike simply the stream of music that Pandora plays. Also, talk radio is someone talking, not singing, so it's easier for a listener to transition to a regular ad with more talking. What's interesting is Pandora said in its blog during its Milwaukee Town Hall meeting, is it's trying to get its customers to interact with the ads and show their favorite ads, bookmark them, etc. This is an attempt to try and get them to respond to the ads more, I'm not sure if Pandora is having wishful thinking or being more innovative here.

Verdict

After my surveys and deep analysis, I have come to the conclusion that Pandora deserves a short position. This isn't a screaming short, because it is possible that internet radio will continue to grow and Pandora will reap the benefits being the leader in the space. Regardless of whether Pandora has a good earnings or not, long term it isn't making enough revenue and profits to justify an over $2 billion market cap. To do that, it must expand internationally, but that will be expensive. Netflix (NFLX) is attempting to go international and is facing many challenges and heavy costs in doing so.

Furthermore, it's predictable that P will take a dive immediately after the lockup period ends on December 12th. LinkedIn shareholders just recently went through some pain after its lockup period ended. So whether Pandora beats on earnings or not, there's still a threat there.

Disclosure: I am short P.
]]> Mon, 21 Nov 2011 12:08:32 -0500 Many high flying stocks have come down to earth after earnings this quarter. The market seems to not have any tolerance for companies that sacrifice earnings for higher revenues and higher investment in its business.

Stocks that have come under fire for these practices after earnings are:

1. Amazon (AMZN): Down over 10% after earnings
2. Salesforce (CRM): Down over 10% after earnings.
3. Youku (YOKU): Down over 10% after earnings.
4. Open Table (OPEN): Down 8% after earnings.
5. Green Mountain (GMCR): Down over 20% after earnings.
6. Netflix (NFLX): Down over 30% after earnings.

It's because of this that I thought Pandora (P) might suffer the same fate since it's in the same category. Its earnings will be reported after the market closes on 11/22. I wanted to get deeper information on the company before I made any decision. I conducted a survey with random people in my social circle regarding Pandora without saying whether I was bullish or bearish on the stock. If anything, I acted like I was positive on Pandora. Soon enough, I found that there was a strong theme to the survey, and that was..."Spotify, Spotify, Spotify!"

The following are some responses from 14 people who live in the New York City area when asked if they use Pandora and like it (in no particular order).

1. 65 year old male: "I think Pandora is toast. I don't use it at all anymore, I moved to Spotify about a month ago. (Is it easy to use?) It's very easy. You know, it's (Spotify) not a new service, its been in Europe for many years, it's just new to the United States."

2. 30 year old male: "I think Pandora will do well. All the other internet radio sites say "it's like Pandora" when talking about their features. That means Pandora is the one to beat."

3. 25 year old female: "No, I usually just purchase and download songs to my ipod."

4. 37 year old male: "No, I generally don't listen to music."

5. 27 year old male: "I tell my friends to use Spotify. Pandora has been around for awhile and is now on its way out. There are plenty of other "create your own station" programs out now, Pandora doesn't do anything special."

6. 35 year old male who works at a radio station: I asked if he used Pandora, he said "yea". When I asked what he thinks is the best internet music program, he said without hesitation: "Spotify."

7. 26 year old male: "I pretty much only use Pandora. I can jailbreak your iPhone and that will give you free unlimited Pandora music with no ads."

8. 65 year old male: "No I don't use Pandora or internet radio. I don't personally know anyone who does, no one has mentioned Pandora to me. One thing I hear mentioned a lot on the radio station I listen to in my car is Spotify, that seems to be the next internet radio big thing."

9. 23 year old male: "I mostly listen to Spotify, but sometimes Pandora. I listen to Pandora about twice a week. I think Pandora's ads are pretty good, better than most online advertising."

10. 31 year old male: "I used to use Pandora, but because they repeat the same songs over and over, I use iHeartRadio when I workout. See" (and he showed me the app on his Android). When I asked him if he used the "create your own station" feature it has like Pandora, he said "no" he's never tried it.

11. 27 year old male: "I don't use it much, but my co-worker listens to it all day at work. Why do you ask, are you looking to start your own internet radio site? I know this guy who is creating one."

12. 32 year old male: "As a musician who records frequently and is actively a part of whats left of the recording industry I feel like I can answer these questions well. I never listen to pandora anymore but used to when it first came out and it was the only website of its kind.  I'd put it on when guests came over cause it kept streaming the tunes without me having to keep running back to the computer and youtubing something new.  Now with playlists that's not a problem though. I listen to music off youtube cause there's many versions of songs to choose from, great playlists already made up, it's free and if you want you can watch a visual with the song too. Bottom line is it's just not that hard to imitate what Pandora does.  Most of the people I know use Youtube, Grooveshark or Spotifi.

13. 35 year old female: "I don't use Pandora, I listen to my playlists on Youtube."

14. 67 year old female: "Hmmm, Pandora, yea I think I've heard of that. No, I don't use it or know anyone who has, but I'm older, you should probably ask my daughter. (But you use Netflix right?) Yes, I use Netflix and listen to the radio."

15. 31 year old male (a DJ): Pandora is super rad..not sure on the ratings. Other big name internet radio stations for Electronic Music are Digitally Imported dot com, Proton Radio dot com, Frisky Radio dot com, Pure dot fm, the radio stations listed however do not have the super functionality that Pandora has.  

From Employees Point Of View

Looking at Glassdoor.com, I saw some comments from Pandora current and previous employees. Now, granted most employees who post on Glassdoor are disgruntled, these comments are not the right kind of disgruntled for a shareholder. A shareholder would like to see: "too much pressure, pay too little, too many hours" kind of complaints. Not too many of the complaints are in that direction. Here are some tidbits from Glassdoor.com, Pandora company reviews:

Past employee (posted May 9, 2011): "Pandora has a non-existant company culture.There is also a general sense of dysfunction due to "growing pains." The company hasn't scaled key departments in a functional way that serves employees in the the ways that they should, specifically HR. They've also made some bad, incompetent hires in key roles."

Current employee (Oct 7, 2011): "The other review mentioning that there is no company culture is spot on. If there used to be one, its gone. Upper management is indeed disconnected, and many of the upper management staff are engaged in full-on turf wars that are hurting the company's growth and employee moral.
If Pandora lasts through 2013 without going out of business, getting acquired, or completely changing their business model, I'll be astounded."

Past employee (Sept 11, 2011): "Upper management and the sales organization is completely unorganized. The company has no solid long-term vision and lacks in initiatives to get to profiitbility. Some of the maagement is just rude. They just want to be the cool company rather than be professionals and have drive to get to profibility."

The bottom line is that these employees feel that Pandora isn't organized and isn't driven by profits. This isn't a good thing for a company, and the stock market currently has no tolerance for companies that don't respect the bottom line. Dividend stocks are the most popular now. During a bull market like the dot com boom investors didn't care about profits because they were looking into getting rich in the future. Now, with investors struggling, they are looking to find returns in the now.

Ad Quality

Another aspect an investor needs to look at is quality of ads. Pandora must pay a tenth of a penny in royalties for every song played. Office workers who spend all day working and listening to Pandora might not be the best ad listeners because they aren't giving them their full attention. They're probably tuning the ads out.  Also, the vast majority of Pandora's audience is between the ages of 15 and 35. That demographic has less spending money than the older crowd.

Pandora's CEO, Joe Kennedy, recently said he wants "fair share" of radio ad dollars. Based on what was sold last quarter, Pandora should get double the ad dollars compared to the rest of radio advertising based on the amount of listening time. What I think is missing in the puzzle, is talk radio has a personal connection to its listening audience, unlike simply the stream of music that Pandora plays. Also, talk radio is someone talking, not singing, so it's easier for a listener to transition to a regular ad with more talking. What's interesting is Pandora said in its blog during its Milwaukee Town Hall meeting, is it's trying to get its customers to interact with the ads and show their favorite ads, bookmark them, etc. This is an attempt to try and get them to respond to the ads more, I'm not sure if Pandora is having wishful thinking or being more innovative here.

Verdict

After my surveys and deep analysis, I have come to the conclusion that Pandora deserves a short position. This isn't a screaming short, because it is possible that internet radio will continue to grow and Pandora will reap the benefits being the leader in the space. Regardless of whether Pandora has a good earnings or not, long term it isn't making enough revenue and profits to justify an over $2 billion market cap. To do that, it must expand internationally, but that will be expensive. Netflix (NFLX) is attempting to go international and is facing many challenges and heavy costs in doing so.

Furthermore, it's predictable that P will take a dive immediately after the lockup period ends on December 12th. LinkedIn shareholders just recently went through some pain after its lockup period ended. So whether Pandora beats on earnings or not, there's still a threat there.

Disclosure: I am short P.
]]> Jumped the gun with NFLX, made a good trade with AAPL http://seekingalpha.com/instablog/745844-adam-gefvert/225311-jumped-the-gun-with-nflx-made-a-good-trade-with-aapl?source=feed 225311 I bought AAPL in the premarket at 377, and NFLX at 129.80. AAPL kept going up, NFLX pulled back a little. The difference here was in the news affecting earnings. With AAPL, there was record iPhone 4S sales, that news directly affects earnings positively in the near term.

With NFLX, the news was they're getting rid of Qwikster. This may or may not affect sales in the medium term, so it shouldn't have as powerful an effect on the stock. Always before making a news-based trade ask yourself: "Will this news itself directly affect earnings in a big way?" If the answer is "no" then look towards shorting or not buying, if the answer is "yes" then look towards buying or not shorting. Furthermore, it isn't even a surety that this is good news! Maybe NFLX would be better off with Qwikster? So in analyzing the news itself, it was a bad play on my part. Based on this hindsight, NFLX was a good shorting opportunity, not a buying opp.

]]> Mon, 10 Oct 2011 14:03:13 -0400 I bought AAPL in the premarket at 377, and NFLX at 129.80. AAPL kept going up, NFLX pulled back a little. The difference here was in the news affecting earnings. With AAPL, there was record iPhone 4S sales, that news directly affects earnings positively in the near term.

With NFLX, the news was they're getting rid of Qwikster. This may or may not affect sales in the medium term, so it shouldn't have as powerful an effect on the stock. Always before making a news-based trade ask yourself: "Will this news itself directly affect earnings in a big way?" If the answer is "no" then look towards shorting or not buying, if the answer is "yes" then look towards buying or not shorting. Furthermore, it isn't even a surety that this is good news! Maybe NFLX would be better off with Qwikster? So in analyzing the news itself, it was a bad play on my part. Based on this hindsight, NFLX was a good shorting opportunity, not a buying opp.

]]> David Morgan Responds To My SVM bearish article http://seekingalpha.com/instablog/745844-adam-gefvert/218761-david-morgan-responds-to-my-svm-bearish-article?source=feed 218761 Below is a letter from David Morgan to his subscribers regarding my Silvercorp bearish article. In the article, I stated that Morgan was an SVM bull, but out of all the analysts on the Jim Pulplava show, he showed the most reservation. He did mention that one should own a minimum of 6 silverminers to diversify from risk.

Unless one does deep due diligence on a company, like Al Little has on SVM, one shouldn't have a strong opinion one way or the other. I do agree that Morgan seems like an intelligent guy who knows a lot about silver.

Dear (first name),

The questions surrounding Silvercorp continues. A article on
seekingalpha
titled: Silvercorp's Management Speaks In Exaggerations And Half-Truths
is
available here:

http://seekingalpha.com/article/294683-silvercorp-s-management-speaks-in-exaggerations-and-half-truths?source=yahoo

I do not know Adam Gefvert and his article was brought to my attention
within the past couple of hours. His take on me is basically correct,
but
let me state for the record I am not 100% certain that all is well with
Silvercorp. Everyone needs to make their own decision regarding this
company. However, I too can give my opinion about Mr. Gefvert stating
that
yes I am bullish but clearly he is bearish as he states...

In conclusion, I (Adam Gefvert) think the stock will likely go down
further, with a very small chance of appreciation. The only chance I see
of
it going higher is if silver makes another run towards $50 soon. SVM
could
possibly go under $4, but shorting here and covering somewhere just
below
$6 would be the more conservative play.

This is what the company had to state yesterday...

VANCOUVER - September 19, 2011 - Silvercorp Metals Inc., a Canadian
based
company, ("Silvercorp" or the "Company"), following yet another false
and
misleading internet posting today by the fictitious and anonymous Alfred
Little, posted an open letter today to its shareholders that addresses
recent allegations made about the Company. "All of the allegations made
against Silvercorp have been anonymous. All of the allegations are
baseless
and designed to be manipulative", said Rui Feng, Chairman of Silvercorp.

"While new attacks will keep coming, as is the past practice within the
short and distort industry, with this open letter we are turning the
corner
and putting these allegations behind us", said Rui Feng.

. . .  . . .  . . .  . . .  . . .  . . .  . . .  . . .  . . .

Dear Shareholders,

Over the last two weeks, Silvercorp has been attacked by a group of
well-organized and well planned illegal short sellers trying to profit
by
manipulating Silvercorp's share price with false and selective
statements,
fabrications, and rumors.

On September 1, 2011, the Company was forwarded a copy of an anonymous
letter ("Anonymous Letter V1") dated August 29, 2011, maliciously
alleging
a "Potential $1.3 Billion Accounting Fraud at Silvercorp".  On September
13, 2011, a second set of anonymous allegations against the Company was
published on the internet "alfredlittle.com" ("Alfred Little").  On
September 14, 2011, the Anonymous Letter V1 writers ("Anonymous
Shorters")
posted their much shorter and tone-downed version on the internet
"Chinastockwatch.com" ("Anonymous Letter V2").  It was also couriered to
Silvercorp on September 15, 2011.

Full article here:

http://silvercorpmetals.com/news/2011/index.php?&content_id=318

At this point there is still much emotion about this company and exactly
what the facts truly remain to be determined. As a New York Stock
Exchange
company the repercussions are grave if anything is substantially
misrepresented.  This does not guarantee that all statements put out by
the
company are to be taken at face value, nonetheless it is the most
prudent
way to access the situation currently.

We will continue to monitor the situation as they develop.

The Silver Investor

PS: On another note, Today a PR came out from Prophecy Platinum Corp
(NKL.v), restating the 43-101 PR. After reading it through it seems that
only minor changes. The mineral resource is the same as it was first
reported.


Information contained herein has been obtained from sources believed to
be
reliable, but there is no guarantee as to completeness or accuracy.
Because
individual investment objectives vary, this Summary should not be
construed
as advice to meet the particular needs of the reader. Any opinions
expressed herein are statements of our judgment as of this date and are
subject to change without notice. Any action taken as a result of
reading
this independent market research is solely the responsibility of the
reader. Stone Investment Group is not and does not profess to be a
professional investment advisor, and strongly encourages all readers to
consult with their own personal financial advisors, attorneys, and
accountants before making any investment decision. Stone Investment
Group
and/or independent consultants or members of their families may have a
position in the securities mentioned. Mr. Morgan does consult on a paid
basis both with private investors and various companies. Investing and
speculation are inherently risky and should not be undertaken without
professional advice. By your act of reading this independent market
research letter, you fully and explicitly agree that Stone Investment
Group
will not be held liable or responsible for any decisions you make
regarding
any information discussed herein.

]]> Wed, 21 Sep 2011 08:29:17 -0400 Below is a letter from David Morgan to his subscribers regarding my Silvercorp bearish article. In the article, I stated that Morgan was an SVM bull, but out of all the analysts on the Jim Pulplava show, he showed the most reservation. He did mention that one should own a minimum of 6 silverminers to diversify from risk.

Unless one does deep due diligence on a company, like Al Little has on SVM, one shouldn't have a strong opinion one way or the other. I do agree that Morgan seems like an intelligent guy who knows a lot about silver.

Dear (first name),

The questions surrounding Silvercorp continues. A article on
seekingalpha
titled: Silvercorp's Management Speaks In Exaggerations And Half-Truths
is
available here:

http://seekingalpha.com/article/294683-silvercorp-s-management-speaks-in-exaggerations-and-half-truths?source=yahoo

I do not know Adam Gefvert and his article was brought to my attention
within the past couple of hours. His take on me is basically correct,
but
let me state for the record I am not 100% certain that all is well with
Silvercorp. Everyone needs to make their own decision regarding this
company. However, I too can give my opinion about Mr. Gefvert stating
that
yes I am bullish but clearly he is bearish as he states...

In conclusion, I (Adam Gefvert) think the stock will likely go down
further, with a very small chance of appreciation. The only chance I see
of
it going higher is if silver makes another run towards $50 soon. SVM
could
possibly go under $4, but shorting here and covering somewhere just
below
$6 would be the more conservative play.

This is what the company had to state yesterday...

VANCOUVER - September 19, 2011 - Silvercorp Metals Inc., a Canadian
based
company, ("Silvercorp" or the "Company"), following yet another false
and
misleading internet posting today by the fictitious and anonymous Alfred
Little, posted an open letter today to its shareholders that addresses
recent allegations made about the Company. "All of the allegations made
against Silvercorp have been anonymous. All of the allegations are
baseless
and designed to be manipulative", said Rui Feng, Chairman of Silvercorp.

"While new attacks will keep coming, as is the past practice within the
short and distort industry, with this open letter we are turning the
corner
and putting these allegations behind us", said Rui Feng.

. . .  . . .  . . .  . . .  . . .  . . .  . . .  . . .  . . .

Dear Shareholders,

Over the last two weeks, Silvercorp has been attacked by a group of
well-organized and well planned illegal short sellers trying to profit
by
manipulating Silvercorp's share price with false and selective
statements,
fabrications, and rumors.

On September 1, 2011, the Company was forwarded a copy of an anonymous
letter ("Anonymous Letter V1") dated August 29, 2011, maliciously
alleging
a "Potential $1.3 Billion Accounting Fraud at Silvercorp".  On September
13, 2011, a second set of anonymous allegations against the Company was
published on the internet "alfredlittle.com" ("Alfred Little").  On
September 14, 2011, the Anonymous Letter V1 writers ("Anonymous
Shorters")
posted their much shorter and tone-downed version on the internet
"Chinastockwatch.com" ("Anonymous Letter V2").  It was also couriered to
Silvercorp on September 15, 2011.

Full article here:

http://silvercorpmetals.com/news/2011/index.php?&content_id=318

At this point there is still much emotion about this company and exactly
what the facts truly remain to be determined. As a New York Stock
Exchange
company the repercussions are grave if anything is substantially
misrepresented.  This does not guarantee that all statements put out by
the
company are to be taken at face value, nonetheless it is the most
prudent
way to access the situation currently.

We will continue to monitor the situation as they develop.

The Silver Investor

PS: On another note, Today a PR came out from Prophecy Platinum Corp
(NKL.v), restating the 43-101 PR. After reading it through it seems that
only minor changes. The mineral resource is the same as it was first
reported.


Information contained herein has been obtained from sources believed to
be
reliable, but there is no guarantee as to completeness or accuracy.
Because
individual investment objectives vary, this Summary should not be
construed
as advice to meet the particular needs of the reader. Any opinions
expressed herein are statements of our judgment as of this date and are
subject to change without notice. Any action taken as a result of
reading
this independent market research is solely the responsibility of the
reader. Stone Investment Group is not and does not profess to be a
professional investment advisor, and strongly encourages all readers to
consult with their own personal financial advisors, attorneys, and
accountants before making any investment decision. Stone Investment
Group
and/or independent consultants or members of their families may have a
position in the securities mentioned. Mr. Morgan does consult on a paid
basis both with private investors and various companies. Investing and
speculation are inherently risky and should not be undertaken without
professional advice. By your act of reading this independent market
research letter, you fully and explicitly agree that Stone Investment
Group
will not be held liable or responsible for any decisions you make
regarding
any information discussed herein.

]]> The key sign that could've saved the TSTY shorts http://seekingalpha.com/instablog/745844-adam-gefvert/163604-the-key-sign-that-could-ve-saved-the-tsty-shorts?source=feed 163604
The key paragraph which tells volumes of what the company is up to is in their NT 10-K here. Look at the second paragraph of Narative III :

The management of Tasty Baking Company (the “Company”) has determined that the Company is unable to file within the prescribed time period, without unreasonable effort and expense, its Annual Report on Form 10-K for the period ended December 25, 2010 because management needs additional time to finalize its financial statements and related disclosures while it simultaneously pursues various strategic and financial options to address the liquidity issues facing the Company, as summarized below.

This paragraph tries to hide it, but it speaks volumes. What it says, is while the company's management is going through all the paperwork for a buyout, it doesn't have time to file on the due date.

What I did is underestimate management. Sure, they really screwed up with managing the company, but they're not the 3 Stooges. They obviously had to accomplish a lot to get the positions they had at a company that has gross revenues of $280 million a year. For them to not come up with some kind of deal after putting out an NT 10-K would look really bad. The management already has a bunch of people mad at them and calling them failures, like the city of Pennsylvania, its creditors, and its investors. Like everyone, the TSTY management cares about their reputation and they don't want to look like failures. They would look either incompetent or lazy if they aren't able to put together their 10-K on time and then not see any results anyways.

That paragraph may not guarantee that a buyer is in the works, but one could assume that at least something was cooking. Maybe a PIK loan or some kind of reprieve. Either way, it would've been construed as good news and the stock would go up regardless of what it was. Because of that, a short covering and maybe a buying opportunity arose.

The thing with the NT 10-K that scared all the investors and made it go from $2.20 to $1.50 in a couple days, was the last sentence in Narative III:

"The Company anticipates that the Company’s Form 10-K for fiscal year ended December 25, 2010 will include an explanatory paragraph from the Company’s independent registered public accounting firm expressing substantial doubt about the Company’s ability to continue as a going concern."

The words "expressing substantial doubt about the Company’s ability to continue as a going concern" from an independent accountant sends chills down the spine of investors. They're buzz words for impending doom.

Then the stock managed to pop back up to $2.00 in the next day or two. I wonder if investment managers read into that second paragraph and took advantage? Possibly.

As for me, I was looking through rose colored glasses and although I made other mistakes too, that was a big one. I had so many facts and heard so many people dog TSTY, that I was overly sure they were going bankrupt.  It's a learning experience and I will also try to keep an objective view on my stocks from now on so I don't miss important signs like the second paragraph again.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
]]> Tue, 12 Apr 2011 13:24:07 -0400
The key paragraph which tells volumes of what the company is up to is in their NT 10-K here. Look at the second paragraph of Narative III :

The management of Tasty Baking Company (the “Company”) has determined that the Company is unable to file within the prescribed time period, without unreasonable effort and expense, its Annual Report on Form 10-K for the period ended December 25, 2010 because management needs additional time to finalize its financial statements and related disclosures while it simultaneously pursues various strategic and financial options to address the liquidity issues facing the Company, as summarized below.

This paragraph tries to hide it, but it speaks volumes. What it says, is while the company's management is going through all the paperwork for a buyout, it doesn't have time to file on the due date.

What I did is underestimate management. Sure, they really screwed up with managing the company, but they're not the 3 Stooges. They obviously had to accomplish a lot to get the positions they had at a company that has gross revenues of $280 million a year. For them to not come up with some kind of deal after putting out an NT 10-K would look really bad. The management already has a bunch of people mad at them and calling them failures, like the city of Pennsylvania, its creditors, and its investors. Like everyone, the TSTY management cares about their reputation and they don't want to look like failures. They would look either incompetent or lazy if they aren't able to put together their 10-K on time and then not see any results anyways.

That paragraph may not guarantee that a buyer is in the works, but one could assume that at least something was cooking. Maybe a PIK loan or some kind of reprieve. Either way, it would've been construed as good news and the stock would go up regardless of what it was. Because of that, a short covering and maybe a buying opportunity arose.

The thing with the NT 10-K that scared all the investors and made it go from $2.20 to $1.50 in a couple days, was the last sentence in Narative III:

"The Company anticipates that the Company’s Form 10-K for fiscal year ended December 25, 2010 will include an explanatory paragraph from the Company’s independent registered public accounting firm expressing substantial doubt about the Company’s ability to continue as a going concern."

The words "expressing substantial doubt about the Company’s ability to continue as a going concern" from an independent accountant sends chills down the spine of investors. They're buzz words for impending doom.

Then the stock managed to pop back up to $2.00 in the next day or two. I wonder if investment managers read into that second paragraph and took advantage? Possibly.

As for me, I was looking through rose colored glasses and although I made other mistakes too, that was a big one. I had so many facts and heard so many people dog TSTY, that I was overly sure they were going bankrupt.  It's a learning experience and I will also try to keep an objective view on my stocks from now on so I don't miss important signs like the second paragraph again.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
]]> tsty Comparing TSTY to Sees Candies http://seekingalpha.com/instablog/745844-adam-gefvert/160328-comparing-tsty-to-sees-candies?source=feed 160328 Buffet bought Sees Candies for 25 million when sales were 30 million and pretax earnings was about 4 million.

Compare that to Tasty Baking. Sales is 170 million, and total liabilities is about 200 million. EBIT is about exactly 0. On top of that, management is desperate to sell and there are lots of improvements needed in the company.

Definitely not a slam dunk. There is still a risk of a pre-bankruptcy buyout, but is definitely looking like an attractive short at these levels.

]]> Sun, 03 Apr 2011 09:55:46 -0400 Buffet bought Sees Candies for 25 million when sales were 30 million and pretax earnings was about 4 million.

Compare that to Tasty Baking. Sales is 170 million, and total liabilities is about 200 million. EBIT is about exactly 0. On top of that, management is desperate to sell and there are lots of improvements needed in the company.

Definitely not a slam dunk. There is still a risk of a pre-bankruptcy buyout, but is definitely looking like an attractive short at these levels.

]]> tsty