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Akram's Razor

 
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  • NQ Mobile: A Neutral Observer's Take [View article]
    Good to know. My track record as an author speaks for itself. I'm honest, thorough, and objective. I have over 2k people (ceo's, fellow hedge fund managers, industry experts etc)who have been reading my very regular market musings for nearly five years now. I have at times covered just about anything you can think of investing wise. So, i understand the imortance of integrity.

    A better topic of conversation is why are you so defensive of this name? I have learned to walk away from stocks short or long when things arise that call into question my thesis. Its probably the best lesson in investing. As the other 99%, plays stubborn. This mgmt team doesn't give a damn about you. So, what you should be asking yourself is do you actually comprehend the issues that are staring you in the face? Do you think trying to shoot down the very straightforward questions i have asked will somehow help the stock bounce back? I didn't dig this up, and everyday there is more and more coming to light on this. It seems this has attracted just about anyone who has ever shorted a chinese fraud. They are most likely amazed that this one slipped through the cracks.
    Nov 8 12:20 PM | 2 Likes Like |Link to Comment
  • NQ Mobile: A Neutral Observer's Take [View article]
    Because when I own a huge stake in a floated company siphoning off a few mil in cash is nothing close to what I will get from my stock quintupling if i can inflate my growth rate. But yes, you can't rule out that ydt was used to siphon out some cash. However, the discrepancies between cash,ap, and ar at both companies would seem to indicate that it is more likely were simply recycling the loan back to nq as revenue
    Nov 8 10:30 AM | Likes Like |Link to Comment
  • NQ Mobile: A Neutral Observer's Take [View article]
    I am still not short if that is what you want to know. But I will buy some nominal puts today just so that i don't feel like a fool for wasting my time if this gets halted. I have no doubt there are overstatements here now...question is how signficant. There is no other plausible explanation for the dscrepencies, structure, relantionships, etc.
    Nov 8 10:05 AM | 1 Like Like |Link to Comment
  • NQ Mobile: A Neutral Observer's Take [View article]
    Sorry, but based on your last two comments I find that hard to believe. These guys have been cooking the books, you have to be blind analyst not to be highly suspicious here. As a said before, I could care less about whether xu was a consultant/employee. And whether NQ muddled that. I was more interested in the relationship between her and NQ's co-founder zhou, and that is now fully clear. She is a liutenant not a friend/fellow entrepeneur. It is clear YDT was acquired at his behest to serve his plan for NQ. At this point, I wouldn't even bother asking xu anything or trying to explain it away. She is definitely in deny/cover up mode, and probably slowly coming to grips with the fact that she will be made the fall person.

    I also see no way based on all that has been put out there that the regulators don't step in here. All this doesnt seem to concern you even though it appears you have staked your entire firms reputation on this one stock. Which based on my experience in this biz makes little sense. If you have dealt with investors (presumably you have client money in nq), you know how they get at times like these. No matter how well you have done for them in the past they will not be forgiving. I've been there a few times with people who have done real well off of me. So, being right might not even matter if they end up concluding this is too risky for their money regardless the outcome. Because at this point you are in a binary stock with skewed downside risk (delisted/zero vs a gradual recovery over time to $20+), and i don't know many investors, even the most risk tolerant, who want that to be more than 5%-10% max of their exposure. And even then at least have the immediate upside being far greater than the downside which is not the case here.
    Nov 8 03:55 AM | 1 Like Like |Link to Comment
  • NQ Mobile: A Neutral Observer's Take [View article]
    Right up until this point I wanted very hard to believe you guys. Now I am much more convinced you are simply part of a promote. That or a small chance that you have simply been brainwashed by spending to much time with these folks and touting the stock to your investors, and are consequently having a very hard time objectively analyzing this position. Your information simply doesn't compute.

    NQ IR has ZHOU listed as CEO and Founder of Beijing Polywin where it turns out Xu was his gm. This is what was conveniently omitted and which you seem to have chosen to ignore in two straight comments. Xu's resume jumps from Wanxiang to NQ. Zhou was not VP of BPT if you are asserting that BPT and Wanxiang are the same company....

    Xu acquired YDT while working at BPT. Furthermore, 9h was founded solely by Zhou in nov 2007. Xu is not even in the picture until 2009.

    And what is this star employee turning around?

    YDT has appeared to do nothing up until recently but collect money for NQ. Is the fact that your former boss founded a company that will generate $20 mil in annual billing for you evidence of a turnaround after he also provided you with the cash to acquire your company?

    Alos, YDT is co located with 9h, has a handful of employees, and has a related party with an SP license as its best customer. Better yet they seem to provide them interest free loans despite no discernable need for such loans to run said business.Yet all this doesn't seem to concern you a bit.

    I am going to take a position in nq tmrw simply to have skin in this game because I now have a very hard time believing that at some point there were not material overstatments of nq revenue courtesy of fake billing via YDT. I also think the balance sheet of ydt/nq cannot be reconciled in anyway whether you agree with their net revenue reporting assertion or not. Where is the cash that should be held at YDT as it passes through on its way to nq?

    Also, setting the facts of this whole story aside, I can't for the life of me reconcile the interest free loan.Then when i stick that in with what is being asserted by ydt/nq it doesn't compute at all. Xu describes this as a low expense simple business that has favorable payment terms. Then why does it need loans? Let alone $5mil which is 2x 2012 reported net revenue?

    You amazingly seem to think all of this can be explained away in two seconds and is nothing to worry about or worth just ignoring. When in reality looking at the payables, receivables, and cash balances along with the loans would lead to almost no other conclusion then that the loan is being recycled as revenue for nq.

    I also think that all of this explains NQ's desire to earn higher yields in term deposits on its cash. It would appear the goal here was to plug whatever hole was created along the way with the proceeds from investment income on cash. That makes a lot more sense to me then what MW's was asserting about it not existing, and reconciles the bizarre 100% level 2 outlier that caused so much initial controversy.

    This would also seem to compute with an overall thesis that this company is now going fully legit after having no more need for partially faking it, and has been making moves to provide this asthetic. Problem is it seems getting over these past indiscretions is going to be quite a challenge.

    If i am wrong, I am happy to write off some options. And if i am right i will at least feel this whole thing contirbuted to my ongoing and ever evolving experience of short-selling even if it doesn't really impact the bottom line.
    Nov 7 08:10 PM | 2 Likes Like |Link to Comment
  • NQ Mobile: A Neutral Observer's Take [View article]
    Good to see you completely ignored the very relevant questions raised with regards to ms. xu. So, she in fact concealed that she worked for zhou as an employee in an SP. She is clearly not some amazingly successful businesswoman, but rather a former lieutanent of zhou who has become the face of related entities. If this was in fact not the case, I really would like to know why she would not share this history when this controversy started.

    I still have no position, but honestly i'd like to know how I am supposed to believe that there were no impropreities here. I gave you the benefit of the doubt, but honestly if after all this research you missed this glaring fact; I dont have much to say.
    Nov 7 01:31 PM | 1 Like Like |Link to Comment
  • NQ Mobile: A Neutral Observer's Take [View article]
    Did that answer my question?
    Nov 7 10:15 AM | Likes Like |Link to Comment
  • NQ Mobile: A Neutral Observer's Take [View article]
    So, based on this new data do you still say that 'related' has nothing to do with it. If 9h was actually founded by zhou and then renamed and transferred to xu doesn't that jump out at you. Also, the fact that xu worked at an SP owned by zhou before nq which did not come to light until recently, and that she now owns an sp that has been critical to nq, doesn't catch your eye. I mean why was this not disclosed before? She seems to have had a good reason to not share this history?

    And why does a company that seeks to maximize yields via term deposits lend cash interest free to a carrier biller with virtually no overhead and favorable payables to receivables spreads?
    Nov 7 09:29 AM | 1 Like Like |Link to Comment
  • If You Believe In Yidatong (NQ's Largest Purported Revenue Source), You'll Believe In Santa Claus [View article]
    So the convert counts as cash but not as a liability. It's more like 115mil cash vs 600ml cap
    Nov 6 04:06 PM | 1 Like Like |Link to Comment
  • If You Believe In Yidatong (NQ's Largest Purported Revenue Source), You'll Believe In Santa Claus [View article]
    NQ Liabilities....?????
    Nov 6 03:25 PM | Likes Like |Link to Comment
  • NQ Mobile: A Neutral Observer's Take [View article]
    This is about the court of public opinion that is the market. There are plenty of reputable independent parties that do this which would be more than willing to provide their services. Just like all the red flags....not conclusive....but at least in this case would seriously reverse the tide.
    Nov 6 07:18 AM | Likes Like |Link to Comment
  • NQ Mobile: A Neutral Observer's Take [View article]
    I'll take a look. As for nq, point blank question here considering all that has transpired. Are you worried about a material restatement? Or to be even more specific, what would have to happen for you to come out and say ' we are selling this thing...we have had enough". I know that would be a tough pill to swallow, but investing requires being able to do that. So, I am curious what would change your mind. Because it would seem all your comfort at this point comes from management access, and the controversy here would appear to be that some people flat out think they are lying. So, anything that comforted you ten months ago is not going to be any different then what is comforting you today. Basically, if I was in your shoes I would be paying very close attention to their behavior and how it might have changed based on your frame of reference. You probably should have taken a human lie detector along with you to any meetings, and then just had him give you an assesment once you were done.

    Personally, if I was mgmt and I wanted to shoot MW out of the sky, I'd offer to take a polygraph and have MW submit the questions. This would put an end to all this nonsense. Yes, they are not perfect, but in this case confidence wise it would go a long way.
    Nov 6 06:18 AM | Likes Like |Link to Comment
  • Tweet Tweet: #IPO#Valuation#Sina [View article]
    Market is getting a lot more difficult to read in this space. There is now a headwind starting to form. Would seem twitter is the end of this party in tech for now. But yeah sina shud benefit. To be frank its the only one im holding long vs a lot of shorts.
    Nov 6 04:29 AM | Likes Like |Link to Comment
  • NQ Mobile: A Neutral Observer's Take [View article]
    Fair enough. I too typically have highly concentrated exposure with respect to portfolios I run, and often in highly time sensitive options. So, I am quite familiar with needing to have virtually zero margin for error. Its not for the faint of heart. But i will tell you nq is not the type of stock a value oriented guy should be looking at. This is something for a high risk growth chasing guy, at which point i'd say you should have a few of these bullets spread across the portfolio becuase the homeruns should generate 5-10x and more then offset the occasional flop/problem child.

    For what its worth, I actually know vnet quite well, well at least the vnet that went public as I have not looked at it since (so maybe knew is more approrpriate as its now nearly 3 years). It was a large holding for an investment firm I used to work for on its IPO. We met with managment and the whole shibang. I will say i was quite against investing as i didn't understand why we should be capitalizing this company to go out and do acquistitions and grow capacity. Struck me as a very bubblish ipo. And in comparison to western peers, made absolutely no sense.
    Nov 6 03:53 AM | Likes Like |Link to Comment
  • NQ Mobile: A Neutral Observer's Take [View article]
    I used the term 'related businesses' because they are housed in the same office and supposedly majority owned by the same lady. Also, with NQ pitching themselves as a user acquistition engine for all things mobile including gaming, the fact that her critical to nq security related biz is housed with a gaming company is not exactly irrelevant. But there is no denying that xu's success story could be as you described, however, i hope you see how her going from employee to owner of a critical component of nq's business would be met with skepticism from a external observer.

    As for the buybacks, i have a whole lot of evidence of tech companies that where ROCKS who still stumbled big time because of buybacks. And I have even longer list of smaller names like NQ who literally destroyed their stocks thanks to buybacks. People building a 100 year franchise don't go from buying back stock to raising a convert to making acquistitions to back to buying back stock in a matter of months. It is simply a sign of the wrong type of management you want building a growth company.

    And yes based on what I have seen so far, I think i am right to have a 'low' view of the company. However, I have views long and short on plenty of companies which I have shared on here over the years. You on the other hand seem to literally to be almost solely engaged in bullishly covering nq. And it appears that going back to early this year that you have had to contend with highly suspect views of the company.(i read your instablog post just now)So, I find it ironic that my motives commenting on this situation have been questioned by posters but that yours have not.
    Nov 5 10:27 PM | 1 Like Like |Link to Comment
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