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  • Montage Technology: The SoC You Can't See [View article]
    Nice summary, Volte-Face. Today's press releases are like a Rorschach test. The bulls can look at them and say, "see, cash is fine and revenue is mostly fine and gross margins seem reasonable (whatever that means)" and the bears will look and say, if everything is so great, why can't you file audited financial statements?

    I don't think the verbage in the Nasdaq delisting press release was a bearish as some have suggested; saying "we'll have a plan by June 2" doesn't necessarily rule out that the audited financial statements will be filed by then. We think it's more being legally conservative; there's no reason to say the fin statements will be out if they might not be.

    But clearly, there is something still outstanding in the auditors' minds, or else this release wouldn't have been so very vague. Are the auditors hung up over a small detail, or do they perceive a major problem with the earnings?

    The lack of disclosure about LQW will definitely, in our minds, result in serious SEC action against the responsible individuals at some point, but that alone is not enough for our short position to work. Unless the company makes some epic blunder of a tell, we need the auditors to agree that the revenue isn't there and the earnings don't exist.

    The wording of the "everything is cool" press release seems so carefully chosen that it raises a lot of questions. I expected that after the company released its Nasdaq deficiency letter, we'd probably know more than we did before; I feel like all I have now are more questions.

    It will be interesting to see if the sell side has any more clue than we do tomorrow morning. Chardan has repeatedly made predictions that have turned out to be baseless (are they making stuff up or just repeating what Voll tells them?), but I trust most of the other analysts to not make stuff up. Unfortunately, I suspect there will be a lot of very conservative analysts notes that simply relay the facts presented today.

    Not sure if this epic adventure turns out like Return of the Jedi or more like Moby Dick. But definitely there seem to be some chapters left.
    Apr 22 10:04 PM | Likes Like |Link to Comment
  • Montage Technology: The SoC You Can't See [View article]
    The SEC usually takes time to act; delaying action for a non-binding takeover bid is possible but seems unlikely to us. Remember that company executives may well be selling stock to U.S. investors (especially merger arb funds) each day this stock continues to trade, and because of the "foreign filer" status, the execs don't ever have to file a form 4.
    Apr 22 11:22 AM | Likes Like |Link to Comment
  • Montage Technology: The SoC You Can't See [View article]
    Good question, Pat. Voll is largely a mystery to us as he refuses to speak with us, so what we know of him comes second-hand. It's a weird situation in that he so often publicly says things that are wrong or do not make sense. Either we are wrong in our assertions, he is in on the scam, he should know enough to have figured things out but is in denial, or else he is not involved with the scam and is just essentially an extension of the U.S. investor-relations effort. Personally, I think the last option is the most likely, and the reasons I believe that are (1) he did buy stock (Yang and Tai also bought stock in the IPO, but their parents each cashed out much, much more in the secondary), (2) I think he believes the things he says. No clever liar would say "our distributors and customers don't have websites" in a public forum, as a clever liar would not want to say something that could so easily be proven false. Whereas if his colleagues in China had given him a story about the "small business" nature of the China/HK set-top box supply chain, he might dutifully internalize and retell it. I don't think he's ever actually been to the LQW office, as what he said about LQW was the same unclear thing the IR firm said about LQW. And clearly his estimate of ASPs is way off. I don't think being "clueless" is as unlikely as you think. External IR firms tend to believe what their clients tell them; if I imagine someone who is equally disadvantaged with respect to information, but is working for the company itself, human loyalty is going to make most people in that situation believe what they are told.

    Our greatest concern here is, of course, the one in which a buyer purchases the company for reasons other than economic logic. Obviously it is possible with a non-binding offer already on the table. Maybe I am naive, but I think it is much less likely than the market seems to think it is.

    Time will tell.
    Apr 22 11:19 AM | Likes Like |Link to Comment
  • NQ: You Can't Fool All Of The People All Of The Time [View article]
    Jonas, when positing our work, please attribute as such. thank you.
    Apr 21 11:55 AM | Likes Like |Link to Comment
  • Montage Technology: The SoC You Can't See [View article]
    We have notified the SEC. Whistleblower awards are based on the revelation of non-public information. All of the info we have obtained that indicates MONT is a fraud is public information, so are not eligible for a whistleblower award; however, we are, unlike a whistleblower, eligible to express our opinion in the securities markets. Our reward will come when the stock price falls to what MONT is worth.
    Apr 21 11:45 AM | 1 Like Like |Link to Comment
  • NQ Mobile's Ugly And Highly Questionable Earnings [View article]
    Jonas,

    We would appreciate that if folks re-post snippets of our work, they attribute the work to us. Thank you.
    Apr 21 10:52 AM | 1 Like Like |Link to Comment
  • Montage Technology: The SoC You Can't See [View article]
    In the article, we showed nicely that few suppliers carry MONT chips; far fewer than one would expect. Well, unsurprisingly, it turns out that few set-top-box manufacturers sell boxes with MONT chips in them.

    Alibaba has a ton of low-end set-top boxes made for China and the emerging markets, allegedly MONT's bread-and-butter. Satellite (as opposed to cable or terrestrial) is even more their alleged bread-and-butter, at 60% of set top box chip sales.

    Well, what do you find if you search on Alibaba?

    search term: _______ satellite
    “ALi satellite” 5,199 products from 104 suppliers
    “MStar satellite” 1,337 products from 41 suppliers
    “Sunplus satellite” 3,896 products from 72 suppliers
    “Montage satellite” 37 products from 5 suppliers

    And this is not apples-to-oranges. These are the same low-end boxes that MONT claims to be doing so well in.

    What about the new HD chip that "nobody was buying" so they cut the price by half, such that they couldn't possibly be making any money on them:
    search term: ________ HD satellite
    “ALi HD Satellite” 3,808 products from 82 suppliers
    “MStar HD Satellite” 1,337 products from 41 suppliers
    “Sunplus HD satellite” 3,163 products from 62 suppliers
    “Montage HD Satellite” 11 products from 3 suppliers

    It looks like the only possible explanation is "nobody we do business with has a website." :-)
    Apr 21 09:54 AM | 4 Likes Like |Link to Comment
  • Montage Technology: The SoC You Can't See [View article]
    Anti-Gravity,

    An institutional investor we respect recently told us that they were "very certain" that SPRD was not a fraud, and that they had added to it on the dip following the allegations, and held it all the way until the takeover was complete.

    SPRD was taken private at 1.6x EV/sales.

    MONT is clearly a fraud, yet currently trades at 4x trailing EV/stated sales (or roughly 15x actual sales).

    The Chinese state has no interest in buying an extremely fraudulent company at an extremely high price. They have never done such a thing before. It is the fraudulent executives at MONT who are about to lose face. Nobody in government is going to spend $600 million to save them. If MONT execs are not careful, they could lose not only face but also their entire head.
    Apr 18 01:51 PM | Likes Like |Link to Comment
  • Montage Technology: The SoC You Can't See [View article]
    this thing trades like it's owned by holders who will never ever sell (e.g. Gilder Gagnon and Howe) and a lot of merger arbs who are very willing to buy a little lower and/or sell a little higher.

    as for today, second options expiration in a row where the large open interest in expiring 20 puts has pinned it at 20.00 on options expiration day.

    the fundamentals will prevail in the long run.
    Apr 17 03:44 PM | Likes Like |Link to Comment
  • Ignite Restaurant Group: Hidden Value In The Company's Attractive Assets [View article]
    Bloody hell!

    "The Pasta-laya and Crab Cake Dinner have 14 grams of artificial trans fats in them, which equals a week's worth of trans fats. The KJ Steampot and Joe's Great Barrier Steampot both have a whopping 25 grams of trans fat."

    There's data from the Nurses' Health Study (it's in a slide in a powerpoint on our website if anyone is interested), that shows that for every additional 2% of a day's calories that one consumes as trans fat, the relative risk of coronary disease is 1.93. So if one were taking in the 14 gram trans fat dinner above, that is 6.3% of a 2000 calorie diet, or a relative risk of about 7.93x baseline. Eating this dish regularly would practically guarantee coronary disease.

    People should go to jail for this sort of stuff.

    No position in IRG either way, though we did once lose a ton of money when the SEC didn't let the Landry's management-led buyout happen for bogus reasons.
    Apr 17 02:47 PM | Likes Like |Link to Comment
  • Montage Technology: The SoC You Can't See [View article]
    Montage longs were given a boost this evening when it was revealed that even the Milwaukee Bucks are apparently worth $550 million.

    http://nyti.ms/1h5HFqi
    Apr 16 11:56 PM | 1 Like Like |Link to Comment
  • Montage Technology: The SoC You Can't See [View article]
    We are familiar with your "Chinese government wishes to purchase the entire Chinese semiconductor" meme. To whatever extent that is true, we still believe the Chinese government is smart enough not to purchase Montage.
    Apr 16 09:28 AM | Likes Like |Link to Comment
  • Montage Technology: The SoC You Can't See [View article]
    Anyone with any intelligent guesses as to what happens with the 10-K which will be filed "towards the end of March"?

    a) MONT files 10-K today
    b) Nasdaq sends warning letter to MONT tomorrow
    c) MONT decided it is no longer filing like a U.S. filer and announces plans to file 20-F instead
    d) in the middle of the night MONT announces it will file 10-K at some indefinite time in the future, expects a warning letter, and will ask for a hearing, and then at 8 am it announced that second quarter 2014 revenue will be awesome
    e) other????
    Apr 15 02:03 PM | 1 Like Like |Link to Comment
  • NQ: You Can't Fool All Of The People All Of The Time [View article]
    Thanks for sharing this on Seeking Alpha so a broader community has a chance to read it and discuss it. The remarks about audits and independent committees are absolutely spot on and are important, generalizable investment lessons.
    Apr 14 09:10 PM | 6 Likes Like |Link to Comment
  • NQ Mobile's Ugly And Highly Questionable Earnings [View article]
    If you liked NQ as a short, you'll love MONT.
    Apr 14 02:20 PM | Likes Like |Link to Comment
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