Davis Freeberg

China Sky Confusion: Management Is Flying in Circles

I'm not sure what Balabanovj is talking about. Asensio's record speaks for itself when it comes to his short selling. There are only a small handful of firms that I can think of, who've matched his consistency when it comes to unrooting fraud. To ignore the points he raises, just because he's bet on the do not pass line is a very dangerous game for investors to play.

I haven't listened in to any of the CSKI's conference calls yet, but I do find some of these numbers pretty unbelievable. It would be one thing if CSKI was doing less than a million in sales per year, but it seems highly unlikely (to me) that a business could generate CSKI numbers with such a consistently low inventory on hand.

Add to this the troubled history of auditors and the sketchy backgrounds of the people who created the company and I think that you have a compelling argument that they are cooking the books. Instead of seeing critics attack Asensio's credibility for being short, I'd like to see someone attack his argument and provide a rational explanation for how CSKI's accounting makes sense?