12 Signs and 158 Reasons Investors Should Avoid Chinese RTO Stocks [View article]
The Barron's article is fish feed for short sellers on US-listed Chinese stocks. The article has strong biases built in: Bias 1 - Time after the time, the article quoted that Chinese smallcaps underperformed. However, much of the statistics quoted failed to mention the spectacular run of Chinese small caps from March 2009 to Jan 2010. It simply quoted the recent down of those stocks.
Bias 2 - Only quotes the bad part of a stock. The ONP fiasco is well documented. The article only quoted "Muddy Waters" stands behind the story, and there are no comments from ONP/IR/Lawyers. It does not say anything from the counter points. It does not even mention that those two MW researchers have no financial background, and recently "moved on" after the taking the profits from the short position.
Bias 3 - Much of the story focuses on the promoters and a few "Wall Street" investment bankers/IR firms. It does not distinguish the dealers from the managers of the company. It assumes that all promoters of the Chinese stocks are bad, and the companies, by association, are therefore bad.
Bias 4 - It is an undeniable fact that a large number of reverse mergers are bad deals for all both the original Chinese owners and early investors, including retail investors who bought such a stock before it could develop a life of its own out of the early stage. Of course a pool of such stocks will perform worse when compared to an index of established names, that is not a surprise and not China specific.
The final conclusion could be that the authors used deceptive argumentation to bolster their desired conclusion. They forgot to mention that we had a massive downturn in late 2007, the same time that most of these companies entered the U.S. equity markets. In that downturn, stocks perceived to be riskier performed exponentially worse than the overall market. OTC/pink stocks, which comprise most of the Chinese RTO's and are perceived to be the riskiest of all asset classes, performed the worst of all.
The proper comparison would be to compare Chinese RTO's with other OTC/pink stocks that were born at the same time.
Class Action Suits Could Hurt China MediaExpress [View article]
Joe, it is not my attention to bring down China MediaExpress.
What makes a lot of noise in my hat is the fact that these lawyers also make a company look bad. In Europe we don't have class action, Thanks God.
Class action is a horror for the US industry: proceedings which allow individuals to file unlimited claims for payment for a whole class of claimants through legal action. It seems that in the U.S. there is a lot of dubious excessive use of these suits.
China Small Cap Stocks: Should You Buy, Sell, Or Simply Stay Away? [View article]
I really think investors can buy quality companies for bankruptcy prices. This year I am convinced we will see US-listed Chinese companies taken over by bigger domestic Chinese companies (listed in HK or Shanghai) or foreign companies.
Shorting China Stocks Part of a Bigger Plan? [View article]
Why short China?
Everyone knows that it is the growth story of this century. Of course there are always be companies that are questionable, but that is not only in China. Learn Chinese, learn their culture, learn their business principles and you will become rich.
Look at the short list above. Most companies have had extensive due diligence by institutional investors. You think they are all frauds?
Royal Dutch Shell, Show Me The Money In Dividends [View article]
From Rick D.
Tax-wise, for U.S. investors in taxable accounts, A and B shares are generally a wash.
If you buy B shares, every dollar of dividend is paid to you and you pay U.S. taxes on that dollar, typically at 15% so you end up with 85 cents after taxes.
If you buy A shares, your dividends are subject to 15% Dutch withholding tax, so 85 cents of every dollar is paid to you. You pay U.S. taxes on the full dollar, costing you another 15 cents, so you're down to 70 cents. You then claim the foreign tax credit on your U.S. tax return and get the Dutch withholding tax back from the U.S. government, so you're back to 85 cents after all taxes and credits.
So in a taxable account, it doesn't matter if you've got A shares or B shares. Either way you end up with 85 cents of every dividend dollar after all taxes and credits.
In an IRA, you want the B shares because you can't claim the foreign tax credit for foreign taxes paid by an IRA
Puda Coal Chairman's $12 Buyout Offer: The Most Doubtful LBO of All Time [View article]
Alfred, personally I think the Chairman's proposal could be successful and in the end will be similar to the proposal of the CEO of CSR. If the guy has good connections with Chinese financial institutions financing is not the problem.
Election Results: Big Win for GOP, Potential Loss for the Economy [View article]
"This country is not bankrupt. We are not the European Union. We are not Argentina. We are not Zimbabwe. We most certainly are not Greece. As the monopoly supplier of currency in a floating exchange rate system we can always afford to spend in our own currency."
A little bit arrogant if you say the European Unity is bankrupt. Northern Europe countries as the Scandinavian countries, Germany and my own country the Netherlands are far from being bankrupt and belong to the TOP-10 of most reliable countries in terms of government accounting and keeping debt levels under control.
China New Borun: Born to Run or Destined to Fall? [View article]
SEC filings are the basis for your research (DD). Field research is also very important, that's why I hope a lot of analysts and investors will do the necessary groundwork in China for the people who can't visit China.
Orient Paper and the Unfortunate Shady Corners of Wall Street [View article]
Personally I think a lot of professional short sellers use this tactics, including Jim Chanos, Greenberg and other bashers. I my opinion (naked) short selling is unethical when you publish misleading reports and try to benefit from it. This way of making money has to be forbidden.
12 Signs and 158 Reasons Investors Should Avoid Chinese RTO Stocks [View article]
Bias 1 - Time after the time, the article quoted that Chinese smallcaps underperformed. However, much of the statistics quoted failed to mention the spectacular run of Chinese small caps from March 2009 to Jan 2010. It simply quoted the recent down of those stocks.
Bias 2 - Only quotes the bad part of a stock. The ONP fiasco is well documented. The article only quoted "Muddy Waters" stands behind the story, and there are no comments from ONP/IR/Lawyers. It does not say anything from the counter points. It does not even mention that those two MW researchers have no financial background, and recently "moved on" after the taking the profits from the short position.
Bias 3 - Much of the story focuses on the promoters and a few "Wall Street" investment bankers/IR firms. It does not distinguish the dealers from the managers of the company. It assumes that all promoters of the Chinese stocks are bad, and the companies, by association, are therefore bad.
Bias 4 - It is an undeniable fact that a large number of reverse mergers are bad deals for all both the original Chinese owners and early investors, including retail investors who bought such a stock before it could develop a life of its own out of the early stage. Of course a pool of such stocks will perform worse when compared to an index of established names, that is not a surprise and not China specific.
The final conclusion could be that the authors used deceptive argumentation to bolster their desired conclusion. They forgot to mention that we had a massive downturn in late 2007, the same time that most of these companies entered the U.S. equity markets. In that downturn, stocks perceived to be riskier performed exponentially worse than the overall market. OTC/pink stocks, which comprise most of the Chinese RTO's and are perceived to be the riskiest of all asset classes, performed the worst of all.
The proper comparison would be to compare Chinese RTO's with other OTC/pink stocks that were born at the same time.
Class Action Suits Could Hurt China MediaExpress [View article]
What makes a lot of noise in my hat is the fact that these lawyers also make a company look bad. In Europe we don't have class action, Thanks God.
Class action is a horror for the US industry: proceedings which allow individuals to file unlimited claims for payment for a whole class of claimants through legal action. It seems that in the U.S. there is a lot of dubious excessive use of these suits.
China Small Cap Stocks: Should You Buy, Sell, Or Simply Stay Away? [View article]
CCME: Extensive Research Confirms It's the Real Deal [View article]
Shorting China Stocks Part of a Bigger Plan? [View article]
Everyone knows that it is the growth story of this century. Of course there are always be companies that are questionable, but that is not only in China. Learn Chinese, learn their culture, learn their business principles and you will become rich.
Look at the short list above. Most companies have had extensive due diligence by institutional investors. You think they are all frauds?
China MediaExpress: The Most Polarizing Stock in the World [View article]
Or course there are frauds out there, but a lot has to do with misunderstanding the facts.
Royal Dutch Shell, Show Me The Money In Dividends [View article]
Tax-wise, for U.S. investors in taxable accounts, A and B shares are generally a wash.
If you buy B shares, every dollar of dividend is paid to you and you pay U.S. taxes on that dollar, typically at 15% so you end up with 85 cents after taxes.
If you buy A shares, your dividends are subject to 15% Dutch withholding tax, so 85 cents of every dollar is paid to you. You pay U.S. taxes on the full dollar, costing you another 15 cents, so you're down to 70 cents. You then claim the foreign tax credit on your U.S. tax return and get the Dutch withholding tax back from the U.S. government, so you're back to 85 cents after all taxes and credits.
So in a taxable account, it doesn't matter if you've got A shares or B shares. Either way you end up with 85 cents of every dividend dollar after all taxes and credits.
In an IRA, you want the B shares because you can't claim the foreign tax credit for foreign taxes paid by an IRA
Puda Coal Chairman's $12 Buyout Offer: The Most Doubtful LBO of All Time [View article]
seekingalpha.com/artic...
Orient Paper: Loeb's Not the Right Firm for the Investigation [View article]
BlackBerry Sells Out In 90 Minutes At Selfridges [View article]
BlackBerry has a great future, many people are tired of iPhone and want to try something different, at least here in the Netherlands.
The Game of Shorting China MediaExpress Has Been Exposed [View article]
Due diligence has been done by a lot of professionals, so why I have to do it?
I read the MW report and all claims made by MW are already debunked by several sources.
Election Results: Big Win for GOP, Potential Loss for the Economy [View article]
A little bit arrogant if you say the European Unity is bankrupt. Northern Europe countries as the Scandinavian countries, Germany and my own country the Netherlands are far from being bankrupt and belong to the TOP-10 of most reliable countries in terms of government accounting and keeping debt levels under control.
China New Borun: Born to Run or Destined to Fall? [View article]
Orient Paper and the Unfortunate Shady Corners of Wall Street [View article]
U.S.-Listed China Stocks Vulnerable to Management Buy-Outs [View article]
So I will not be a long term holder of CSR.
The intention to going private is there, otherwise the company would not create a Special Committee and retain Nomura and S&S.
So something is going to happen in the nearby future.
Otherwise, why they would spend thousands of dollars for legal, financial and accounting advisors?