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Marc Chang
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Retail investor. Semi-retired. Experience: CEO, M&A, Business Development, >30Y of international activity
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  • Shorts Despairingly Target To Fleece Sphere 3D Investors Through Posting False Claims And Misleading Stories.

    When you read this instablog please be aware that my newer article "Sphere 3D: A desruptive Cloud Technology Player" is now published by Seeking Alpha.

    This instablog is in response to the misleading article posted today in Seeking Alpha by Xuhua Zhou, hedgefund analyst:

    Sphere 3D is trading in Toronto TSXV stock market with ticker ANY and in the US OTCQX market with ticker SPIHF.

    Doing a little homework on some of the claims it is easy to figure out the story not only is devoid of any facts, it is one of the funnier pieces of fiction I have ever read.

    Some investors, primarily "Hedge Funds", engage in a practice known as "shorting" In case you're not familiar with this practice let me give you a "short" description. Shorting a stock is the practice of selling shares of a company that you do not own, at a certain price, in the hopes that it will further drop in price and you will be able to purchase it for less than you sold it. This by itself is not a bad thing as it creates liquidity and allows people opportunity to purchase shares that are being shorted (sold).

    Where things start to become problematic is when those who are short decide they want to trigger a price drop to force the shares of a company to go down. How you ask? They will often utilize smaller known media outlets or stock chat boards to create false news, make accusations of wrongdoing and malicious smear campaigns against companies or their management. This practice is of course illegal, yet common. In the business they call it a "Hit" on a company written with the sole intent to influence your psyche breaking your confidence in your investment and tempting you to sell your shares creating the opportunity for the hedge fund to buy your shares at the lowest possible price.

    Compare it to someone who falsely screams fire in a full movie theater and wants visitors to trample each other trying to get first to the exits.

    With the corporate update published by the company today April 14, 2014 the stock just made a high of $8.50 CAD on the Canadian stock market, while it is known that some entities started to short this stock in August 2013 when it was trading at about $2 CAD.

    The "official" short position on date of March 31st 2014 was way over a million shares. The "real" short position is much higher and I estimate that the total short volume is 12 to 15 times the average daily trading volume on the TSXV.

    Given the latest commercial breakthroughs made by Sphere 3D the shorts are cornered in a precarious position and they mistakenly hope to trigger an avalanche of cheap shares so they can buy back shares for as little as possible. Consequently, this "HIT-piece" fits their strategy.
    However, such "HIT-piece" is counterproductive as it doesn't take the market by surprise. There has been remarkable short activity lately on IHUB. With the corporate update from today "investors in the know" will step in and thankfully sponge up any cheaper shares eventually offered through the short's fire sale.
    In the case of Sphere 3D there have been a bunch of insider buys in the last weeks, so cheap shares have been scarce and we can predict that any fire sale will be short lived...

    So with this in mind, back to the story that I received; the author does not even hide his/her hopeful outcome. The author concisely states in the article:
    Sphere 3D is a "compelling short-selling candidate" and "Long investors you have been warned get out now." and "Don't be the last sucker holding the bag! …hmmm, sounds relatively unbiased to me so far, not!

    Now let us have a look at how they attempt to deceive the average investor and scare them into selling shares. Hereunder I will refer to some sections of their story circulating in the internet and give you my comments in bold and italic format.

    They claim to have done a background check of the insiders at Sphere 3D reveals what may be a hard pill to swallow for current investors".
    "Following questionable characters involved in past fraudulent schemes is one of the most successful approaches to identifying compelling short-selling candidates.

    What background check? The story does not actually offer any, it just makes a statement and moves on. A responsible journalist would have known that all directors and officers of public companies listed on the TSX are required to pass a 10 year background check and an RCMP (the Canadian equivalent of FBI) clearance. Don't take my word for it, just go to and make sure you look at page13.

    They then attack the Management with statements like: "Chief Executive Officer, Peter Tassiopoulos, is a man with a chequered past" including a link that states that Mr. Tassiopoulos was paid an insignificant fee in shares by a company 14 years ago.

    Interesting statement, I haven't found any evidence that Mr. Tassiopoulos has never been convicted, charged or even accused of any wrongdoing in a 20 plus year career (remember the background checks above). So what are they him accusing of?
    10 years later, that same company referred to by the hit-piece author, having been restructured and having changed names four times along the way, was the subject of fines from regulators. I guess that makes all 100,000 former employees or consultants of Enron, from over a decade ago, "Chequered", now that's a stretch!

    They call into question Sphere 3D Chairman Eric Kelly who was appointed Chairman of Sphere 3D while the company that he is currently serving as CEO, Overland Storage is in a commercial relationship with Sphere 3D. The story states "I will spare you the details but let me state that the Overland shareholders should be asking their CEO Eric L Kelly where his loyalties lie?"

    This man is currently advising the US government and they question his integrity? The same Eric Kelly is featured in this news release: An excerpt from the release: "U.S. Deputy Secretary of Commerce Rebecca Blank appointed President and CEO of Overland Storage, Eric Kelly to the 2013 US Department of Commerce Manufacturing Council. The Council advises the Secretary of Commerce on government policies and programs that affect U.S. manufacturing and provides a forum for proposing solutions to industry-related challenges. The Council also works to ensure that the United States remains the preeminent destination for investment in manufacturing throughout the world. The Secretaries of Labor, Energy, and Treasury serve as ex officio members of the Council to better collaborate on issues the Council will address." I think that's enough on Mr. Kelly.

    But wait, this gets sleazier and sleazier, they claim that founder and Technologist John Morelli, "has previously been charged with potential embezzlement of funds."

    Alarming at first glance I am sure, but the writer is relying that nobody will click the link because if you do you will see that it links you to a civil a dispute between Mr. Morelli and his stepmother over the affairs of the estate of his deceased father. There is no allegation of any wrongdoing let alone being charged! If you feel that your intelligence is being insulted by claims like this, it's because it is.

    Think that it's silly enough yet? It gets worse. The author claims that the R&D team does not exist, that they are fabricated. "The software developers at Sphere 3D, who control the secret sauce that makes Sphere 3D, must have learned from Peter's playbook. Kumar GK and Ganesh KK's Linkedin profiles feature virtually identical backgrounds. See below (highlighted in red are the identical parts)"

    Not only is there no deceit, the man has his picture on both of his profiles. Please have a close look at the pictures; this is one and the same person! Compare also the initials. I suppose the person forgot to cancel one profile…

    (click to enlarge)

    (click to enlarge)

    The writer has more claims about management but it's more of the same defamatory statements that are without any facts. So now that the 'HIT" story on management is done the author takes on the company. First he targets the products.

    Statements like "The Company has paid out salaries that are 20 times their investment in R&D (which is only $200k since inception).

    In accordance with International Financial Reporting Standards, until the Company achieved certain specific milestones it had to expense the development costs, including salaries. Those requirements were met in 2013 and the Company started deferring development costs as of July 1, 2013. The author could easily check his facts but of course decided not to. Check the public record - it's in the Company's quarterly financials at

    The author again tries to claim "Sphere 3D has no revenues" "their product roll-out history is quite literally a pile of words" "there are never any actual releases."

    Unlike this so called journalist that wrote the story I just looked up the financials. If there are no products ever released where did the revenue on their books come from? Again check the public records.
    Overmore the company's update from today states"Estimated revenue for Q1 2014 is expected to exceed $1 million"

    Once again the author grasps at the proverbial straw with "Sphere 3D has cumulative losses to date of $5.2 million with zero revenue in the last twelve months".

    "Zero revenue" is another serious aberration from reality: The company announced they "commenced shipping of V3 Appliances to customers in January 2014" that they were paid $500,000 upfront by Overland and other transactions that are on the public record. Yet, even if they were pre-revenue, let us not forget that it took Twitter $3B of spending before they had product for sale and Facebook acquired Whatsup for $19 Billion pre-revenue. So, what's the hit-piece's point???

    Early in 2014, Sphere 3D acquired a company, V3 Systems Inc. Due to the fact that V3 appears to be in the same cloud segment the author foolishly states "Can anyone imagine Microsoft acquiring another company that designs word processors?"

    YES WE CAN IMAGINE! Go and check Wikipedia "The first version of Microsoft word was developed by Charles Simonyi and Richard Brodie, former Xerox programmers" "Both programmers worked on Xerox Bravo, the first WYSIWYG word processor."

    The "HIT" also claims that the company makes false press releases, specifically referring to the recent PR where Sphere 3D announced an agreement to join a coalition of companies that offer IT infrastructure and services, primarily to the Healthcare sector.

    It is very obvious that this news has the Shorts very concerned for the coalition includes Dell, Intel, RedHat, VMware and now Sphere. It is referred to as the Dell Drive coalition. The author just flat out calls it a fake press release and says "The most recent deal with Dell where Sphere 3D itself directs you to the Dell website highlights no mention of Sphere 3D." Try going to Dell's tweet about this deal!!!


    Dell Healthcare @DellHealth




    @Sphere3D joins @DellHealth's DRIVE program to bring enhanced virtualization exp to #EHR users


    02:23 PM - 04 Apr 14



    Reply to @DellHealth




    And of course the author has to attack the Intellectual Property as this is a technology company. What lie does he rely on? He asserts that there is none "What intellectual property does Sphere 3D actually own?"

    Hello? I quickly found 6 patent applications and these are far from identical:




    Systems and methods of optimizing resources for emulation




    Systems and methods for managing emulation sessions




    Systems and methods of managing access to remote resources




    Systems and methods of optimizing resources for emulation




    Systems and methods for managing emulation sessions




    Systems and methods of managing access to remote resources

    And there is more at:

    I have been through the story which continues with more of the same, but in essence it is nothing but rhetoric that a hedge fund has paid an author to fabricate. I find no relevance or merit in any of the claims. However, in the event that it somehow does get published, I will bring on my point by point rebuttal to that story so that readers can have access to the truth!

    The shorts are aware of the limited timeframe in which to cover and have taken to defamatory postings, with no regard for honesty, in the hope that they can CON investors into selling the stock to save themselves from the losses they so richly deserve. DON'T BE CONNED. Do your own research and don't let the shorts scare you into selling them your shares.

    Disclosure: I am long SPIHF.

    Tags: ANY
    Apr 14 12:16 PM | Link | 9 Comments
  • HSOL: Undervalued And Underestimated! A Worthy Potential Investment In The PV Sector.

    HSOL: undervalued and underestimated! A worthy potential investment in the PV Sector.

    After its latest Q report HSOL pps has lost >20%. In my view this is completely overdone and I strongly believe that not long from now we will see new highs!

    As it has become nearly impossible to make a decent post on the Yahoo Message Board I will use this instablog post to share some important information about HSOL.

    First of all, I agree with hangmaniceman1's assessment about HSOL at the Yahoo Message Board and I share his belief that HSOL is much undervalued and very few analysts have a clue about their future potential.

    Please also check HSOL website investor relations: First Q Review and Update slide presentation

    Improved turn-over, higher ASP, higher gross margin: count on it that this trend will continue for 2013:

    Confirmed by HSOL mgmt. during the CC

    Multiple sources such as Mercom Solar, Lux Research, Taiwan Digitimes, solarserver, pvinsight websites etc…are confirming a price uptrend for modules in recent weeks/months

    Taiwan Digitimes expects another up to 10% price increase of PV modules this year.

    Despite wide opposition amongst EU member states, the European Trade Commissioner, Karel de Gucht has forged ahead with temporary duties of 11.8% leaving a 2 months window for further negotiations.

    Although a final outcome of the ruling is only expected in December, the current trade dispute has already pushed up PV prices in Taiwan and Europe.

    Common sense tells me a compromise will be negotiated to avoid a trade war and to avert slow down on the expansion of PV installations in Europe. Google article:

    "Europe's anti-dumping tariff about to finalize, Chinese PV manufacturers' three contingency plans"

    Current HSOL Geographic sales distribution:


    Everyone who tracks the growth of the solar sector has learned in the last week that "Japan is poised to be world's largest solar market", (See "reneweconomy"). Japan is forecast to install $20 billion worth of PV systems in 2013, up 82% from 2012 and representing 24% of global PV system revenue.

    Recent products shipments (33% of Q1 shipments) show HSOL's strong market position in this high growth/ high margin market. Remember that in August 2012 HSOL struck a deal with Marubeni Corporation to supply 500 MW PV Modules for the Japanese market spread over 4 years and that we have now only started to see increased shipments. Considering the growth of the Japanese PV market is beyond forecasts and HSOl's valuable partnership with Marubeni I see a good chance that the volume of the deal might be increased in the future.

    We can expect further increase of shipments to both these markets!

    South Africa:

    21% of HSOL's shipments in Q1 went to the South-African market. Also this is a very strong growing market where HSOL is well positioned. The potential of this market was also accentuated by Google's recent investment as described in "Google invests in big South African solar project" published in gigaom.

    CEE market:

    Have a look to the article published by Bloomberg Businessweek: "EU Solar Duty May Spur Short-Term Imports as Deal Sought". Some extracts:

    "The European Commission yesterday announced provisional anti-dumping duties of 11.8 percent on photovoltaic products from more than 100 Chinese manufacturers, an initial rate that may increase more than fivefold in August. The rate comes as a relief to Chinese producers that were anticipating steeper penalties, said Angelo Zino, an analyst at Standard & Poor's Financial Services LLC in New York. European customers may stockpile panels before the duties increase, and some companies expect Beijing and the EU to negotiate a deal that avoids the higher tariffs."

    As compared to other China based PV manufacturers HSOL already has alternatives to avoid high punitive import duties. It can approach the European market via QCells Germany or with PV modules assembled in Taiwan (currently ongoing for US market).

    In this context I suggest you Google: "limited-exposure-to-europe-will-warrant-better-returns-for-chinese-solar-" which appeared in the website of pv-magazine.

    USA market :

    HSOL currently sells Hanwha HSL Poly Series as "Tariff free High Performance Taiwan Cells" avoiding heavy import duties.

    I love HSOL's strategic market approach in the US through the investments made by HANWHA in "OneRoof Energy" and "SilentPower". Now that OneRoof Energy has recently lined up $100 million funding to finance residential rooftop installations it targets installing roughly 60-70 megawatts of solar panels throughout 2013.

    Specifically for the commercial- and utility scale projects HSOL is capable of offering full services through QCells USA.

    This market approach is quite young and is expected to come to fruition in H2 and 2014.

    With regards to the tariffs that the US imposed on Chinese Solar panels an interesting article came out on June 2 in the Financial Times. Please Google: "US China solar duties fail to halt imports as EU prepares its move". Rhone Resch, president of the Solar Energy Industries Association, said tariffs have had "a very small impact on the US market": neither sending cell prices soaring, nor rebuilding the domestic manufacturing base. While imports from China have slowed significantly, those from other parts of Asia have soared.

    Asia Pacific market beyond Japan:

    With the recent product improvements and HSOL's lower COGS compared to other players HSOL can tackle these markets in a very competitive way!

    HSOL and QCells are making good progress in Australia with recent commercial scale rooftop PV projects in WA, NSW and SA totalling >500 kW.

    Besides the Thai, Indian and Malaysian market where HSOL has obtained sales already the Indonesian market looks very promising. Recently, the Indonesian Ministry of Energy and Mineral Resources, announced the government's plan to increase the number of solar power facilities to 153 this year, from last year's 117.

    I also expect HSOL to participate in the recently launched Tender For 150 MW Of Solar Photovoltaics.

    The Indonesian market has a very attractive potential, given Indonesia's electrification ratio only reached 55-60% and almost the entire area is non-electrified rural areas located far from electrical power plants.

    Chinese market:

    Although China only represented 3% of Module revenue by shipping destination Q1 13 a major market potential for HSOL and other Chinese PV players will open up in H2 2013, thanks to a policy shift: Google "China's policy shift in 2013 to stimulate on-grid installations and address abandoned power issues"
    "Energytrend" expects HSOL to sell about 140MW in China during 2013 thanks to this policy shift. These 140MW may conservatively not been included in HSOLs outlook while it may drastically improve revenues and profitability!

    Over more, if the Chinese home market starts to bloom it will quickly resolve the PV manufacturing over capacity in China and result in higher PV module prices, worldwide.

    Russian Market:

    Is also getting attractive for Hanwha Solar having already a presence in Moscou. Google the Bloomberg article "Russia Approves Subsidy Program to Boost Renewable-Energy Output": Russia approved an incentive program to boost renewable-energy production, targeting almost 6 gigawatts of new capacity by 2020 and its first solar parks.

    Middle East Market:

    In March Hanwha also indicated increased demand from the Middle East.

    Improved Cost Structure will result in improved margins and profitability in Q2, and H2:

    Filtering the comments from Ki-Joon Hong, Chairman and CEO we obviously can expect better GM and profitability: Q1 shipments (+45%) rose sharply, plants are running at full utilization favorably impacting our cost structure!

    Now, think twice, the increased shipments mainly went to those markets with a higher ASP! The only factor here that I am a little weary off is the weaker Japanese Yen.

    HSOL also implemented some production efficiency methods that were already applied in Qcells' manufacturing plants and for the new HSL PV Modules some savings were achieved on materials.

    Latest early 2014 Hanwha Chemical's polysilicon plant at Yeosu, South Korea will start production and supply to Solarone which is also expected to favorably improve cost structure.


    With the purchase of Q-Cell's R&D center and manufacturing factories in Germany, Hanwha now ranks 3rd globally for its capacity to produce solar energy (Q-Cell annual capacity is 2.3 GW).

    Improved market conditions, higher module pricing for a higher quality product, better market penetration, favourable outlook for the Chinese market and lower cost structure will result in profitability for the remainder of 2013 and I wouldn't be surprised we may even see some double digit margins.

    For further reading, please Google the following articles:

    "Evolving into global solar giant" published in koreaittimes

    Polysilicon Seen Rebounding as China Plans Import Duties: Energy published by Bloomberg

    Disclosure: I am long HSOL.

    Jun 06 7:59 AM | Link | Comment!
  • Jadestone's hit-piece against GURE is a fraud - part 2

    In response to part 1 of this instablog "christinaburger" published her own instablog to counter what I had to say about the "jadestone report".

    Let me quote her instablog's introduction
    "Regarding to the response by Marc Chang on his Instablog, we would like to guess the response is more quickly than ‘the company management team’. We could not stop guessing that Marc is hired by GURE to publish the positive report and response to any attack. It explains why Mr. Chang need to clarify if this is the company behavior, or individual. "

    Now what???
    On Sep 29, at 7:53 am I responded to the Jadestone internet report, not to “christinaberger” and at 10:31 am “christinaberger” reacted on my instablog
    That clearly means "christinaberger" is now identified being Jadestone!

    Christina spreads rumors about me being hired by GURE while any reader can learn from my SA Profile what I do in my daily life.
    We cannot say the same about "christinaberger"! How about her SA Profile? Shouldn’t she include or add the jadeorstone website that was established just recently on Sep 15 with the purpose of incognito publishing hit-pieces against Chinese companies?
    Why does her SA profile sate that she is an “Independent Planner Adviser” while her Jadestone website claims she's “A corporate investigator aimed at Chinese companies traded overseas”?

    Please note that an investment fund has now forwarded a .pdf print of her instablogs, web-reports and both contradicting profiles to FINRA.

    She wondered about my speedy answer while GURE needs more time:
    -       it deserved my quick response because she intentionally misused data from Table 1 in my report to try to mislead investors.
    -       I believe she was are very well aware that posting the JS report and instablog just before the Golden Week in China would make it difficult for GURE to timely respond to your allegations.
    -       She knows that in GURE’s management team there is only one person who reads English fluently and that consequently more time would be needed for management to respond to your evil accusations.

    Her next statement: 
    "We hope more investors could see the real situation but not from the ‘inside information’ by the company itself. "
    Is she trying to convince investors that you can learn more about a company by spying them from outside the walls of their factory properties?
    How come she even didn’t know that factory 6 has 2 bromine extraction units and 2 brine pumps…..even after reading my report?

    Further comments on her instablog statements:
    Several GURE factories have 2 or more brine extraction towers and consequently the number of pumps used in her assumptions is wrong.
    If she did read my report properly she would know that I was in contact with several suppliers of Bromine towers and extraction equipment.
    Has it ever sunk in with her that Bromine Extraction Towers can be built not only in polyester standard modules but as well on demand, in concrete or stone, according the tender specifications of the buyer?

    Did she see photo 60 in my web album?
    With her 10 year presence in China and a “Professional local team” why didn’t she go to see this new factory 4 to “Expose the target and reveal its genuine value” as claimed on the JS website?

    Didn’t she notice that in Table 4 of my report you can find the latest update of bromine content in brine for each factory?

    She wanted me to provide you the proof that the underground brine in Laizhou Bay doesn’t occur in one big bubble? Have a look to the complexity of the regional tectonic map of Laizhou Bay in Shandong and the different areas with brine concentration and underground layers.

    Christina, have you noticed that in my report I have given the names of the Government Officials that I met while you do not want to reveal the name of the local tax bureau officer?

    Christina, I think you have now well enough exposed yourself to investors to let them understand your personality, what you are aiming for with your jadestone report! To me you have no credibility at all!


    Sep 30 7:53 AM | Link | 8 Comments
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