Robert Zangrilli

Short only, long/short equity
Robert Zangrilli
Short only, long/short equity
Contributor since: 2013
GrowthGeek, maybe you're not, but there's a crew of people that basically hang out on StockTwits, Yahoo Finance, and PumpHoldersUnite all day long "relaying what Matt said" to the idiots there. The company has given away 25% of its float for a bunch of no name companies without disclosing, and now suddenly longs think this reverse merger is a big red flag and are telling people they can't hold it anymore.
Add this to the fact that NQ didn't fight the sell-off (i.e. didn't announce a b.s. buyback with earnings) and how aggressively people were ready to load up at $3.50 on b.s. news, I think this was orchestrated by NQ.
The only question is whether this is just about giving insiders another couple hundred million swing in market cap so they can trade it before it becomes a penny stock or whether there will be news that company is getting taken out for more than $3.50 (also the price when Bernstein became auditor and the stock rebounded aggressively).
Nothing has changed since last week. The whole point of not announcing a buyback was to make people sell, so insiders could load up.
(1) Mathison wouldn't have accepted the liability of statements about "unlocking shareholder value" unless he knew investors stood to make money at this point on NQ.
(2) Bernstein never would have signed off on NQ's audit unless he knew their was a credible buyout offer where he wouldn't be liable for investor losses.
(3) Blatantly paid pumpers like GrowthGeek, Selby and SludgeReports wouldn't have been trashing the company unless they wanted people to sell.
The other possibility is this whole Lin disappearing, the entire board resigning, the reverse merger, etc. is all about NQ flushing out non-insiders because they want to buy their shares cheap before a buy out. These guys are the greediest people on earth, and Chinese frauds getting bought out is actually the norm.
Great article again. You've really been doing a nice job of distilling everything to the core issues for people.
The interesting question to me at this point with NQ (I think most see it'll eventually be a penny stock) is what happens to the American management team. Seriously, how can a guy like Mathison claim this deal is "unlocking shareholder value" while we assume he's not aiding and abetting NQ anymore. The same thing goes for some of the statements Khan has made that have caused investor losses (i.e. the 20-F would be filed on time). At some point, these guys can't continue to pretend to be robots, pumping this endlessly while NQ prints 25% of its float without disclosing it, sells its main business for effectively $28 million, etc.
I mean, can you really just act like you're an idiot and then you're in the clear?
Great article. If the NYSE read this and actually took its role seriously, NQ would be delisted.
Thanks for the advice and sorry for the hostility.
Yes, COMF it looks like from your comments you were short NQ when it doubled last summer and long when Muddy Waters demolished it at $22.
You also sing the praises of blatant NQ pumpers like Toro Investment Partners and Trade Star in your comments.
Given your NQ experience, the fact that you're supporting another Toro-pumped stock like VNET is seriously absurd.
The bottom line is your judgment is lacking, and you have no business interjecting yourself to criticize minor issues with Trinity's research.
Get used to it, Trinity. This is the typical fraud rebuttal - make a big deal out of a few minor issues with a report as grounds to invalidate all of the findings.
Nice work.
Knockdiddy has left 9 comments and 5 of them are pumping up Trade Star. Check out the other 4 below...
Gee, who do you think he is?
"Trade Star is plainly getting the better of ShihRyanJ in this debate."
"As Tradestar persuasively pointed out in his previous (it now seems so long ago, sadly) article, auditors don't generally stick around very long if the company its not legit or cooperating." (LOL)
"Trade Star,
Nice job looking past all of the rhetoric being flung by both sides and trying to read the tea leaves for all of us. That is what good investors do."
"I'm guessing that's why you seem so irrationally irritated with Trade Star - because his articles and analysis are largely fact-based, contradict your own beliefs, and neither of you have the skill, background or expertise to effectively and logically respond in kind. "
Congrats, Sam....the fact that you made the longs mad means you've called out something important, which in this case is how they are pushing the idea to retail investors that a clean 20-F is imminent when it is not.
Also, let's review your main critic's (Trade Star) articles.
Article 1: NQ will be exonerated because their auditor and directors did not resign within 6 weeks of fraud allegations.
End result: Nine months later PwC, the CFO, and the audit committee chair have each resigned.
Article 2: Round tripping is a far-fetched conspiracy theory.
End result: PwC refuses to sign off on 20-F unless they are able to audit NQ's counter parties.
Article 3: NQ will be bought out.
End result: Stock continues to trade at a 30% discount to the buyout offer that Trade Star set the expectation for.
Article 4: NQ's audit committee chair's resignation is no big deal.
End result: The CFO resigns weeks later.
PwC, two CFOs and the audit committee chair resign in less than a year. Don't worry though, longs....it has nothing to do with NQ's financials.
Nice research...what you are raising seems like a possibility, but I doubt PwC will refute NQ's letter because it is in their self-interest for the buck to be passed on to a new auditor and against their self-interest to admit finding wrongdoing.
HomerJ,
I wrote on July 8th about covering my short. I've interacted with enough longs now to know you're delusional enough to run this up to double digits on a few pump piece press releases. Knowing there is 4 months before the audit is due again, what incentive do shorts have by holding anymore?
It's like a preseason game right now. That means this is the season when delusional longs get over-confident, start believing they're smarter than they are, and drive up the price to the point where the actual smart people want short it again.
If I didn't hate the thought of making Khan and Mathison a nickel richer, I probably would've gone long.
That quote is great. It's should be posted on Matt Mathison's office wall if it isn't already.
He has also written in the past about how he thinks Chinese ADR's are 30-40% undervalued, and I'm sure you saw today's blog post to "provide assurances to the market" about NQ's auditor change. Sure, why not "provide assurances to the market" as the independent auditor.
The show will most certainly go on. I'm glad I covered and think it's crazy for people to jump into a new short position here.
QTR - I appreciate your overall point, but you're risking sounding Giles and Toro-esque with titles like this one.
Here's a video of Drew Bernstein of Marcum Bernstein calling Muddy Waters a "criminal," "notorious" and "infamous" in a 30 second span: http://bit.ly/1yRY4tU
Bottom line is its probably not a good idea to tell people to short here if this is NQ's independent auditor.
Thanks for the article, Paul. You seem to be the only person that has credibility to both longs and shorts, so it is great when you weigh in.
Yes, Leopard...I can tell your "short the shorts" trade has been "extremely lucrative" since you've pumped NQ in the teens.
I've got a better trade: short people that make sweeping rules about how one should invest.
It is rare that this changes year over year is his point, but I've found companies that have received a similar audit opinion change after their IPO year (Perfect World, for example).
Ignore Siv, guys. NQ gave up on pumping the stock as the next QIHU and have moved on to enticing people to at the very least trade it. The insiders still have some shares set to vest.
Siv, are you just following directions or what? Can I pay you to go away?
Nice article, Joe.
Sorry you fell for the trap that a clean audit opinion would be next after NQ's "independent" investigation results announcement. It appears to me that NQ structured it's release to create this false impression by burying disclaimers that contradicted its overall message and even set the stage for this months in advance when they told people that they were going to release their "independent results in conjunction with the 20-F." (See "Status Update" release and comments from their 4th quarter earnings call).
As you can see, there are a ton of diehard longs and possibly paid pumpers that are here to drown out your voice and make it seem like you're delusional. Don't take it personally and keep up the good work. Hopefully you can help others from buying on anything other than a clean audit opinion by PwC, which is and always will be the only thing that matters.
It raises awareness and gopefully forces accountability. It may not have a direct impact on the price, but it's important people like Carnes continue to put pressure on these companies and the exchanges.
Knockdiddy, you don't get the point I am making about how Trade Star operates.
Nothing he writes is ever factually false or a flat out lie that you can point out. Instead here's what he does:
1. Set the false expectation of something - i.e. NQ is getting bought, or NQ is going to be exonerated
2. Talk about things that aren't important but spin it like they are - i.e. Toro Investment Partners being added to NQ's board as an advisor, or directors not resigning within the arbitrary 6 week time frame
3. Bury the things that do matter as disclaimers - i.e. what ultimately matters for a buyout is NQ gets a clean audit opinion, or what ultimately matters for NQ being exonerated is whether PwC signs off on their annual report
The best way to combat someone that does this is show how misleading his past articles were to investors. There is no better indication of this than pointing out how NQ is down 70% since then, largely because his thesis about how NQ would be exonerated for all the minor reasons he hyped up fell flat on its face.
Milkweed, glad you enjoyed that. Go through Trade Star's comment history for a good laugh.
And yes, Trade Star... I was totally congratulating you for Ying Han's bad health and was saying firms are sending me job offers through Seeking Alpha, you spin artist. Seriously though, try not to write worthless pump pieces and maybe you can expand your network and you'd be surprised what can come of it. I imagine sitting on web forums all day pumping NQ gets boring, and we know from the stock price it doesn't pay well either.
Tradestar, I guess the hedge funds and research firms that have reached out to me for ideas and job opportunities since I started writing about NQ don't know anything about accounting either. Apparently its the people that have lost their lunch betting against us that are the accounting experts. How odd.
Congrats on Ying Han. Seriously, who cares about the fact that NQ is heading to its all time lows...you've been vindicated.
Actually TradeStar, the accounting lessons were the articles I wrote, and the profits I made betting against you were your fee. When you lose 70% and I make 70% it is pretty clear who the pupil is in this situation.
You can keep claiming I don't know anything, just like you can claim you "generally guide investors to invest in ETFs and index funds" while you've been pumping NQ 24-7 in web forums and comment sections for the past year. Just because you say it, it doesn't mean its actually true, Trade Star. Kinda like how you keep insisting fraud is not on the table even though PwC refuses to sign off on NQ's audit.
Also, do you see yet why I think your phony writing is exactly like NQ's press releases, Trade Star? You write an article pumping the "Buyout on the Horizon" and bury a disclaimer how what ultimately matters is still the auditor. It basically reads exactly like NQ's "independent" results announcement, where certain findings are emphasized (no fraud) while important disclaimers are buried. The good news is you truly have a talent for being a spin-artist, Trade Star. Stock-picker....not so much.
Haha....according to Trade Star, NQ's share price dropping from $22 to $4 and PwC refusing to give an audit opinion has nothing to do with short-seller allegations...those are "still materially out the door" in his words. Yes, Trade Star...totally.
And yes, Trade Star...I totally believe that while you sat in web forums 24-7 for a year pumping NQ pretty much exclusively that you "generally guide investors to invest in ETFs or indexes." Do you realize how phony you look when you say stuff like this?
And let's see...we both have a "connect the dots" thesis around the same time, and since then, I've made about 70% and you've lost 70%. My thesis was that NQ had extreme financials signaling round tripping and PwC would either resign or restate their earnings. Your thesis was that NQ would be exonerated of fraud allegations since no directors had resigned within 6 weeks of the Muddy Waters report. Which thesis was vindicated last week and which one fell flat on its face when Ying Han resigned and NQ insinuated that PwC will resign or be fired?
And yes, Trade Star....you're totally not being slippery when you don't mention the very real possibility of a failed buyout given how PwC refuses to sign off on NQ's audit, signaling that a portion of its financials are fake or cannot be validated. Instead of pointing out how Ambow had problems with its auditor and hence its buyout, you'd rather compare NQ to successful buyouts of companies that never had these auditor problems. Wonderful logic.
Lastly, I actually covered my NQ short, so don't worry about it, but I'll definitely look to short again on a pop from a phony-sounding press release that reads like something you would write.
Trade Star, the reason why you shouldn't play connect the dots is because you've already established you've got no credibility. Last time you played connect the dots you wrote an article telling people that NQ looked like a safe investment because after 6 weeks no one had resigned and they held a conference call to talk about fraud allegations.
Here's a nice quote from you at $15.50 in late Jan to Milkweed: “ALL frauds collapsed within 6 weeks. NQ is going on week 14... Sorry buddy, I've done a lot more research on this than you have. If NQ was a fraud, they would have collapsed by now.”
10 months later a director finally resigned, PwC is going to be fired or resign, investors have lost 70%, and NQ is on the verge of collapsing. How is your thesis working out?
Or here's another gem. While NQ's management was in Beijing preparing their rebuttal to Muddy Waters, here's Trade Star spreading the word in the comment section of Seeking Alpha at 3am: “if PWC is able to verify/re-affirm the cash balances, the short thesis materially falls apart.”
10 months later: the cash has been "validated," and the stock is down another 50% from the Muddy Water report close and PwC won't give NQ an audit opinion. Tell me. How is the short thesis holding up?
Also, is it odd to you that you came up with the same exact meaningless rebuttal that NQ made the next morning when NQ sent out the term deposit balances and Mathison led the call by telling people "cash is king"? Or how about how you seem to have the NQ short-rebuttal script memorized so well that you yourself have joked how similar your responses are: "Wow. Matt's response kind of sounds like my response to the original DSO instablog."
Or how at times you act as a conduit for the investors relations department of the company in the comment section, such as here: “I spoke to Matt today. Everyone is there working hard. That said, no delist, no halt, audit goes on. We are now in week 7, uncharted territory for "fraudulent" companies lasting this long without a departure.”
Given the points in your article and how you seem to move in lockstep with NQ, I would not be the least bit surprised if they announced a go-private offer or strategic investment.
What is important is you show yet again how slippery you are by not mentioning once how these deals fall apart constantly. Ambow Education, a company you reference, had its shares shoot up 60% on news of a go-private offer, and it was halted days later and investors have lost 90% on their investment since the "good new."
Loren Paz, what's a bigger waste of time and resources? Pictures showing how phony NQ's corporate culture is or your bullish defenses of the company.
I've never seen a group of people have so much faith in a corporate press release as the NQ long. Ambow gets delisted and is trading at $0.15 (99% loss from Toro's double-bagger prediction in Barron's), but they send out a press release telling people that they are going to get relisted someday, so that is what matters.
Haha great catch, Keubiko.
The king without a doubt is Toro. He went to China and still could not see that no one used NQ's products. I've been there...they're non-existent and no one has heard of them. (Like everyone I spoke to gave me a blank stare)
Not only was he blind to the fact that there was no way in hell NQ had hundreds of millions of users, but he came back and wrote a report that said surveys showing NQ had a fraction of the market they claimed were inaccurate because NQ's users were unwilling to take surveys unlike Chinese people in other parts of the country. I'm not kidding. Go read the "Muddy Waters Report Card."