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  • Is NQ Mobile Incredibly Crowded? [View article]

    I had originally held off on saying anything negative w/re to your original article as I thought that while your point was valid, it was trivial at best given what was already known. This article however seems to me to be an effort to collect a pay check. One penny at a time. For such a prolific writer such as yourself (726 articles in 2 years), and having debated with you regarding other companies (NAII) in the past, I can see that quantity not quality is the name of the game for you. Let me guess, your next article will be covering NQ's use of Chinese characters as a sure sign of fraud.
    Nov 23 07:27 AM | 35 Likes Like |Link to Comment
  • NQ Mobile: Current Law Enforcement Investigation Now Added To Fraud Allegations Amidst Delayed Audited Financials [View article]
    Your link to the letter clearly states that

    "...the Commission does not disclose the existence or non-existence of an investigation or information gathered unless made a matter of public record in proceedings brought before the Commission or in the courts. Accordingly, the assertion of this exemption should not be construed as an indication by the Commission or its staff that any violations of law have occurred with respect to any person, entity, or security. "

    Your letter doesnt say anything new really. MW already alerted the SEC about their alleged fraud and the SEC probably is watching to see what happens. This letter only confirms that fact.
    May 14 12:58 PM | 20 Likes Like |Link to Comment
  • Research Report: What Baseball Can Teach Us About NQ Mobile [View article]

    In terms of the overall article, its another good effort on your part, however I do believe you are entering into to murky world of half truths, innuendo, and conspiracy theories so popularized by MW and a few other authors. I do like the fact that you resort to objective data to support your thesis. I just do not think the data has been properly scrubbed to properly reflect comparable companies relative to NQ.

    One other thing, and this is more ticky tack. But your baseball references are a bit lengthy and seem to detract from the topics embedded in the article. Perhaps its just me (I'm not a baseball fan), but clearly written and to the point articles are much more effective at selling a point than ones structured more as stories. Articles structured as stories are designed to draw empathy with the writer. Articles structured factually and to the point are designed to convey analysis. The length of the article and style it was written in reminds me of the original MW report and its attempt to overwhelm rather than necessarily convincingly argue.
    Dec 11 01:55 PM | 13 Likes Like |Link to Comment
  • Round-Tripping? Further Adventures Down The Muddy Waters Rabbit Hole [View article]
    I gave Mr. Zangrilli an opportunity to correct his errors. He chose not to. So I felt there was no other option on my end but to correct it for him.
    Dec 17 02:48 PM | 12 Likes Like |Link to Comment
  • Research Report: What Baseball Can Teach Us About NQ Mobile [View article]
    @robert. Actually, they do not look all the same. For example, as you adjust for revenues and scale and location, theres a marked shift to less computer equipment per person.

    Assuming borrowing against restricted stock that vests over time is a very large assumption. Assuming borrowing against earnout shares that are not owned and yet to be earned is an even bigger assumption. Theoretically the company could just pay $100M in stock to FL and borrow against that. I suppose in this analysis you assume the banks are colluding with NQ, thus rubber stamping loan approvals. Or perhaps better yet, they have somehow tapped into the shadow banking system to borrow against un-earned shares. You would think they would have margin calls at this point in time now, or perhaps even weeks ago after the initial allegations.
    To me, there seems to be an inherent conflict of interest here that the lender would easily see in terms of what is fair value of the stock that has yet to be issued or earned and how risky the underlying securities are supporting that debt. There is nothing preventing the company from inflating the unearned shares by overpaying for assets. Even a shadow lender would see this conflict and have issues with determining if 50% was the proper discount if not more.

    Lastly, why bother going through all these acquisitions to "round trip" when they can more cleanly raise cash via stock sales or convertible offerings instead of having a paper trail of shares issued to targets and current ownership of those shares easy to trace? Why not do the acquisitions with cash so that the cash leaves "legitimately" and is easier to repatriate? Also, if you are round tripping, why spend $2m of your own money buying shares back (mgmt repo in 2012). It seems to me that committing fraud in this method is very cumbersome and inefficient and requires a lot of assumptions and collusion.
    Dec 11 12:41 PM | 12 Likes Like |Link to Comment
  • NQ: You Can't Fool All Of The People All Of The Time [View article]
    Better yet, how hard is it to get a loan shark to lend you $100 million dollars with your stock as collateral (while you are VERY publicly accused of fraud) and before you can technically even borrow against shares as your company bylaws prohibit using your shares as collateral. But lets ignore those trivial details. If they could already violate their bylaws like that, then why bother having them changed in late December, when for all intents and purposes, the cash was already repatriated back to chinese banks.
    Apr 15 01:19 AM | 11 Likes Like |Link to Comment
  • NQ Mobile - Special Attestation Report [View article]
    Balanced article. Thanks for the primer on the audit function. I do like this article as it does highlight both the pros and cons to MW's proposal. I guess my question is what is NQ's goal here. To defeat MW or to provide investor comfort with the validity of the business and financials. It seems to me, most of MW's claims rest of fairly weak fundamentals. The company could go through all the hoops to thoroughly discredit MW, but to me that seems to be a fairly lengthy and distracting exercise. After this special attestation report, what would MW require next? A blood oath by Dr. Lin's parents and a personal guarantee from Omar's kids to indenture themselves if any fraud were found? I kid of course. But you see my point. There has to be a finite end to this witch hunt. This special attestation would suffice for any rational investor, but MW is not quite... rational. So therein lies the question. What does a rational investor need to be satisfied with a clean bill of health? Is it a forensic audit by D&T? An attestation audit by D&T? the personal indenture by Omar's kids? My guess is a forensic audit would suffice for the funds involved and the majority of NQ's investors. This seems to be the case for the prior cases of alleged fraud and I see no reason why NQ should have to go through so many steps to exonerate themselves. The reality is, many long investors are tired of the allegations and would much rather see a resolution sooner than later. If a forensic audit gets you 90% confidence that everything is kosher, then I suspect most investors will be comfortable that MW is substantially wrong on their thesis. The review by MW is an obvious ploy to stall for time and create uncertainty. As you so clearly noted, Plante & Moran is woefully under equipped to run a review of D&T's work.

    Haters always gonna hate right? So why bother spending the extra time, money and resources to try to convert those who will always have doubt.
    Jan 3 01:03 PM | 11 Likes Like |Link to Comment
  • Round-Tripping? Further Adventures Down The Muddy Waters Rabbit Hole [View article]
    1. The article is pointing out that the round tripping theory as professed by Mr. Zangrilli does not work. I've also clearly pointed out that the "smoke" raised by Mr. Zangrilli is a reflection of his incomplete research and analysis.
    2. As to your second question, I do not think there is fraud of any sort.
    Dec 17 02:21 PM | 11 Likes Like |Link to Comment
  • Research Report: What Baseball Can Teach Us About NQ Mobile [View article]

    I just got off the phone with Matt in investor relations. They are working hard and available to shareholders if you have specific questions. I addressed the roundtripping allegations with him and his thoughts were similar to the ones I had already echoed. Not sure why you were unable to connect with Matt but I got through to him on the first call.
    Dec 11 03:45 PM | 11 Likes Like |Link to Comment
  • Research Report: What Baseball Can Teach Us About NQ Mobile [View article]

    Your analysis is difficult to follow. I've been reviewing the spreadsheets and I do not get the sense you have adjusted for NQ's acquisitions. Assets like computers and servers are typically capitalized as part of a deal or written down. So comparing 2011 and 2012 to your comps will be difficult. The other issue I have is you compare american companies to chinese companies as well as across technology sectors. This is a very very broad canvas you are applying. I would think there are significant differences in labor costs and staffing realities between the two countries, with the US being much much more expensive to do business. Lastly, everything in your model is hardcoded. Its very difficult for me to look at this analysis and be comfortable that everything was keyed in properly by hand.

    I'm not even sure what your cash calculation is. Its hard to follow. Either way, if I understand it correctly, you are assuming all shares issued for NS and FL are cashed out within the year. FL for example had initial consideration of 3.7M, of which approximately 1.2M shares vest over 4 years. see section 3.2 of the merger document The remaining 2.5M shares in the earnout, section 3.3, do not get granted until Feiliu/Red satisfies the earnout conditions in 2013/2014.
    Shares vest over time and given the amount of float and price in the stock during 1q13 and 2q13, releasing that many shares onto the market would have tanked the stock. Instead, the inverse happened as shares ran up materially. I did not look at NS closely, but given how materially busted your FL assumption is, I'll decline to look too closely. I will say your model assumes ~13-15M new ADS flooding the market in 1q13-2q13 when the share price increased over 100%. Not an easy feat to do.

    Lastly, I would suggest you call the company and ask them why the capital costs are so low.
    Dec 11 11:56 AM | 11 Likes Like |Link to Comment
  • Is NQ Mobile Too Good To Be True? [View article]

    Actually, thats exactly what I did. Its on my instablog.
    Dec 11 11:06 AM | 10 Likes Like |Link to Comment
  • NQ Mobile's Games Apparently Removed From Apple's App Store [View article]
    Carson Block says Apple is fraud and does not exist.
    Oct 29 11:09 AM | 10 Likes Like |Link to Comment
  • NQ Mobile: Many Suspicious Recent Acquisitions [View article]
    Dr. Wheaton, you might want to keep to medicine. Your accounting needs some work. If they are booking fictitious revenues, then how come DSOs are falling and cash is sitting in the bank?
    Nov 18 02:00 PM | 9 Likes Like |Link to Comment
  • The Muddy Waters NQ Mobile Report Card [View article]
    Alan1967. The first mistake you made was believing that SA is a source of information you can trust.

    Articles written on SA are by authors who may or may not be scrupulous. I personally believe Toro to be reputable and a reliable source of information. Facts presented by Toro are logical, well thought out and substantiated with backup. Can the same be said of the MW report? I challenge you to substantiate their claims. Have the other SA short authors visited China to confirm their beliefs? I think you should refer to their articles and their sources to see if those sources are still even available.
    Nov 11 05:29 PM | 9 Likes Like |Link to Comment
  • NQ Mobile Q3 Earnings Preview: Upgrades Look To Be On The Way And Why Shares Could Triple [View article]
    The fraud allegations are getting talked to death on the other articles. You either believe MW or you believe Management. If you believe MW, then theres no point for you or any short to post on this article as all the numbers to you are imaginary.
    Nov 4 04:47 AM | 9 Likes Like |Link to Comment