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Rich Selby is an international agribusiness/renewable energy consultant and an options/futures trader from Des Moines, Iowa with over 26 years of experience in finance, auditing, business development and C-level functions. He currently is an advisor in commodities and organic agriculture to one... More
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  • Serial Killer? Dexter Block? 47 comments
    Jun 29, 2014 7:56 AM | about stocks: NQ

    I woke up this morning thinking a lot about Carson Block. I am sure he is a nice guy when he is not about his business. But my opinion is that he is like a sloppy "Dexter" - a serial killer with good intentions except Dexter gets almost every kill "right".

    I am certain Carson tries to do the right thing, but that does not make financial serial killing an innocent endeavor. He probably got Sino Forest right - maybe Sino Forest was a "child molester"? Maybe it wasn't... I do not know enough about Sino Forest, but it still doesn't make what Carson did morally and ethically right.

    I now see an easy way to manipulate the stock market... all I need is some publicity or a connection to Bloomberg, CNBC or some other mass media outlet... then, I load up all of my investment accounts up against Company XYZ (shorts and an extreme amount of put options), then I hire a couple of hacks who can write and research (and imagine things well) - and who can also find disgruntled employees and enemies of the company because every company has enemies. What the heck... I may even cut a deal with some dark hedge funds who can be my accomplices. Then I come out with guns a blazing - XYZ is a TOTAL FRAUD - 90% of their revenue is fake!! Then, I put the make up on (and a nice tie)... and cameras are rolling!!! Then, I quietly, and over time, start to "buy to cover" and sell my puts... then I move on to my next victim even if the victim I just killed comes out of the grave... ha ha ha!!

    In the case of NQ Mobile, I believe they are definitely "jaywalkers" or maybe they went "by the local drugstore and stole a lollypop." That doesn't mean they deserve to die! I would sure like to investigate Carson's financial affairs... no wonder he allegedly doesn't have a mailing address. I don't think I would either. Just my opinions...

    Disclosure: The author is long NQ.

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Comments (47)
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  • New Investor25
    , contributor
    Comments (108) | Send Message
     
    It really doesn't matter at this point how NQ turns out. Carson made his millions, even if he is wrong. IF he is wrong he stole money from long investors if those investors were forced to sell (margin holders), and call option buyers.

     

    Sick way to do business.. I don't understand why this is legal This is no different than misleading and manipulated sales. Should be punishable by law!
    30 Jun, 08:12 AM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » Thanks New Investor - I completely agree. It doesn't matter what Carson's "batting average" is when it appears that he is heavily and openly engaging in stock manipulation using the mass media as his weapon. Good luck to you!
    30 Jun, 08:15 AM Reply Like
  • Joe A. Williams
    , contributor
    Comments (300) | Send Message
     
    Mosbear64, Shorting is a part of the market just like buying long is. To call a legitimate trading act on the NYSE "immoral" or "unethical" is totally ridiculous! If all people could do was buy & report good news, there wouldn't even be a stock market!
    Don't stop there, How about selling calls or buying puts? Are those immoral & unethical too?
    You can't just pick & choose which legitimate acts you like & which ones you don't like!
    How new are you in the stock market? These statements make me wonder.
    28 Jul, 12:27 AM Reply Like
  • AYMERICK
    , contributor
    Comments (77) | Send Message
     
    Very nice article from a European LONG.
    30 Jun, 11:41 AM Reply Like
  • jsIRA
    , contributor
    Comments (2430) | Send Message
     
    I learned the lession. In stock market, you make money when you have money plus media to manipulate the stock in what ever way you want.
    30 Jun, 11:43 AM Reply Like
  • D0nmani
    , contributor
    Comments (5) | Send Message
     
    Yeah, Me too. It just sounds like a "whole new world"- in negative way- to beginners like me.
    Shorting Stock,spreading bad rumours and walking away with heaps of money ==> this really shouldn't be included in "investment" category.
    Thank you "Mosbear64" for your great articles and comment with reasons. I enjoyed yours since day 1 ^^.
    30 Jun, 10:55 PM Reply Like
  • qrc3288
    , contributor
    Comments (315) | Send Message
     
    yes, what you guys say makes perfect sense. So all those appearances Omar Khan (co-CEO of NQ) did on CNBC, Bloomberg, etc. mean NQ is manipulating its own stock. Riggght.

     

    I think what you mean to say is you would like to blame someone - including some media conspiracy, love it - other than yourself for such a dog of an investment.
    30 Jun, 11:57 PM Reply Like
  • bashiru
    , contributor
    Comments (117) | Send Message
     
    QRC, so you just expect NQ management to pretty much lay down and take all the negative and false accusations without rebutal (sic) or make any attempt to refute all the lies?

     

    Keep up the good work of kool-aid drinking off of shorts delusional and criminal approach of FUD; as long as it enriches your bank account, it does not matter if it's right or wrong.

     

    You and your shorts cohorts disgust me to no end and they always kirma is a biaaattcchh (sic), isn't it? Your sad day of reckoning will come soon.
    1 Jul, 10:50 AM Reply Like
  • qrc3288
    , contributor
    Comments (315) | Send Message
     
    @bashiru...actually I'd love to have NQ management out there explaining why the 20F is so delayed! 2+ months and counting. I mean, you're long right? Wouldn't you like to know what's going on? Or you just have blind faith that the golden boys at NQ got your back?

     

    Haha and I thank you for the kind thoughts. I don't fully understand the mishmash you've typed about kool-aid, criminality and "FUD" (?), but in general I think I get the gist that you don't like NQ is down 70% from the peak and you're looking for people to blame other than yourself for a bad investment decision.

     

    What I was referring to was the author's implication that shorts control the media by getting on Bloomberg and CNBC to make their point. Presumably, the author is referring to Carson Block as Public Enemy #1. I got a good chuckle out of that, because Omar was on the media circuit far more than Carson (before, of course, Omar went AWOL the last few months...). I just thought that comment about Carson "controlling" the media was pretty funny considering how much media time NQ had received, although I suspect you guys can't see the irony through the "kool-aid" you're drinking.
    1 Jul, 11:05 AM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » I am not saying that only shorts engage in what I call illegal behavior. This is evidenced by Enron, Worldcom and the many other indictments from the SEC & FBI on pump and dump schemes. I have not witnessed any bad behavior by Omar et al during this difficult time. Would I have done things differently? Yes... I would fight Carson in a very nasty and swift way!! NQ management, if anything, is too nice and naive!
    1 Jul, 01:05 PM Reply Like
  • qrc3288
    , contributor
    Comments (315) | Send Message
     
    @Mosbear...at least we can agree on that. I would absolutely love NQ to sue MW in a US court.
    1 Jul, 09:02 PM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » If I was the CEO of NQ, I'd push for a criminal case first. Let law enforcement/interpol dig up all MW finances first, then go civil in courts. Interrogatories would be much easier and fees less for company.
    1 Jul, 09:55 PM Reply Like
  • qrc3288
    , contributor
    Comments (315) | Send Message
     
    @mos...you understand how you're basically advocating a witch hunt? You understand it would be NQ who would have to provide info, right? Perhaps in China or Russia MW would be the one to face issues, but not in any country with genuine rule of law. MW is making claims. Most of them are protected under free speech in the US, unless of course it can be proven that MW is making obviously making false claims with the sole intention of profiting. I know that's what you guys are implying (and to me, you guys all sound absolutely bat $ hit crazy, because we spent years researching NQ ourselves and came to identical, independent conclusions as MW).

     

    How does one prove MW's claims are false? INVESTIGATORS AND REGULATORS MUST TALK TO NQ. And I'm all for that! Digging through MW's bank accounts as you suggest will yield you nothing useful, except perhaps to "prove" that MW has made a lot of money shorting NQ. Um, you don't need an investigator to prove that. Just look at the stock chart. OBVIOUSLY MUDDY WATERS HAD MADE A LOT OF MONEY SHORTING NQ! you really don't need the cops to tell you that.

     

    To prove MW is committing libel/defamation/etc., NQ will need to show those claims are false. So far, it hasn't. I think there is about 0% chance NQ would agree to that because I'm nearly certain NQ was faking most of its revenues.

     

    You say on another forum you hired a guy in Hangzhou to investigate claims about another company. I highly recommend you repeat that exercise here and hire a few Chinese MBAs or whatnot to privately investigate NQ, and I encourage you to come back here and report what you find.
    1 Jul, 11:01 PM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » Sorry, but there is a big difference between free speech and slander. Nothing that CB said would be called free speech. To attack a company (even if he is right) using the mass media and to profit from it is a crime. Let me remind you that NQ has proven that CB is wrong already: http://bit.ly/1tIzAPs
    Do you not think that my son's friends in Hangzhou only report to us on Kandi? Of course they give us Intel on NQ because they have friends in Beijing as well. You are beginning to sound like you actually are CB or someone very close to him... hmm....
    2 Jul, 06:54 AM Reply Like
  • qrc3288
    , contributor
    Comments (315) | Send Message
     
    @Mos, nope. Never met Carson in my life. Never done any biz with MW either. But I live in China. Been here a long time. Shorted plenty of frauds. Although I see what you're trying to insinuate about having done a lot of work, I either conclude you have morons working for you or are making things up. My bet is you actually haven't vetted NQ like you imply.

     

    Actually, unless proven otherwise, pretty much everything MW said about NQ is protected under freedom of speech. I doubt you actually know the NQ China team calling the shots, but if somehow you can get in touch with them I recommend you encourage them to sue MW in the US. Would be fantastic for all of us. Both longs and shorts can agree on that.
    2 Jul, 12:27 PM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » OK.. if you are not one of CB's inner circle, then you must be short? Can you disclose that? I can disclose that I am long...
    I respectfully should disagree with you about law suits - nobody wins those but criminals - I could do a much better job going after CB's mafia than NQ with the help of the Feds... he could face money laundering, wire fraud, stock manipulation and a whole number of charges. Unfortunately, I have ran investigations like that and they do not end well for the white collar criminals. A law suit in the US would be fruitless... a criminal case... now that is where it should go... even if CB is right on some of his projects!
    2 Jul, 02:37 PM Reply Like
  • kevh
    , contributor
    Comments (111) | Send Message
     
    It's abundantly clear that whatever Carson Block did is covered under free speech in the US legal system, and to build a libel and defamation suit in this case is a nearly insurmountable obstacle. The various lawsuits against Alfred Little and Citron Research have shown that as long as the short seller can provide some kind of evidence supporting their claim, they are protected. I know that some short sellers have lost cases in Canada but this, according to my knowledge, has yet to happen in the US.

     

    And qrc is correct in that NQ would have to open itself up to discovery. It is on the burden of NQ to prove that Carson Block's intent was to short and distort without any factual basis. Carson Block has the right to look through NQ's business to build a legal defense for himself.
    2 Jul, 03:52 PM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » Wrong on both counts... NQ would not have to do anything if it was a criminal case... + stating an opinion is covered by free speech but saying: "IT IS A FRAUD" - when its not true is grounds for court and there are provable damages!
    2 Jul, 04:29 PM Reply Like
  • kevh
    , contributor
    Comments (111) | Send Message
     
    Alfred Little, Muddy Waters, Citron Research have accused dozens of company being "frauds," with some being legitimate, but none of these firms have lost a case in the US despite numerous lawsuits.

     

    Even much larger firms, like Nu Skin, have refrained from this course of action because 1) the case is nearly unwinnable and 2) it forces you to open your books up where we all know, if you dig hard enough in China, you will always find some dirt.

     

    As for criminal investigation, how will this happen? If this is indeed in the cards, why aren't any of these guys in jail for the numerous companies that they said were frauds but ended up being exonerated?
    2 Jul, 04:46 PM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » The feds are just starting to wake up to it... Believe me... I am in the know... CB just might be the poster boy for it... IMO
    2 Jul, 05:46 PM Reply Like
  • Energysystems
    , contributor
    Comments (946) | Send Message
     
    You're in the know? Are you sure about that?
    2 Jul, 07:31 PM Reply Like
  • Joe A. Williams
    , contributor
    Comments (300) | Send Message
     
    They havent even filed a 20-f yet 8 months into 2014 & you are going for a criminal case?! wow.! It might be NQ who has a case put on themselves!
    Talk about the phrase "jumping the gun"! wow
    28 Jul, 10:00 PM Reply Like
  • Anyoption
    , contributor
    Comments (223) | Send Message
     
    Good article. The sad thing is that so many people actually watch the media to get their investment "tips"
    1 Jul, 07:33 AM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » Thank you all for your comments. I would appreciate it if you could share this with your networks.
    1 Jul, 07:58 AM Reply Like
  • adecinvestor
    , contributor
    Comments (223) | Send Message
     
    Rich, let us focus on NQ's issues.
    What do you think is holding the 20-F?
    How much time it would take for 20-F to be filed in your opinion?
    No matter what carson block says, if NQ can a good 20-F, things are clear. But 20-F just can't come out.
    2 Jul, 12:56 AM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » Based on my experience - the earliest is tonight and the very latest is 15 October - otherwise, the chances of delisting will be real.. Now this is speculation, but I know for a fact that PwC wanted to meet D&T forensic and get all on record and off record conclusions before they commenced the audit. That meeting could not have happened until June 5th... so the delay is very reasonable. My guess now is sometime in mid to late June to get it out - they wouldn't want it to go out to the fall - it would then really interfere with further filings and the cost would be enormous.
    2 Jul, 12:37 PM Reply Like
  • Energysystems
    , contributor
    Comments (946) | Send Message
     
    "Now this is speculation, but I know for a fact"....wait, what?
    2 Jul, 02:52 PM Reply Like
  • John Gibson
    , contributor
    Comments (46) | Send Message
     
    he meant that the timing of the 20-f is speculative and that he knows for a fact that PwC wanted to meet with D&T.
    no need to get mad at the guy for not being clear in a comment he wrote. happens to everybody. ELE: everybody love everybody: http://bit.ly/1rYWQtd
    2 Jul, 03:59 PM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » Thanks John... that is what I meant... energy trader is a troll in my opinion...
    2 Jul, 04:30 PM Reply Like
  • Energysystems
    , contributor
    Comments (946) | Send Message
     
    I'm a troll? You're the one already throwing around incredible accusations to multiple posters on this website. You've gone as far as personal attacks within, what, a month of posting on Seeking Alpha? LOL get a grip(on reality).
    2 Jul, 07:33 PM Reply Like
  • GrowthGeek
    , contributor
    Comments (898) | Send Message
     
    Sources state that Carson B. is actually a "cereal killer" whose daily breakfast is Alphabets. Every morning he finds all the "n's" and the "q's" and he sadistically crushes them.
    2 Jul, 04:29 PM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » It is much easier than calling KPMG a fraud - he would have to double his efforts just to eat breakfast!
    2 Jul, 04:31 PM Reply Like
  • rmn68
    , contributor
    Comments (10) | Send Message
     
    Rich I think you and John are the only ones who have anything credible to say on SA. The rest on this is noise. I was CFO of a large multi national and we used PWC. Once the fraud flares went up, they became hyper vigilant, waited for the D&T report and then had to recheck their audit inquiries and this is before getting to the audit notes where they are negotiating with management on language. It all takes a ton of time. If they come back with a qualified opinion it will be on some degree of revenue recognition... but even then it will be clarity and firms like Canacord will be able to reassess and put out research notes. God bless anyone willing to short at these levels because this can trade to 2x revenue in a heart beat. I have a big long position here and adding. I stuck it to QTR on QCOR and the same will happen here. Rich, thanks for your research and comments and Raven if you are reading this get some journalistic integrity - it's clear you are trying to make a living on a penny a click.
    3 Jul, 02:32 AM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » Thanks RMN68. Much appreciated & quite obvious that you know what you are talking about... also wanted to share my concerns on yesterday's supposed statement by NQ that this rumor (which it was) was quashed by NQ on Bloomberg... well that was bogus too - these same friends of ours allegedly fabricated a Bloomberg terminal into a screen shot, but I could never find it in Bloomberg! It appeared on flyon thewall. I then asked our friends to screen shot the entire screen and their reply was... it costs me $2000/yr to be a subscriber... these same guys also have lodged a complaint with SA to silence me. Now I can screen shot that! :))
    3 Jul, 06:01 AM Reply Like
  • GreenGrowthGeek
    , contributor
    Comments (640) | Send Message
     
    Thanks Rich--the shorts are having quite the party today--fireworks, barbecuing longs etc...but it's all noise and misdirection. Carson counts on Western bias before he shorts and distorts and he has successfully "banked" a lot of money on that strategy. I think I will stop reading short articles as I don't want to contribute to their bank accounts and all they have is attacks and fuzzy language and logic like "it appears" "seemingly" etc... Yes, it is easy to successfully attack a relatively small Chinese company with a complicated international structure and temporarily tank the share price. MW and other shorts have been quite successful at that to this point and don't think it will stop with an unqualified 20-F although that will certainly seal the deal for those who are not so biased.
    3 Jul, 01:27 PM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » Thx GGG - On a day where I have received some 130 taunts and harassing private messages, it is refreshing to have friends in the fox hole! I think NQ should tell Carson "sure - you can come in and audit us, can we do the same for you... " I cannot even imagine how much money he makes in short/distort... I now think the wild card is a nice buyout that takes care of common shareholders... seeing the way the board is being stacked, this could be the solution if they cannot come to complete terms on the 20F with PwC... one audit I managed was well over a $1 million USD a week, so I can see where Omar is counting shareholder value... they just need better PR/IR!!!
    3 Jul, 02:25 PM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » BTW - I went to sign up for PR newswire - they refused my press release because I had the words "Carson" and "Block" - those names were associated with bad journalism... doesn't that smell????????????
    3 Jul, 02:27 PM Reply Like
  • GreenGrowthGeek
    , contributor
    Comments (640) | Send Message
     
    Not a shocker that those words are red flagged in the reputable journalistic world.
    It's quite a dirty trick to force any small company (anywhere in the world) under a microscope and scrutinize every word and number using words like "it appears" and "seemingly" blah blah blah. NQ had held up quite well until the 20-F delays began in April and the pressure and panic has been unrelenting ever since with only the brief respite after the internal investigation results.
    My thoughts are that the company is certainly worth at least $7 a share even with a qualified audit and the current price is pretty ridiculous. With an unqualified audit the share price should hit at least $14 in short order. What are your thoughts given the continued delays?
    3 Jul, 03:32 PM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » If NQ would have added a Director of Corp Security (someone like me but maybe more blue blood and tougher) and a real tough General Counsel Attorney - they would probably not be where they are today. I call it naiveté of senior management - they are techies who are smart, successful product launchers but not CEO material.... the world is a dirty place and you need someone like a Brian Jellison at Roper to manage this!
    3 Jul, 03:49 PM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » I think the same. The only difference is that I think your numbers and my numbers are not in sync... yours are much more conservative.. I would say more like $10 (qualified audit) and $40 (unqualified). I think that all will be forgotten if, let's say, NQ releases a 20F with an unqualified audit opinion at the end of July! Having an intelligent conversation with you is soothing - hate mail count over 170... I have gotten a lot of encouraging ones though!
    3 Jul, 03:47 PM Reply Like
  • GreenGrowthGeek
    , contributor
    Comments (640) | Send Message
     
    Keep it up Rich and happy Independence Day. I know that my numbers are quite conservative--on purpose, as the market tends to have unpleasant surprises frequently (often based on manipulations).
    I got absolutely killed on Thursday as Regado is another big holding of mine. The story is far from over on that one as well. Small biotech and small Chinese companies require brass ones to be sure. NQ shorts will now say that I am referring to my brain, but that's okay : )
    4 Jul, 04:59 PM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » Hey GGG - Happy belated 4th to you my friend... there are also a lot of bulls crunching numbers on a buyout scenario. A lot of talk at $17-20 per share as a worse case. Hang in there with Regado. I don't know much about them but from the looks of it - they got a really good new board member. Also, remember - it is Stalingrad 1942 and we are surrounded by the Nazi's.. I will man the machine gun and you can be the sniper... I think good news is coming! :))
    5 Jul, 10:22 AM Reply Like
  • GreenGrowthGeek
    , contributor
    Comments (640) | Send Message
     
    Wow Rich I've got to say that the shorts are relentless and they are getting converts like Joe W. I hope that the damn 20-F gets filed soon so they can just shut up. Right now they are taking victory laps--kind of reminds me of NFL showboats who start celebrating before they cross the goal line and drop the ball short of the score.
    13 Jul, 09:03 PM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » Hi GGG - it will come in time.. they have until October. I was in their headquarters last week and it seemed like they were not too nervous about it... of course they could not share with me inside information but I got a good feeling... in high school we were tied with our arch rivals in baseball and their ace was pitching. I hit the first pitch and I "knew" it was gone over the left field fence... I was dancing and doing my trot around first - bu the wind apparently caught the ball and it hit the fence -- the first base coach started screaming at me - I was thrown out at second and the other team won in extra innings! :))
    14 Jul, 08:25 AM Reply Like
  • Mosbear64
    , contributor
    Comments (140) | Send Message
     
    Author’s reply » How do you feel now after 10 days? :))
    23 Jul, 08:24 PM Reply Like
  • GreenGrowthGeek
    , contributor
    Comments (640) | Send Message
     
    I knew that the turn around would come eventually. The drop in share price had been ridiculous, especially given the D&T report. The NQ saga since last October till at least the end of this year is certainly one that will be studied and written about for years to come.
    28 Jul, 10:41 AM Reply Like
  • Keubiko
    , contributor
    Comments (1413) | Send Message
     
    Alpha has to come from somewhere.
    15 Jul, 07:35 AM Reply Like
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