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  • I have found the hogs 8 comments
    Jul 26, 2011 7:46 AM | about stocks: HOGS

    When it comes to investing in China RTOs, there is simply no substitute for on the ground DD. Some of the OTGDDs are fairy easy to carry out, HOGS is one such case. Assuming company is telling the truth, all you need to do is to follow the company list and locate the shop and take a photo, that’s exactly what I asked my investigator to do.

    I’ve chosen Anyang city because it has been scouted by CER street by street, in taxis, and on motor bikes, and CER found 8 branded stores in Anyang city, so we have a benchmark to compare to. Furthermore, it’s a third tier small city which is easy to investigate, one probably needs to spend a week in Shanghai to figure it all out, for Anyang, it’s a one day job. Anyang is also one of the home bases of Zhongpin, so one should expect rather good coverage there. I have chosen 20 CONSECUTIVE stores on Zhongpin’s list to show that I won’t mark the bullseye after the shot. They are list item 151 – 171 on Zhongpin’s list , excluding nr. 153, which is in a county, not in the city.

    I have found 17 out of 20 stores! The pictures are here , at the address that the company said where you could find them. In addition, I have also found store that didn’t show up on the list, and stores that are not within the 20 names, just like CER did, in Anyang city. China is changing fast, so I guess a fluctuation of 10-20% can be expected in one and a half months, also it’s possible that I have missed some stores, some addresses are a little confusing. The key point however, is that 17 out of a short list of 20 is a pretty good score, which completely overturned the story that CER painted, aren’t it?

    Given I have found 17 out of 20, it would be natural to wonder why CER only found 8 out of the entire city? Maybe some of them are too hard to find? Not at all, Nr. 161 is very hard to miss according to my investigator, it’ the biggest farm market and everyone knows that there is a chain of Zhongpin stores,  Maybe CER’s investigator didn’t ask anyone local when they did their investigation, after all, they are the authority in OTGDD, why ask local? One can argue that Nr.161 is in a farm market, though among the most popular place to buy meat in China, but nevertheless, you don’t see it in a taxi. How about this one facing the street in the city center? It’s not in my 20 names but nr. 189 on Zhongpin’s list, if you ask any locals where you can find Zhongpin shop, they most likely would point that one out too, how could CER miss one facing the street in the city center of a small city such as Anyang? How could they make the claim: “(We are confident as to thoroughness of our research in this respect. – CER)”? But let’s not forget, they have missed most of what Zhongpin has in Anyang, so I am not so confident, nor is the market if I look at the price reaction.

    Maybe they are hiding something? When doing a crime investigation, you need to find out the motive, would CER have a motive to lie? YES, although CER takes no position itself, however, one call I placed to CER’s Graham Earnshaw recently, I asked him how he made his publication profitable, he mentioned that he provided services to hedge funds that wanted to do OTGDD, in this case, it is probably a short fund and with clear instruction. I see HOGS is suing CER, easy to guess where I gonna place my money.

    GEO investing, a OTGDD team with better track records and reputation, has shown that HOGS SAIC revenue matches SEC’s, other things aside, CER’s story contradicts diagonally with GEO’s finding, once again, my money isn’t with CER.


    Stocks: HOGS
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Comments (8)
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  • clicks001
    , contributor
    Comments (423) | Send Message
    Interesting and somewhat reassuring point of view. It is always somewhat scary to invest in China, but this report seems to be piggybacking the recent SinoForest issues.


    I am long HOGS, so I certainly hope their investigation is as shallow as your article shows. But regardless they have done a great disservice to the shareprice.
    26 Jul 2011, 10:16 AM Reply Like
  • johnz
    , contributor
    Comments (270) | Send Message
    Author’s reply » I am no expert in on the ground DD, but this one is so easy that even I could do it. I offer no analysis or new approach, just the photos, which should speak for themselves. CER has found 8 shops in Anyang, 2 of which they have shown a photo, which are included in my 17, if mine is bogus, they would have pointed out with their remaining 6, (one of which is not even in Zhongpin's list, which I also have but didn't show.)
    26 Jul 2011, 10:33 AM Reply Like
  • clicks001
    , contributor
    Comments (423) | Send Message
    They have not really issued too much in the way of reply to what you offered. And even though they maintain they were 'right' in the second article, it sounds less sure of itself.
    26 Jul 2011, 01:41 PM Reply Like
  • SanFranRyan
    , contributor
    Comments (11) | Send Message
    Thank you very much John. This is very reassuring. The truth will set you free as they say.


    I see a lot of grouping China all together in investors, a common form of underlying racism. "They all look the same etc" becomes they all are crooks etc." Racism is grouping people together and assuming one size fits all.


    I see China as I see the Wild West the U.S. Were the business people of the Wild West all bad guys? No, some good and some bad. Less enforcement means easier cheating, then and now.


    Remember every Chinese business and every Chinese person is different. Just as is the case in the U.S.
    26 Jul 2011, 03:43 PM Reply Like
  • jimidean
    , contributor
    Comments (182) | Send Message
    Come on CER, your silence on this article is very telling, either refute him or admit your mistakes, to remain silent speaks volumes
    26 Jul 2011, 09:28 PM Reply Like
  • clicks001
    , contributor
    Comments (423) | Send Message
    Unfortunately, they don't have to do anything. The damage is done. This stock is a trader's dream right now.
    27 Jul 2011, 09:54 AM Reply Like
  • sf123
    , contributor
    Comments (38) | Send Message
    Johnz, do you think Zongpin may have mixed some supermarket counter locations in the retial store list? Because #170 and #171 look to me are supermarket counters.
    Has Zhongpin ever provided a list of supermarket counters locations? They are suppose to have more than 2000 of these locations.
    1 Aug 2011, 04:11 PM Reply Like
  • johnz
    , contributor
    Comments (270) | Send Message
    Author’s reply » I guess 170 & 171 are small pap&mom supermarkets, maybe they are counted as retails stores. The supermarket of Zhongpin most likely refers to chains. I am not sure about this, maybe we need to ask Zhongpin.
    Zhongpin did a tour in Shanghai last friday with investors and analysts, they scored a 9 out of 9. Wonder why CER wasn't there to select stores.
    I stay by my original conclusion that CER is a fraud and misled investors with false information, intentional or otherwise.
    1 Aug 2011, 08:37 PM Reply Like
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