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The Green River Intrinsic Value fund is a relatively concentrated, long/short equity strategy. The fund seeks long-term absolute returns investing in deeply mispriced securities which are identified through a careful process of methodical fundamental research and due diligence.
  • Petty Bickering  12 comments
    Mar 3, 2013 12:55 PM | about stocks: UNXL

    I'm posting an exchange I've had with Xuhua on VIC. I'm doing this for three reasons: 1) to demonstrate how delusional his arguments have become; 2) because there are a couple data points in these arguments that are worthwhile; and 3) VIC doesn't have as large an audience as SA.

    I don't enjoy this petty bickering at all, but it's better than allowing this guy to spread his disinformation freely.

    First comes a note from Wanna (Xuhua), and then my (ShGreen) response.

    From Wanna:

    Shgreen, I abhor debating you on Unipixel for a lot of reasons. For one, to a pair of naked eyes, your argument sounds incredibly well-reasoned and seemingly factual. It takes time to break down your writing and rebut what you've written. I'm going to respond to you one last time on this topic and then let's move on and let the market decide (to me, its UNXL's mgmt on when they are bailing out of the scam).

    1.VIC is filled with independent members. I'm in fact relatively new to the club. To think I have 5 pseudonyms on VIC is laughable. One could have 50 pseudonyms Seeking Alpha on the other hand.

    2. You say you have never said "the stock is going to $100". You are absolutely right on that front. In the thesis you published above, you said "That five percent share could mean a valuation of around $180".

    3. I do not believe there's any long-term risk to being short the stock because I believe it is a fraud. i. they have no viable tehnology ii. the market is substantial smaller than what the management is boasting iii. their guided pricing is simply uncompetitive in the marketplace further suggests the management doesn't even have a clue about its business iiii.they stole the technology from CIT per the lawsuit. And those are just evidence against the company on the fundamental business side, not to mention all the obvious red flags around the management team.

    4. I find it puzzling that you would accuse me of spreading lies and misinformation. You stated on multiple occasions that you've spoken with dozens of leading experts, analysts and companies on Uniboss and the feedback was uniformly extremely positive. Funny enough, I have heard the exact opposite from all the industry people I have spoken with. People who have looked into the situation further told me the technology is not viable; people who have glanced it over told me it is a very risky investment. To me, its either your claim of speaking with experts is either completely bogus or the people we spoke with live on two different planets. Additionally, I'd like to point out that Benjamine Wiley, who's an accomplished chemistry researcher at Duke University, has done years of research in the alternative non-ITO based solution and he is highly convinced that the mgmt of Unipixel is full of shit and UniBoss is not a viable technology. Scott, how many years of chemistry have you taken?? The fact you would argue with him on technical aspects of UniBoss instead of listening shows you are either way over your head or you have little respect to evidence stacked against you. I challenge you to name ONE expert you've spoken with that told you UniBoss will revoluntionize the touch industry.

    5. Your defense for insider sales is completely baseless. The management team of Unipixel is well aware of the situation surrounding its company. Legitimate executives would never sell a substantial amount of shares before the materialization of their bullish statements made two days before the sale. Moreover, how could discretionary sale be more comforting to you than 10b5-1 plan sale? It makes zero sense. FWIW, I do believe the mgmt had been in possession of the most material information for the whole time --- they are scamming everybody.

    Finally, I'll tell you why you are potentially hurting the working man and you may have done a lot of damages when all plays out. To me, the only reasonable investment thesis on Unipixel is if you assign a different probability set to the likely outcomes of Unipixel. Mine stands at 0% of success, but I could reasonably see other professionals who have done less research assign a 5% probability of success. That is fine since he will allocate appropriately. For an average retail trader, the story often plays out differently. Some Joe would buy into the stock with 20 or maybe 30 grand of his savings at maybe 18 dollar a share after reading your analysis that the stock has a fair valuation of $180 a share, thinking he will strike it big this time. Let me assure you, he will have a very hard time cutting his losses when the share price starts collapsing and before he realizes, the stock is at 3 dollar a share...I have heard many heartfelt stories from retail investors in CCME, CHBT etc... They never would have gotten involved had it not been for the pseudo intellectual analysis put out by the likes of you. You may have been intellectually honest about your analysis, but you sure as hell did not warn against those risks to the group of investors you are preaching to...And that is what disturbs me the most. FYI, I take pride in my ability to publicize the debate. At least the retail guys will look at it with a more cautious eye.

    RESPONSE FROM SHGREEN.............

    Wanna,

    Your abhorrence of our debates is understandable. Every time you offer some baseless lie, some outrageous claim with no substantive backing, or some weak analysis, I call you out on it. I'm sure this is difficult for you.

    I'm happy to let the market decide this debate and end our discussion. Yet I'm not prepared to sit by and watch you publish misleading analysis about UNXL without defending the truth.

    I'll respond to each of your claims below, and then we'll put this to rest (hopefully), and let the market digest the events of the next few months and come to its own conclusion.

    1) I'm glad to hear that you don't have 5 pseudonyms on this board. I'll take your word for it.

    2) You accused me of being promotional. Yet I have made no claims that I know where the stock price will be. You have. Your note says that you are convinced it will trade to $5. My note shows my base case scenario where the company gains five percent share (only producing to the capacity of its one confirmed contract) of the market and "could" trade to $180. My wording is much less definitive than yours, and it is thus less promotional. I've laid out several examples where you have made unfounded and misleading claims - I consider that promotional.

    Here's a quote directly from my second piece on SA which speaks to the balanced, non-promotional view I try to offer:

    "I've been around small cap investing long enough to understand that there's a lot that I don't know. Though I have done a fair amount of due diligence on Uni-Pixel and the ITO market, and have gained a high degree of confidence with respect to the company and its competitive positioning, the outcome is far from certain. Nothing is definitive until it's in the rear view mirror."

    3) You state below "I do not believe there's any long-term risk to being short the stock" and you and your henchmen accuse me of seeing only one side of the story? You accuse me of being promotional? Statements like this make you appear incredibly naïve - I can only hope that you don't serve in any kind of fiduciary capacity. Your quote actually reminds me of an infamous one from Robert Merton, then with Long Term Captial Management, when he claimed that his models indicated he could manage the risk in the portfolio to zero. We all know how that ended!

    Do you realize, Wanna, that close to 40% of the outstanding shares are short? Do you realize that this is likely more than half of the effective float? Let's just say you're right and the company and its multitude of partners are effectuating an enormous fraud upon the hapless and somewhat dimwitted long investors such as myself, Wellington, and Fidelity. Nonetheless, UNXL is able to pull off one last hurrah, and sign an ecosystem partner to another preferred price and capacity license agreement (as they claim they will in the near-term), with a large upfront engineering fee. The stock would immediately gain 50-100% (my guess) and your stock could easily be called away from you, forcing you to realize a substantial loss, possibly leading to margin calls as well. This would seem to be a risk regardless of your long-term thesis.

    Now, we can debate the likelihood of the scenario I've just proposed. I know you think it unlikely, but can you honestly say that it's zero?

    You think there's no risk to being short because you believe the company is a fraud, yet you've never been able to substantiate any of the points of "proof" you offer in support of your thesis. On the other hand, the long side has substantive proof behind it. I have seen this product being produced in a roll-to-roll fashion at commercial scale. I have seen it come off the line and undergo extensive quality test and measurement. I have spoken with a variety of multi-billion dollar partners who have often spent in excess of six months evaluating UniBoss's production process before partnering. Are you sure your position carries no long-term risk?

    I am sure that you will question the veracity of my proof, but don't take my word for it. Go see it for yourself. I know that there's a group going to see the company later this month. Call some of the partners and ask them yourself.

    4)Why do you find it puzzling that I would accuse you of spreading lies and misinformation? This is precisely what you've done in a public forum for all to see. There's little room for debate here, Wanna. I've listed a few factual examples below:

    a. In your first article you directly referenced a UNXL corporate presentation from November 2010 and claimed that it anticipated an $800mn UniBoss market opportunity by 2016. You accused management of making statements "aimed at intentionally misleading the market about the size of its market opportunity." But you lied, Wanna. The slide that you referenced clearly and obviously stated the opportunity was for the "Mobile Touch Panel Market Only." Management hadn't intentionally misled anyone, Wanna, but you had, and the facts are there for all to see. A clear example of "not letting the facts get in the way of a good story," right Wanna?

    b. You claim in one of your articles that, "My analysis and understanding of UniBoss' technology stem from numerous discussions with unbiased experts and researchers in the nanotechnology sector." Calling these experts unbiased is a complete lie. Nanotechnology is being used to develop ITO alternatives that would compete with UniBoss, and nanotechnology companies and experts are directly threatened by UniPixel's success. To call these experts "unbiased" is without doubt a bald-faced lie. You also failed to mention that your key expert, Nanomarkets, is paid directly by an assortment of UniPixel competitors.

    c. You claimed to see "observable coppery color" in Dan VanOrstrand's product demonstration when there is absolutely zero coppery color observable on the touch sensor display itself. You intended to deceive the audience here by referencing the copper bezel circuit, and implying that this copper color was problematic as it would impact the display transmissivity.

    d. In your most recent article you claimed "there is simply no plausible explanation" for the omission of UNXL's contract with the PC OEM per SEC Item 601 (b) (10) of Regulation S-K. Yet before your article was published you knew that there was a highly plausible reason this contract was not filed. You knew that the company didn't have to file the contract because it was entered into in the "ordinary course of business." You knew this because I told you it was so, and because you could read Item 601 and see this for yourself. But you valued the truth far less importantly than the idea of perpetuating your short myth.

    I hope this explanation has left you feeling less puzzled as to why I would accuse you of spreading lies and misinformation. You have provided many other examples we could discuss, but I'm trying to limit the length of this response.

    You might get away with lying once to deceive investors and make a case that you made an innocent mistake, Wanna. There is a clear pattern here, however, and while I'm not a lawyer I would guess that a pattern like this one would firmly establish your intent.

    Under point 4 you claim that I stated that I had talked with numerous experts and "the feedback was uniformly extremely positive." I honestly don't remember writing that, Wanna. Can you find that quote for me, or am I to assume that you are fabricating yet another story to mislead the audience? What's one more lie after all?

    Here's a direct quote from my article that speaks to the feedback I got from experts:

    "I spoke with two engineers who work within very large controller businesses. Despite the fact that they each had business reasons to feel somewhat threatened by UniBoss, they both readily admitted that the UniBoss technology was solid, and that Uni-Pixel would likely win business at larger screen sizes." This is a far cry from what you claim I said, Wanna. Please explain the discrepancy.

    The fact of the matter is that I've spoken with a number of "experts" who were very negative on UniBoss. I am very familiar with the bear story on this name. In fact, I have had lunch with the one person who has likely served as the primary short source on UniPixel. He is a former employee of the company, and I'm fairly confident you've spoken with him as well.

    This individual has personal grievances with Reed, and he has business interests which further bias him against the company. Regardless of his biases, it's his arguments that matter. And these arguments simply aren't strong enough to convince me that UNXL won't be successful. This is also true of the other "negative" experts with whom I've spoken. Like your Multek engineer and Ben Wiley, they were somewhat out of touch with UniPixel's advancements, and they all had economic reasons to downplay the prospects for metal mesh. We can delve further into some of these arguments in more detail if you wish.

    In short, the reason that you come up with universally negative feedback from your "unbiased experts" is simple - it's selection bias. Go dig up an expert at TXN who is involved with UniBoss, try Synaptics, try N-Trig, try Dell. If you find the correct contact at these companies you will hear positive sentiments, but it will be balanced with enthusiasm for other technologies. They all have reasons to protect their business interests outside of metal mesh.

    You attack me for having the temerity to question Ben Wiley's UniPixel analysis, and you point to my lack of chemistry background. What you've missed, Wanna, is that I didn't challenge assistant professor Wiley's understanding of the chemistry behind metal mesh touch sensors. I did (convincingly I think) debunk his ideas about the lack of economic viability of UniBoss, and his assessment of UniBoss's market opportunity. To his credit, I don't think Ben Wiley intended to mislead anyone. I think he was blinded a bit by his business interests, and was ill-informed and confused about some of the data.

    To answer your final challenge under item four - I cannot name a single expert who has told me that UniBoss will revolutionize the touch sensor market. In fact, I don't think UniBoss will revolutionize this market. I think it's an evolutionary product that will have (along with other metal mesh technologies) a sizable impact.

    5) I'm sorry that my explanation about management sales didn't make sense to you. Perhaps if you read it again it would help? Understand that upper management is almost always in possession of material inside information which is why they generally sell stock through 10b5-1 plans. This said, I believe the only way management can buy stock in a discretionary manner is if they don't possess material positive inside information. The only way they can sell it in a discretionary manner is if they don't possess material negative inside information. Hopefully this helps you understand my statement more clearly.

    Finally, as to your argument about the working man, all investors take risks when they buy stocks based on what they learn from people like you and me. We owe it to them to make our respective disclosures revealing our respective biases - then we do our honest best to convince readers that our perspective is more informed, and our outlook is more likely than the other guy's. Beyond this it's caveat emptor. Either of us could be right - it's the market after all, and there's a lot of uncertainty.

    The problem comes when one of us isn't telling the truth - when one of us is deceiving and manipulating investors for his own personal gain, trying to make points without regard for the truth, when one of us misleads by omitting material information, when one of us misleads by misrepresentation. This is when things get serious, Wanna. This is when people get into trouble and investors can say that they were intentionally wronged.

    Disclosure: I am long UNXL.

    Stocks: UNXL
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Comments (13)
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  • Chris Hofmann
    , contributor
    Comments (756) | Send Message
     
    From Today's PR:

     

    "Management will discuss the company’s progress towards revolutionizing the touch screen market, including its recently signed agreement with a major PC maker."

     

    Clearly somebody thinks it is revolutionary ;)
    4 Mar 2013, 02:33 PM Reply Like
  • Green River Asset
    , contributor
    Comments (261) | Send Message
     
    Author’s reply » What do I know? I'm a joke. Just ask realist. ;)
    4 Mar 2013, 03:11 PM Reply Like
  • Chris Hofmann
    , contributor
    Comments (756) | Send Message
     
    haha, I liked realist's argument with me this morning about the market cap of UNXL...
    4 Mar 2013, 03:12 PM Reply Like
  • Green River Asset
    , contributor
    Comments (261) | Send Message
     
    Author’s reply » I think you made his day
    4 Mar 2013, 03:18 PM Reply Like
  • pahrah
    , contributor
    Comments (278) | Send Message
     
    ZZZZZZZZZZZZZZZZZZZZ. ZZZZZZZZZZZZZZZZZZZZ

     

    Which one of you is Mr Z?
    5 Mar 2013, 05:12 AM Reply Like
  • Xuhua Zhou
    , contributor
    Comments (148) | Send Message
     
    Dude, VIC messages are private and I'm done debating with you on Unipixel. I don't understand why you felt the urge the post the communication. It's funny you did not post all the board messages on your idea or tell people that your unipixel got one of the lowest ratings on VIC. Judging by your performance data, you seem to have way overallocated on your unipixel's position. A word of advice from someone who's done overallocation and suffered huge personal losses, diversity a bit. I wish you the best as it seems like you aren't a professional pump and dump guy. Its always wise to take a little profit and scale back your position a bit after a 5x move. FWIW, It's strictly business for me..I think after this unipixel episode ends, you may want to explore an alternative career path. It's one thing to run a private wealth portfolio and quite a different thing to be in the hedge fund world...You seem exceedingly gullible and amateurish in your understanding of the stock market and the business world in general.
    6 Mar 2013, 11:51 PM Reply Like
  • pahrah
    , contributor
    Comments (278) | Send Message
     
    Just curious. If this is private, then how did I get here? I don't understand. All I did was click on someone's name, I think.

     

    Any of you can answer? There may be a glitch in how this private access is set up? If I can get in, then anyone can get in.

     

    And Xuhua Zhou, I feel your pain on this one. Honest. Private should be Private.

     

    Sincerely.
    7 Mar 2013, 02:54 AM Reply Like
  • Green River Asset
    , contributor
    Comments (261) | Send Message
     
    Author’s reply » Thanks for the kind words, Xuhua. You might want to put more time into doing some balanced due diligence, and less into giving out career advice.
    7 Mar 2013, 07:46 AM Reply Like
  • Chris Hofmann
    , contributor
    Comments (756) | Send Message
     
    Xuhua meant that the VIC message board is private, not that this post was private. Also, while the VIC message board is "private", it is still a message board. Anybody can sign up and view the boards after passing a little entrance test type thing.

     

    It was not a private discussion between two people.
    7 Mar 2013, 08:14 AM Reply Like
  • brentvwilliams
    , contributor
    Comments (7) | Send Message
     
    Xuhua -

     

    I am long UNXL but I would certainly be interested in hearing VIC's perspective on the stock. Would you consider posting?

     

    Thx
    11 Mar 2013, 06:41 AM Reply Like
  • Green River Asset
    , contributor
    Comments (261) | Send Message
     
    Author’s reply » Brent, VIC is just a message board. It doesn't render opinions on ideas. VIC members rate ideas.

     

    My UniPixel posting has a low rating from other VIC members. This is likely due to the fact that VIC seems to have attracted a lot of UniPixel shorts. If you join VIC you'll see that every comment (with one exception) made on the article came from a short.
    11 Mar 2013, 07:41 AM Reply Like
  • Xuhua Zhou
    , contributor
    Comments (148) | Send Message
     
    It's a private message board for a reason and I don't plan on posting any comments. If you still own the stock, the only piece of advice I would give you is not to bet your life savings on this and do not double down on this. Gamble with what you can afford to lose...Though it's my personal opinion you have a much better shot in vegas than making money on Unipixel...
    11 Mar 2013, 08:03 AM Reply Like
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