Recent publications by short positioned people have obviously and with great success attempted to bring the market back into heavy doubts about Gulf Resources (NASAQ:GFRE).
Although responses to previous allegations have been made by the company, well controlled by US Securities and Exchange Commission (SEC), and although Gulf Resources's 2011Q1 results are outstanding, profiting from the doubled prices on the Bromine market, investors seems to fail to connect the dots.
Mainly due to a recent article by an unknown "Kerrisdale Capital Management" on this very website, trying to convince people that this company making too much money is a reason to sell shares. Using previously refuted allegations, and based on middle-age financial information, which would be pre-2008 market data.
The small weakening of the Chinese growth has apparently opened a new way for vultures to make profits : if Chinese shares don't go up anymore, let's make them go down while they're still high, playing on people's irrational fears and momentary disappointments, unfortunately emphasized by the PUDA case.
One can only say : Bravo ! To this new strategy. It's brilliantly working, fooling the most hopeful of long investors into a terrible trap, crushing their economies while they come in and have to go out with terrible losses.
Anyway, this strategy is without considering the request by Gulf Resources, accepted by the SEC months ago, to buy back shares for 10M$. Short sellers, be on your guard as a massive buying movement introduced by the company of let's say only 500k-shares at once could lead the prices to a 5-6$ plateau and bring your profits to losses while bringing some senses back into the market.
Each investor should measure the risks they're taking short or long, but based on verified information : SEC fillings and law enforcements. GFRE has won on legal basis, but still not on market basis.
Last point, all these allegations are graciously disregarding true and important information like the reports linked by the following article that went unnoticed :
HONG KONG -- (MARKETWIRE) -- 05/18/11 --
Today, WorldStreetFundamentals.com released its industry report highlighting Gulf Resources, Inc. (NASDAQ: GFRE) and Cabot Corporation (NYSE: CBT). Full fundamental and technical analysis is available at WorldStreetFundamentals.com/Reports.php.
With US National Gross Domestic Product beginning to move beyond high-watermark, it marks a significant shift away from recessionary pressures. The US Department of Commerce has confirmed growth within first quarter 2011, opening the strong possibility of companies within sub-sectors to experience organic revenue growth. This represents opportunity amidst issues with high-margin and specialty products. This opportunity is provided by limited exposure to rising commodity costs. Although raw material cost increases will continue to pressure margins, well-positioned companies can leverage organic growth and general consolidation of product lines to further bottom-line growth.
World Street Fundamentals has highlighted Gulf Resources for its focus on manufacturing and trading bromine and crude salt, and manufacturing and selling chemical products used in oil and gas field exploration, oil and gas distribution, oil field drilling, wastewater processing, papermaking chemical agents and inorganic chemicals. As of December 31, 2009, its products have been sold only within the People´s Republic of China. Gulf Resources business operations are conducted in two segments: bromine and crude salt, and chemical products. The Company manufactures and distributes bromine through its wholly owned subsidiary, Shouguang City Haoyuan Chemical Company Limited (NYSEARCA:SCHC). The entire report on Gulf Resources, Inc. (NASDAQ: GFRE) is available here: WorldStreetFundamentals.com/ViewFullRepo....
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: I will wait until the market comes to it's senses to get in GFRE