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Chris DeMuth Jr.
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"It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a misplaced bet - that they can occasionally find one." - Charlie Munger I look... More
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  • Spotting Lies For Fun And Profit 45 comments
    Aug 15, 2014 1:24 PM | about stocks: NQ, GS

    There are some statements that are always lies, because they involve topics that never tend to arise when the statements are true. Two of my favorite examples are liquidity and fidelity. Deadbeats and cheaters find themselves discussing these respective topics with great frequency, typically denying illiquidity and infidelity. However, if you have plenty of cash and are faithful to your spouse, the topics never really have any reason to arise. Therefore, for all intents and purposes, it is a safe assumption to distrust anyone who needs to spend a lot of time promising, swearing, and guaranteeing just how liquid and faithful he is. Sure, there must be counterexamples somewhere. But the point is that this distrust is a useful working assumption. If you require any further evidence to draw your attention to such lies, listen for the liar to add an "honestly" (as honesty itself rarely comes up in conversation with actually honest people. Honest people know that the truth is true, and thus it requires little amplification).

    If you are interested in learning more about evasion and deception detection, I would recommend Business Intelligence Advisors (BIA) for training. I have benefitted enormously from the training that they gave me. It makes listening and reading more fun because it gives you a winnable game to play. I will not give away any of their secrets but will mention a little about the theme of the education that I received from BIA. Telling the truth is simple and lying is more complicated. There are tricks that an analyst can use that exacerbate the difficulties involved in lying. These tricks make lies so noticeable that you can catch lies so consistently that you will almost feel sorry for liars. Almost.

    If you would like to read further, my favorite books on the topic include Detecting Lies and Deceit, Liespotting, The Unspoken Dialogue, Spy the Lie, and Effective Interviewing and Interrogation Techniques. I have gone through these books as well as several others that focus more specifically on accounting fraud so that I could synthesize my own system for fraud detection - in order to play defense on the long side and offense on the short side.

    The core assumption of my efforts at fraud detection is this: the basis of fraud is not evil or greed or any such permanent human condition. Instead, the basis of fraud is pressure. It is a specific kind of pressure: extreme responsibility for certain outcomes out of proportion to the authority and control over those outcomes. Once this pressure is established the next variable is this: little flexibility over decisions, but lots of flexibility over how decisions are subsequently described, communicated, and accounted. Then the environment is prepared.

    In every one of the many frauds that I have followed over the past decade, there were different variations on the following pattern. An executive knows that he could be fired for a failure and lavishly compensated for a success in period of time that is so short as to lack any statistical significance. He knows that it is all a matter of luck whether he succeeds or fails. It is not fair and he knows it. His ego is at stake as is his very livelihood. There is not much that he can do except… except in describing the outcome. No lie is required, only exaggeration and clever omissions. Nothing more as of yet. However, in subsequent quarters, the newly exaggerated claims have to be continued - and expanded - for the sake of logical continuity. Then at some point, probably not even a point that our executive notices, the exaggeration becomes a lie. That night, he goes to bed and sleeps the sleep of the just because he knows that what is said is something that he can make true in the future. By the time anyone notices, he can reconnect his claims with reality and no one will get hurt.

    The antithetical job of preventing instead of uncovering fraud is to take apart this environment. Setting aside the few angels (who will not break under massive pressure) and demons (whose evil needs no such pressure), most people lie if given the right circumstances, but will also tell the truth if the circumstances are changed. First, forgive fixable mistakes. Have a system and culture that casually, constantly, comfortably expects mistakes to be aired and corrected in the open. Lead on this by airing one's own failures in front of family, friends, and colleagues. Secondly, make hiring, firing, and compensation decisions that are directly related to factors under an employee's control. This requires that one gives up a lot of discretion so that enough authority is transferred to people with responsibilities that they will be judged on. Thirdly, borrow the Goldman Sachs (NYSE:GS) mantra to "be long-term greedy" because long-term greed places a great value on reputation and relationships that come with a radically honest culture. Fourth and finally, give decision makers no flexibility over the accounting for their successes and failures. In the case of money managers, portfolio management and fund administration should be two wholly separate functions. If someone allocates capital, they should have no role in administering that capital.

    All of that brings us to the following release from (NQ):

    NQ Mobile Inc. Announces Management Changes

    BEIJING and DALLAS, Aug. 15, 2014 /PRNewswire/ -- NQ Mobile Inc. ("NQ Mobile" or the "Company") (NYSE: NQ), a leading global provider of mobile Internet services, today announced certain changes to its management team.

    KB Teo, Chief Financial Officer of the Company, has resigned from his position for family reasons effective Friday, August 22, 2014. Dr. Vincent Wenyong Shi, Co-Founder and Chief Operating Officer of the Company, will take over as Acting Chief Financial Officer until a suitable replacement is found.

    The Company noted that Mr. Teo's departure is not related to the Company's operations, policies, or accounting practices and is due to family reasons. The Company values the contributions made by Mr. Teo during his tenure with the Company.

    "I would like to thank KB on behalf of the Board of Directors and management team for his service over the past year," commented Dr. Henry Lin, Chairman and Co-Chief Executive Officer of NQ Mobile. "He has been very supportive of the Company and we wish him well."

    The Company remains fully confident in all of its previously reported financials and filings as to their accuracy and does not expect any material changes.

    If you have studied evasion and deception with BIA, your attention was probably grabbed by at least seven different aspects of this press release. It is like a "Where's Waldo?" illustration of nothing but Waldos. But the short version is that these are not the kind of statements that ever tend to be said when they are true. The people in question are under enormous pressure. The whole situation started innocently enough with exaggerations. They had a lot of discretion in terms of how they described and accounted for their business. Now, they are working tirelessly at the job of maintaining logical continuity between their prior claims and the current reality. It is hard work that only gets harder with time and scrutiny.

    Disclosure: The author is short NQ.

    Additional disclosure: Chris DeMuth Jr is a portfolio manager at Rangeley Capital, a partnership that invests with a margin of safety by buying securities at deep discounts to their intrinsic value and unlocking that value through corporate events. In order to maximize total returns for our partners, we reserve the right to make investment decisions regarding any security without further notification except where such notification is required by law.

    Stocks: NQ, GS
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Comments (45)
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  • EquityTrader1975
    , contributor
    Comments (360) | Send Message
     
    Chinese insiders/executives are buying and selling stock with private acts with a hedge fund partner, they are making a killing,that explains why stop goes up on pwc firing, and head auditor quiting and cfo quiting, they are gaming the system for a fortune
    15 Aug 2014, 01:47 PM Reply Like
  • John Gibson
    , contributor
    Comments (60) | Send Message
     
    "But the short version is that these are not the kind of statements that ever tend to be said when they are true."

     

    Except when you are being accused of fraud left and right. If NQ was never accused of fraud, they would not be forced to make those kinds of statements.
    Good research and writing though...I just take a different perspective.
    15 Aug 2014, 03:15 PM Reply Like
  • EquityTrader1975
    , contributor
    Comments (360) | Send Message
     
    nq is not a fraud, but they are working with muddy waters from the start and a major hedge fund in china, plus executives are privately trading NQ, that why its like a circus and the opposite of what should be happening is happening, because it all orestrated, stock goes up on PWC fired!!! buyers were ready to buy dip, big big buyers not retail, the dip today on cfo, big buyers were ready to buy the dip, CFO has made so much on insider trading, quitting was a no brianer, he is super rich now. NQ hedge fund letting all shorts pile on to burn them take stock over 35 on nut sqeeze
    15 Aug 2014, 04:54 PM Reply Like
  • grendelbane
    , contributor
    Comments (263) | Send Message
     
    Reminds me of my relationships with women. (I am, at 58, single).

     

    Do women always tell the truth? The answer is no. Does this improve as one gets older? No.

     

    Are there women who don't lie? Yes, my mother was one. I have heard of others.

     

    Truth is an elusive thing. I would really like to find truth some day, but I don't think I ever will.

     

    One thing Barry Sadler taught me was the meaning of the phrase, "Caveat Emptor!".
    15 Aug 2014, 11:07 PM Reply Like
  • connellybarnes
    , contributor
    Comments (376) | Send Message
     
    I think the stealing/lying is partly genetic. Here's a good article about that by Joshua Kennon:

     

    http://bit.ly/1pUYLyC

     

    Personally I will say "white lies" to make peoples' feelings be pleasant, after much experience as a kid being absolutely devoted to accuracy and scientific truth and pissing everyone off. However, people usually detect the white lies because I have to think carefully and state each word slowly in an ambiguous way to make it be roughly consistent with objective reality.

     

    I would be terrible at poker. Actually on the topic of poker I would guess that there are small imperceptible motions of the face and eyes, that could be amplified by graphics techniques, to gain an edge. For example, I would guess peoples' eye motion is statistically different when they have a bad card than when they have a good card (and eye motions such as saccades are involuntary). Reminds me of the first wearable computer by Ed Thorp, which was for the purposes of gaining an edge in blackjack.
    17 Aug 2014, 05:00 PM Reply Like
  • Bo Yang
    , contributor
    Comments (82) | Send Message
     
    What do you think of NQ's price movement after change of auditor, and after resignation of CFO ? It seems inexplicable that the price rose, I'm down to conspiracy theories now.
    19 Aug 2014, 01:09 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4569) | Send Message
     
    Author’s reply » It is nuts, but I am short and generally think that the prices of my shorts are nuts.
    19 Aug 2014, 06:56 AM Reply Like
  • johnbarleycorn
    , contributor
    Comments (131) | Send Message
     
    ....John Mitchell, Richard Nixon's attorney general stepped down for 'family reasons' in the middle of Watergate. Of course in his case he also had to keep his wife quiet who wanted to blurt out the truth about illegal activities in the administration and claimed to have been drugged and locked in her California hotel room by the secret service.
    24 Aug 2014, 09:36 PM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    Chris --

     

    There is so much good information in this short column that you ought to sell it as a book: It has more high quality, useful information than most books do, even books on the subject of lying. Your advice on how to behave is even more valuable than the advice about how to detect lies. (I have devoted a bit of study to spotting lies too.)

     

    "Have a system and culture that casually, constantly, comfortably expects mistakes to be aired and corrected in the open. Lead on this by airing one's own failures in front of family, friends, and colleagues. "

     

    I can't tell you how good I think that advice is. I am continually amazed at how few people operate that way. People are hung up over admitting mistakes or being wrong. So they don't admit mistakes and apologize. Instead they opt for the alternatives: Blaming others, misdirected anger, and lying.

     

    Grendelbane said:

     

    "Truth is an elusive thing. I would really like to find truth some day, but I don't think I ever will."

     

    I tend to think that he is most of the way there by simply seeking it and knowing that we all have cognitive biases that will color, distort, and at times outright fabricate false information as a memory.

     

    I used to do a lot of litigation and worked with a lot of expert witnesses. When I was preparing them, I gave them a few short hard and fast rules. Some of those I expanded on, discussed the nuances, etc., some rules spoke for themselves.

     

    Rule 1 was "Always tell the truth."

     

    No elaboration needed, at least not in concept.

     

    Rule 2 was "Don't mistake your opinion for the truth."

     

    Rule 2 was intended to be somewhat humorous to help them remember, but I was deadly serious about it. Many people routinely regard whatever they think for whatever reason as essentially being the truth. They could have one fact and think they know what happened and fabricate, intentionally or not, a plethora of other facts/information to coincide with their view of the situation.

     

    And anyone who thinks they are immune from synthesizing and/or distorting information need only see a well done example of the hollow face illusion. It isn't a typical optical illusion where your mind has difficulty processing difficult sensory input and consequently sees first one thing, then the other. It is kind of on the other end of the optical illusion spectrum from those that work primarily that way.

     

    I have one called "The Living Image." ** It is a black box with a guy's face inside it. Rather than the face being convex, however, it is concave. There is also a light from below the face that shines up on the face.

     

    What happens is that when you look at it, it appears to be watching you. When you walk and look at it, it appears to keep looking at you: Like the face turns and follows you, not just a little, but a lot, probably for over 120 degrees as you walk along. I mean it REALLY seems to be watching you and following you.

     

    What is responsible for that is the fact that you are used to seeing convex faces that have light on them shining down from above. Although this is a concave face with light from below, you see it as a convex face. Your brain essentially makes up a bunch of non-existent information to reconcile what it thinks should be there with what is actually there. That works out to be a convex face that looks at you, not the concave face that never moves. You watch this thing one time and you will never think the same way about what you think and perceive again.

     

    By the way, I think "Grendelbane" is a really clever name. It seems particularly apropos for this article, given the nature of Beowulf. When I first read Beowulf I was having a hard time getting into it: I couldn't quit thinking "are these guys chowderheads or what" -- for buying the fighting with monsters under the sea stuff (it's been almost 40 years, so I don't remember the details well).

     

    Well, I enjoyed it a lot more once I figured out that the answer to that question was "yes" and not only those listening, but also the storyteller himself. They bought the great hero and monster stuff totally. That stuff was real as far as they were concerned: They had not the slightest problem telling it as truth or accepting it as such.

     

    Great article Chris. We ought to get together sometime and see who can pull the most bullshit over on the other guy.

     

    ** I highly, highly recommend "The Living Image." I was so taken with it when I saw it, I bought three of them. The price tag on mine is $33.00. The box has this information about the seller/producer:

     

    (c) 1998 Fancinations (NYSE:R) Toys and Gifts, Inc.
    Seattle, WA 98148
    Made in China
    Patent Pending
    Lasergraph Contour Imaging
    30 Aug 2014, 12:37 AM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    Sorry, I type really fast and don't always proofread.

     

    It should be (copyright) Fascinations (Registered) Toys and Gifts, Inc.

     

    I misspelled the company name and evidently SA inserted a stock symbol for me that I did not intend.
    30 Aug 2014, 12:28 PM Reply Like
  • connellybarnes
    , contributor
    Comments (376) | Send Message
     
    Good point about illusions. There is a 'self-serving bias' in psychology that documents many of these cognitive distortions:

     

    http://bit.ly/1bASQb0

     

    The visual illusions are mostly due to the first layers of the visual cortex trying to recover 3D geometry and materials from only 2D images. This is an ill-posed problem so our brains have instead evolved to make many assumptions. Here are some I showed in class in the last couple days:

     

    http://bit.ly/Y1u2ab
    http://bit.ly/Y1u3ed

     

    We also are evolved to detect human and animal faces everywhere, so we detect faces even in randomness, like Mars or in clouds:

     

    http://bit.ly/Y1u2af

     

    We can't recognize identity as well for people from other ethnicities (known as the "Other Race Effect"), probably due to more training examples of people of our own ethnicity, as well as mentally abstracting "others" into crude stereotypes. This has caused some people to be wrongfully convicted:

     

    http://bit.ly/Y1u3ee
    http://onforb.es/Y1u2ah

     

    Much of this happens in the visual cortex which decodes raw retinal information so it is subconscious. Interestingly even our perception of distance is modified based on whether we are sitting or standing, and our body geometry.

     

    There are a lot of connections between visual perception and behavioral economics.

     

    Three main themes I see are:

     

    (1) Information is subconsciously parsed by the brain under myriad assumptions, therefore it is more reliable to use objective measurements than to use what we see, hear, and feel;
    (2) Randomness is perceived as false patterns, particularly when these patterns are centered around the self;
    (3) Self-serving bias.

     

    I believe these biases actively conspire to cause many terrible investment behaviors. For example: extreme over-trading, belief in unprovable but likely dangerous assumptions ("the Fed has our back"), lack of Munger's "inversion" to carefully critique past mistakes and invert widespread beliefs, need to be right, not comparing with benchmarks in the long term, obsession with benchmarks in the short term, use of technical analysis to find imaginary patterns, unreasonable optimism and pessimism about future returns at market highs and lows, unwillingness to consider base rates and forecast returns objectively, and a mentality that there are many actionable ideas and relevant news.

     

    Since many of these biases are subconscious they occur in everyone, it's not a matter of "being smart enough" to avoid them. Thus, I use explicit rules to counteract them. For example, since people overtrade, I've started to target only two investment ideas a year. Since people over-react to randomness I take the default view that essentially everything I see and read is random, and I want a very extreme margin of safety. For investment techniques that appear to have worked well, I ask whether it was an illusion created by self-serving bias, and what are the dangers going forward?

     

    Even subtle things like color are backwards on Wall Street. In China they have better colors: green for loss and red for gain. If stocks showed green ("go") for joyful market crashes and red ("stop") for painful bull markets, investment performance would likely be better on average.

     

    http://bit.ly/Y1u3eh
    30 Aug 2014, 02:02 PM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    @connellybarnes--

     

    Those are some cool illusions. I was amazed at how far off I was on the arrow-- even knowing how it was going to distort my effort.

     

    The checkerboard is still one that just blows me away (my daughter who is 8 couldn't believe it either).

     

    Wikipedia actually has one of their best articles under the title "List of Cognitive Biases." It is really fun to just kind of work through them all thinking about them. http://bit.ly/U3c28e

     

    Yeah, the seeing patterns in random information is a bit difficult to ferret out, even when you are aware of the tendency to do it. On the investing side, I recently read a really fun book called "The Little Book of Behavioral Investing" by Montier. A great fun fast read.

     

    You can only do so much to eliminate your own biases, but I definitely think it is worth not only being conscious of them, but also affirmatively trying to find them at play in your decision making processes. I guess I think of it as at least being "in the game" has got to allow you some advantage over those who don't know they are playing, at least.

     

    A couple of other pretty good books: "A Mind of its Own" by Cordelia Fine (and certainly listen to the Jimmy Dale Gilmore song "My Mind has a Mind of its Own" too . . . . ); and "Mistakes Were Made (but not by me)" by Carol Tavris and Elliot Aronson.

     

    Both of these has some stuff I found kind of annoying, but were worth the read anyway. Plus I was conscious of the fact that my personal cognitive biases would be unduly influencing a decision to quit reading . . . . So, ever the unbiased one, I went ahead and read them . . . . I have another similar book along the cognitive dissonance/self-serving bias that I liked even better than those two, but the the title of which isn't coming to mind now, nor is it on the shelf it should be (my wife has a size thing for putting books away). I'll post it when I think of it or spot it.

     

    And, for a lesson on what a skilled movie can do to use commonly held biases and upend them to totally upset how you feel, think about that in the context of "No Country for Old Men."
    28 Sep 2014, 05:40 PM Reply Like
  • connellybarnes
    , contributor
    Comments (376) | Send Message
     
    @TimeOnTarget: Thanks for the recommendations. I am reading the Little Book of Behavioral Investing now and will check out the others.

     

    The visual system is incredibly fascinating. For example, the sharp part of our vision is only about 2 degrees of the visual field, in the fovea, about twice the width of a thumb held at arm's length. The rest of the visual world that we perceive is very blurry, but involuntary movements of the eye give us the illusion that we can sharply perceive a larger field of view. The first neurons in the human visual system furthermore discard the vast majority of even this tiny amount of sharp information, retaining only edges, corners, rapid motion, and relative but not absolute lightness (that's why the checker illusion works). This information is what we perceive, but it endures only briefly in short-term visual memory.

     

    Our brains compress down a vast amount of visual information to a very small perception, because we have a limited processing budget. But they also give us the illusion that our perception represents the objective world. Other species like mantis shrimp can see 12 colors versus our 3, and polarization, and can detect cancer with their eyesight. It brings to mind the Allegory of the Cave by Plato. We perceive shadows, not reality.

     

    In my scientific research, I tried to exploit limitations in perception to create computational camouflage, inspired by biological camouflage. It's only partly successful, but fun:

     

    http://bit.ly/1pHjIdn

     

    The most interesting problem in investing to me is about belief and stories. If we input random information into our neural circuitry, as humans we get out belief and stories. But in the context of investing however they are nearly all false, in the sense that they are generated by random information that does not permit any edge.

     

    My favorite fiction author is Terry Pratchett, who writes about how our psychology essentially requires stories because of our need to decide, to be sure, to distinguish right from wrong. Investing then is the most unnatural art of not believing in stories, of disbelieving everything and being skeptical of beauty, truth, love, devotion, good, and evil.

     

    We see throughout this website that people want to believe in stories, but actually they are nearly all false. I find it fascinating. Why do people believe? How can you falsify hypotheses to determine what is true, objectively? How can you proceed empirically if objective measurements are few, faulty, and subjective to narrative bias?
    1 Oct 2014, 11:50 PM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    The massive reliance on readily understandable stories can have some rather profound negative consequences, e.g., "If it doesn't fit, you must acquit."

     

    I learned a memorable lesson in how well camouflage can work. Years ago when paintball guns first came out they were single shot. It took several seconds to reload after firing.

     

    I played a game created for them called "The Survival Game." It was in a valley, with a very clear edge, which was the boundary. Basically it was like capture the flag with teams, but the strategy was wildly different. A straight rush and you were almost certain to be killed. When you were killed, you had to hold your hand up and walk off silently.

     

    The valley was 1/4 to 1/2 a mile wide and there was roughly half - 3/4th a mile between flags: The teams each started at their own flag and couldn't see each other in the early stages. Camouflage, concealment, and stealth played a big role. I decided to get an advantageous position for long range gunning by tracing the valley edge until I got behind and above the other teams flag. My shots would carry further and I wouldn't be subject to a quick and undetected attack.

     

    Over the course of about an hour, I painstakingly stayed out of sight and made my way very carefully along the highest part of one edge just before the boundary. I hadn't gotten to where I wanted yet, but I was close. I had paused behind a tree that was no more than 5 feet from the edge and was peering out from behind it trying to spot people below.

     

    I suddenly felt a really, really sharp pain in my lower back. I wheeled around and there was one of the other team, totally camouflaged up, including face, sitting up with his pistol pointed at me. He then just lies back down and is damn near invisible. The entire distance from the tiny little path I had followed to get to the tree and the edge/boundary was maybe 5 feet. I had gone right along that from before where he was lying down, very slowly worked my way past him at a range of roughly a foot, and had paused very shortly after I passed him to take cover behind the tree. I was going slowly enough and carefully enough that it took me several minutes to cover that little bit of ground.

     

    But even though I was insanely close and he really wasn't in that brushy an area at all -- a couple of small scraggly small shrubs and a light leaf cover on the ground, I didn't see him at all. That made a huge impression on me, an impression that was reinforced by how much that paint ball hurt at a range of 2 feet -- I had a nasty welt and then a circular bruise for about two weeks.

     

    Anyway, it totally got me into cammo. I have had a couple of times where I have had deer get close enough to me so that I literally could have tackled them. I didn't ever try. Both times with them about 2-3 feet away, I just said "boo" in a soft voice. Anyway, I was apparently an rather unexpected surprise: I think if deer shit themselves from surprise, those guys would have. They jumped and hauled ass like nobody's business.
    2 Oct 2014, 01:51 PM Reply Like
  • grendelbane
    , contributor
    Comments (263) | Send Message
     
    True story.

     

    There I was, knee deep in hot brass. Lucy Lieu and Lucy Lawless by my side.

     

    Those nasty underground sea monsters kept coming. My M4 was so hot, that I threw it behind me, and grabbed a replacement from Lucy. (I forget if it was Lucy Lieu, or Lucy Lawless).

     

    See? I can tell a story without involving blondes.
    30 Aug 2014, 10:34 AM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    Chris --

     

    This is another book that I would definitely read. It has some good stuff in it. I haven't read the revised version, but I liked the first edition.

     

    There are lots of little tidbits in it that prove useful. One is that liars never like to involve other people in their lies--so watch for narrative that just involves what they said and thought.

     

    http://amzn.to/1rmtwQg
    28 Sep 2014, 05:07 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4569) | Send Message
     
    Author’s reply » Very interesting. Thanks. I can guarantee that AMZN will benefit from at least one customer order today! -C
    28 Sep 2014, 05:09 PM Reply Like
  • sheldond
    , contributor
    Comments (1199) | Send Message
     
    The funny truth is that all people lie and mostly to themselves...finding liars is easy when people have mirrors.

     

    I never trust those that say they know everything or always have a reason for knowing everything. Anyone who uses numbers to justify actions. Anyone who manipulates statistics or people.

     

    Truth is rarely absolute and often shaded.

     

    When someone looks upper right when answering a direct question they are activating their creative side. As a former administrator....I have tons of techniques to detect liars...and I have been told some whoppers.

     

    I made up some good ones in my youth as well. We live and learn.

     

    D
    28 Sep 2014, 05:31 PM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    @sheldond--

     

    Yes, but being conscious of it helps. I just saw a review for this book, which I haven't gotten yet, but plan to.

     

    http://bit.ly/1DZNoNg

     

    A review: http://bit.ly/1DZNoNj

     

    Also, I had read this a long time ago and finally tracked it back down.

     

    When in Doubt, Shout! : Paradoxical Influences of Doubt on Proselytizing

     

    http://bit.ly/1qVbSwP

     

    It made perfect sense to me. I have worked a lot with expert witnesses over the years. In preparing them one thing I always emphasized was that I wanted them to be much more like a detached professor whose only concern is trying to explain things than an advocate for our position. I thought of it in terms of credibility and vehement people rarely seemed to have much credibility. (Something I fail on frequently, I admit.)

     

    Also consider, e.g., global warming, in light of this article. Both sides of the argument are usually vociferous.

     

    Having spent a substantial amount of time trying to understand the issues, with marginal success at the edges on some of the big concepts and mechanisms, I can guarantee you that the vast, vast majority of those vociferous people really don't understand squat about it. It is some of the toughest science I have ever seen.

     

    Or, e.g., religious fanaticism. If someone had doubts about whether there would actually be 72 virgins waiting for him after he blew himself up, but really wanted there to be . . . . Hey, anyone know what is up in the Middle East lately??
    1 Oct 2014, 09:40 AM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    This guy obviously read my comment and then slapped together something to get put in the WSJ on the same day.

     

    http://on.wsj.com/1E2xba3

     

    Anyway, I thought it was a bit of a funny coincidence to find someone else on the same day citing global warming and the middle east for the doubt/vehemence thing. But the stupid SOB got the facts wrong: He totally forgot about the significant change in the ocean heat content. Ohhh dat makes me mad . . . . .
    1 Oct 2014, 11:11 PM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    And now that I think of it, he is off in what he said about the Salem witch trials too. Those weren't a matter of one person just pointing at the next at all.

     

    Salem was far later than most witch hunts. It likely occurred in part because it was children making the accusations--kind of a weird imprimatur of credibility. What analysis found later is that the children making the accusations belonged to a more rural and religious sect of the town -- the kids of the pious farmers.

     

    Those that they accused of being witches had the misfortune to be more of the merchant and tavern ilk. A tension existed between the farmers and merchants on the "direction" of the town. As in turned out, the farmer's children were able to help resolve the conflict. There is no indication that they were put up to it by adults: Rather, it seems like they just "pitched in" themselves, perhaps even quite unconsciously.

     

    There is a good book about all that stuff called "Salem Possessed." I forget the author right now.

     

    In fact, the "pointing at someone else and accusing them of being a witch" at didn't even really happen all that much during the Great Witch Hunt in Europe, or at least it wasn't a defining characteristic of how and why witches were found. For that you had to consider a variety of factors, including the recent developments in the legal process: The shift from trial by ordeal to the inquisitorial method.

     

    While more scientific, the inquisitorial method was still being developed: It turned out that applied zealously it could yield some false positives. At the time, however, confessions seemed to validate the process. We can't forget the role that the monks were able to play drafting descriptions of the shameless erotic activities that, e.g., an incubus and sucubus might engage in; Witch hunting manuals were a HUGE help in enabling communities to ferret out these activities.

     

    Demographically, the great witch hunt occurred at a time when there were a disproportionate number of elderly single women (boys being boys and doing wars and things). Naturally, the economy wasn't as robust as it might have been through this period. It turned out that the great witch hunt had a somewhat salutary effect overall on the on the burden the communities faced with all the elderly, single women: Coincidentally a lot of them turned out to be witches and were burned. So that was 50-100 thousand less mouths to feed.

     

    Finally, and lest you think I have totally lost sight of the subject, perhaps the most significant factor in causing the great witch hunt was the Protestant Reformation. It turned out that there were relatively few witches in areas that were either strongly Catholic or that were strongly Protestant. In transitional areas, however, where the two competing theologies vied for status as the one, true way, it turned out that there were witches all over the place.

     

    So, in a weird way the guy who wrote that article was sort of on the right track talking about witch hunts, but it wasn't a point at someone else thing as much as it was a security in beliefs thing.
    2 Oct 2014, 08:37 AM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    Also, there used to be some FBI training that I found on the web. I'll see if I can hunt that down too. Plus, another book is something like "Never Be Lied to Again." I think that is the title. I loaned that one and it didn't come back, so I have to buy another copy. (Hey, now there is an idea for a start up company, tracking chips for books and CDs . . . . It would save me some money, that is for sure.) It is by the same guy who wrote "How to Get Anyone to Do Anything" (doesn't work if you are married--trust me).
    28 Sep 2014, 05:45 PM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (676) | Send Message
     
    Thanks for this great article! I just wonder whether you litterally mean that there are 7 things wrong with the press release. I only count 4 or maybe 5.
    29 Sep 2014, 01:59 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4569) | Send Message
     
    Author’s reply » I was literal, but I was also parsing by treating each point in each sentence as a separate claim.
    29 Sep 2014, 06:25 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (676) | Send Message
     
    Again I find this a great article, thanks. The trouble I have is indeed how to tell whether a company is telling the truth or is lying. In the first case the company is worth a lot and in the second case it's worth nothing. So I suppose I should read the books you suggested.

     

    I saw your comments on ITT Educational Services (ESI). This company looked very cheap but they were not telling the truth, at least not the whole truth. When I warned people in my first book the price was $13. When it was $45 a year later I thought I must have been wrong. Yet the accounting problems were in plain sight: at the moment the share price is below $5.

     

    I had read only one book to learn how to spot this one: Financial Shenanigans: How to Detect Accounting Gimmicks. I have also read Quality of Earnings from Thornton L. O'glove. And I have read a couple of scientific papers on accounting problems.

     

    Can you recommend me some more scientific papers and books on detecting accounting problems that were useful for you?

     

    After reading this article I remembered that there are some scientific papers on how to interpret conference calls. Unfortunately I wasn't able to access these papers. So after reading your article I did a new search. And indeed, in the mean time others have published some more papers:

     

    http://bit.ly/1rnfYE4

     

    http://bit.ly/1rnfWfq

     

    http://bit.ly/1rnfWft

     

    http://bit.ly1rnfWfv~/media/9EA6...
    Correction: SA breaks this url, so in parts:
    research dot chicagobooth dot edu slash tilde slash media slash 9EA607 1D50F74 191A919 B0F7786 80247 dot pdf (remove 4 spaces after the last slash)

     

    And this is probably one of the papers I could not access before:
    http://bit.ly/1rnfWfy
    29 Sep 2014, 09:11 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (676) | Send Message
     
    In the last paper I linked to above I found another recommendation for Business Intelligence Advisors:

     

    A Boston-based company called Business Intelligence Advisors (BIA) employs a number of former CIA and other national-security operatives to perform behavior analyses of corporate executives to detect when managers are being less than open or outright lying in their communications with shareholders. Its specialists try to gauge whether, during interviews, earnings conference calls, press releases or management discussions in 10-Ks, managers definitively and directly answer questions and forthrightly address issues or tap dance around subjects. Hedge funds constitute BIA’s primary customers. Laing 2006 discusses several examples of assessments conducted by BIA analysts. For instance, “JPMorgan Chase CEO Jamie Dimon scores fairly well on the candor front in a recent earnings conference call by forthrightly dealing with his concerns over the bank’s credit-card growth and the likely rise in nonperforming commercial loans.” Kodak executives, on the other hand, “in their latest earnings conference call, were less than open about the company’s back-to-school sales prospects, in-store kiosk results and campaign to boost operating margins.” And, as if General Motors didn’t have enough problems, “the analysts give its management low marks for openness and credibility”.

     

    Unfortunately I have no other option than cheap training such as by reading relevant papers and the books you mentioned.
    1 Oct 2014, 08:57 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (676) | Send Message
     
    "Costly Talk in Earnings Conference Calls and Short Selling",

     

    Unfortunately no pdf available yet. Abstract:

     

    We examine the short-selling response to earnings conference call linguistic tone and find evidence that short selling is inversely related to conference call tone (soft information) and unrelated to the earnings surprise (hard information). In most cases, negative tone strengthens short sellers' return predictability. An exception to these relations is that short sellers target firms with both high earnings surprise and high tone, particularly in the introduction of the conference call. The combination of positive earnings surprise and positive tone strengthens short sellers' return predictability. This result indicates that short sellers may suspect “inflated” call language by managers that can lead to stock price overreaction.
    1 Oct 2014, 05:00 AM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    @Ruerd Heeg --

     

    First, I don't know squat about accounting. I mix up terms and concepts sometimes and to actually understand financial statements, I have to spend some time with them. Even when I spend time, one thing that becomes real apparent to me is that some companies want you to understand what they are doing, what they are spending, and what money is coming in from where. Other companies seem to have obfuscation as their guiding principle.

     

    This is a link to a small Colombian O&G company (Toronto Exchange listed -- CNE) that I have followed for 2-3 years. One of the things I like about them is that I can actually somewhat tell where they are spending their money, which things are making money, and which things are not. They seem to make an effort to make it accessible for even non-financial guys like me to be able to understand their business to some degree. Note in particular that they include information about "netbacks" -- which is basically how much they make per barrel they produce. If you aren't looking at netbacks for O&G companies, you are missing a big part of the picture. Chevron always (recently) has good netbacks and they always talk about them. http://bit.ly/1DZL6h9

     

    Then compare the CNE press release to Sandridge Energy's latest earnings press release. http://bit.ly/1DZL6hb

     

    First page: Adjusted earnings of 6 cents a share with adjusted EBIDTA of $210 million for the quarter. Then buried on page 4 is that they actually lost 6 cents a share.

     

    Notice also how they give you some of their production expenses, but don't calculate a netback. I think that is because their netbacks are horrible. I did some rough calculations a while back and my take on it was they don't make squat per BOE produced.

     

    When I get into their 10-Ks and 10-Qs I never seem to have enough information to figure what is going on. I cannot tell what expenses are transitory and what expenses are long-term, normal expenses, etc. In short, they make it a real booger to figure out if they are actually making anything on their assets or are capable of making anything on their assets in the future.

     

    So, I have to look at their production stats mostly and try to figure out their decline rates. They reported something like a 65% IRR in their most recent presentation and showed the "type curve" for their wells as being 380 thousand barrels estimated ultimate recovery (EUR). The only way I could calculate close to a 380 EUR from the figures they gave was throwing out all their non-commercial wells, which were as high as 41% in the past and even after a good quarter of drilling it appeared their non-commercial and marginally commercial wells were 25% of their total wells.

     

    More distressing were the EUR calculations I did based on the wells in their trust. They had 160 wells, all of which have now been drilled. I added up all they had produced to this point. Then I took the best (lowest) of the most recent three quarter decline rates, cut that in half to be conservative, and went out something like another 10 quarters or so (to the point where the production was so minimal it didn't seem to matter much). Anyway, it was rough, but I came up with something like a 45 thousand EUR average, or making a conservative assumption that their production figures reflected only a 57% financial interest rate in the wells (the minimum requirement for the trust wells) and adjusting the figure up, I still only came up with roughly a 62 thousand EUR. Admittedly, these were very rough calculations, but I would bet a lot of money the actual production amounts will be a lot closer to my figure than theirs.

     

    It seems to me they bet the company on developing a marginal formation like people develop the Bakken and Eagle Ford. It just doesn't work in the Mississippian Lime. I have yet to see anything from the company that really shows me that they can make ANY money off it, much less enough to warrant investing int.

     

    Anyway, I used to work for one of the O&G majors, so I am not totally clueless. I should be able to figure out some basic stuff, I would think. But with SD, figuring anything out is a struggle. And that makes me not trust them. CNE makes it easy and I do trust them.
    1 Oct 2014, 09:32 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (676) | Send Message
     
    @TimeOnTarget: well I don't really want to hijack Chris' page but I think that might be a good find.

     

    I think less disclosure predicts lower performance. Especially when combined with differential disclosure, like here. SD has so much operational cash flow that I wouldn't short it. If you think SD's cash flow will decrease in future due to depletion of wells then it might better to wait until just before these wells stop producing.
    1 Oct 2014, 10:00 AM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    @Ruerd Heeg --

     

    Naah. It's coming quicker than you think. What you have to bear in mind is that a lot of their cash flow had been created by huge amounts of Capex spending -- like literally virtually as much capex as revenue for several years.

     

    But, despite all that capex, they have lousy assets, so they can't maintain their production. I just looked at their production info again, and in particular their well decline rates -- or rather their purported decline rates/type curve/EUR compared to a very good statistical sample of 160 wells (roughly 10 percent of their total wells) in varying locations.

     

    These guys are toast. There is no way that anyone is going to be buying their type curve/EUR "optimism" after this next quarter. They do have enough cash on had to maybe last another year, but they won't be able to maintain their production unless they keep a pretty horrible burn rate going.

     

    Plus, to top it off, they have a contractual obligation with Oxy for providing CO2, which is removed from their natural gas streams. If they don't deliver enough, they take potentially a pretty big hickey. I think they have accrued $37 million for this year alone already and they are still blowing and going with a giant capex overspend. If they come off that at all, their production is just going to plummet.

     

    You can tell by looking at what happens quarter to quarter with the number of wells they drill and the lack of production growth. Plus, the entire 160 well Sandridge Royalty Trust is a perfect little study in the productivity of their wells and their decline rates. There is simply not squat they can do to keep some serious questions from arising now about what they have been saying about their EURs and decline rates.

     

    Even giving virtually every favorable inference I could, I wound up with a back of the envelope calculation of something like 62MBOE for a EUR for their SDT wells. 62M is a long, long way from 380M. And if this problem is showing up now, given the saltwater they produce, I am pretty sure things are going to be getting worse, not better.

     

    I just put a comment in another article with some figures and some discussion of the information in their investor presentations:

     

    http://seekingalpha.co...

     

    I've looked at this one a lot. I even recommended it to Chris, which I wouldn't have done if I hadn't looked at it pretty well (i.e., I'm as conscious as the next guy about looking like a moron and about not trying to teach your Grandmother how to suck eggs (good metaphor Chris?).)

     

    Plus, I've thieved most of the substance from articles that Richard Zeits wrote. I've just found a bit of extra dirt -- or rather dirt that he chose not to go into. I might not know my stuff, but Richard is the best O&G analyst I have ever seen.

     

    I actually want to check the covenants in the indentures to their existing notes, but haven't done it yet. Their $200 million buy back seems to have totally backfired on them. There could be something in those that might be a catalyst.

     

    Anyway, they have revised their type curve and EUR down a couple of times before--their NAV too -- they were claiming a $15 Billion NAV about a year and a half ago -- now they are claiming less than 5. I'm not sure exactly what would trigger the obligation to revise those, but I may look into it more. I'm thinking that with another quarter of data pretty much everyone is going to start going "BS, BS," but it does surprise me how slow the market can be really slow to pick up on obvious stuff sometimes and at other times respond virtually instantly to stuff that is really hidden or way out there.

     

    Anyway, I expect SD's share price to implode before they actually are technically insolvent. Basically they have no realistic was to dig themselves out of the hole they are in and everyone is going to see it.

     

    Plus, there is another pretty fun catalyst, or something that may turn out to be a catalyst.
    1 Oct 2014, 11:43 PM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (676) | Send Message
     
    Speaking of lies: I am watching a tv program about Ordina. This IT body shop gets a large part of its revenue from the Dutch government. It seems that they are suspected of corruption and similar misbehaviour. It seems to be really big with high managers possibly involved. Stock price already 18% down.
    2 Oct 2014, 03:11 PM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    When I see stuff like that my first thought is to be totally amazed that just 10 or so years years after that spate of frauds -- company-destroying and news-headline grabbing, heart-attack inducing, prison-sentence consequence, frauds -- that people still haven't learned. Then I would think about it and realize that it was much more complicated that that. I never, however, put it together the way Chris described it above:

     

    "The core assumption of my efforts at fraud detection is this: the basis of fraud is not evil or greed or any such permanent human condition. Instead, the basis of fraud is pressure. It is a specific kind of pressure: extreme responsibility for certain outcomes out of proportion to the authority and control over those outcomes. Once this pressure is established the next variable is this: little flexibility over decisions, but lots of flexibility over how decisions are subsequently described, communicated, and accounted. Then the environment is prepared."

     

    That is just a really insightful, actually freaking brilliant, description of what occurs. (Don't tell Chris I said so, he may start thinking he is responsible for results and start using his flexibility to describe things . . . . ). You can see how it could slip up on people and I am sure it wound up being a very slippery and ill-understood slope for them in lots of cases.

     

    Like Sandridge. I actually really feel sorry for their management now. They were put in just a horrible situation and one in which all of a sudden they were responsible for the results. And the results they were trained to think of was share price (a part of me likes companies that aren't obsessed with share price or short term movements). But pretty much all they had left was the Mississippian Lime. Lots of it and very little of it good.

     

    Not only that, they had a bunch of prior baggage with how the Mississippian Lime was described (Big Bad Wolf level sales puffing). And the language and specifics that had been used before didn't match with the performance picture they had to present. And everyone was already pissed off about Tom Ward.

     

    And so it seems to me, and completely consistent with what Chris described, they started to smear some edges to make some things less distinct and put bright happy colors on things that were not necessarily bright and happy (e.g., the amount of salt water they generated and all the money they had and have to spend to dispose of it--the goal is producing oil, not saltwater).

     

    And really, the way things are set up, what can they do? They can't say, "that guy . . . he was a real moron . . . we are a terrible investment these days . . . not likely to ever be able to pay back what we owe, much less make additional money." They would get sued even quicker for saying that.
    3 Oct 2014, 12:32 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (676) | Send Message
     
    OK, I have read one of the books you recommended, from Albert Vrij. Great book, thanks!

     

    To practise I have been watching the following video, an interview with the GlobalStar CEO:
    http://yhoo.it/11DXN1P

     

    Forgive me my lie bias in judging this video but have a look yourself if you have time. Especially the first 5 minutes are interesting.

     

    The CEO is explaining the benefits of GSAT's wifi technology very fluently, probably scripted with his IR department. But a couple of times, each time after several very fluent sentences he is hesitating. Especially after the interaction with Jim Cramer on his wifi experience. That might show a little bit of cognitive stress, suspicious.

     

    On the content side: he does not give any concrete example of why Kerrisdale might be wrong, he doesn't go into details, which is also suspicious.

     

    We will see.
    21 Nov 2014, 05:14 PM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    @Ruerd Heeg--

     

    I missed your comment when you posted it, but you are right, this is a cool clip.

     

    I don't know squat about the technical issues involved with Globalstar, or really squat about the company. Although I did read the report at the time, my recollection is basically the issue was whether they were trying to sell a Ford Pinto as a sports car.

     

    So, I don't know squat about the subject matter, but I do know coached. Coached to an amazing degree. An unhealthy degree in my mind. Lawyers call it wood shedding or horse shedding. One ever-so-true maxim is that too much time in the horse shed makes the witness smell like a horse.

     

    I bet he was coached on what to do with his hands. I bet that he was coached to make eye contact and to show some animation when he was speaking. Both those things scream artificial to me.

     

    He's not a natural, nor is he relaxed. Watch him squeeze his hands together when they are in his lap. I'm not seeing outrage or conviction, I'm seeing anxiety. I'm guessing that is why he is careful to keep his hands clasped in his lap most of the time.

     

    He basically begins with something along the lines of "everyone understood we were great, needed, and valuable before these guys came along." I don't doubt that is how he sees it.

     

    As you said, "he does not give any concrete example of why Kerrisdale might be wrong . . . . " Yep. He doesn't anything like "those guys don't know how our business works or what we intend to do." Or "they think we are a turnip, but we are actually kale." Nothing remotely like it.

     

    You would think if they were getting lambasted for selling lead boats that they would at least say "we want them to sink because they drive along the bottom." Instead you get a pretty lame "people buy quality." Convinced me of nothing except to be real suspicious.

     

    Don't know whether he is lying or not, but I'm pretty sure he isn't outraged in the slightest, is very nervous, and has been coached to the point of being totally unnatural.

     

    Like you point out, where is the retort? Sometimes it is the missing note that ties the music together.
    24 Dec 2014, 02:57 AM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    Chris --

     

    I happened to read this article today.

     

    http://seekingalpha.co...

     

    It, of course, made me want to return to this column and compliment you.

     

    You, Sir, have a nose for manure . . . . .
    24 Dec 2014, 03:00 AM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2908) | Send Message
     
    And I mean that is the best possible way . . . .
    25 Dec 2014, 12:12 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4569) | Send Message
     
    Author’s reply » Thanks! (Strangely enough, I've always loved horses and never minded their actual manure. NQ-style manure I like less well).
    28 Dec 2014, 06:01 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4569) | Send Message
     
    Author’s reply » NQ -34% since August 15th...
    4 Jan, 11:43 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4569) | Send Message
     
    Author’s reply » *NOUY SAYS GREEK BANKS ARE 'PRETTY STRONG', HAVE STRENGTHENED THEIR BALANCE SHEETS

     

    *ECB'S NOUY SAYS GREEK BANKS WILL SURVIVE CURRENT CRISIS
    28 Jan, 07:01 PM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (676) | Send Message
     
    I saw this comment yesterday and after that I read a Washington Post article from January 31 about the effect of bank runs on the negotiations. Very convincing article, I suppose you read it when it was published. So are you short Greek banks? Seems to be a great bet.
    18 Feb, 01:56 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4569) | Send Message
     
    Author’s reply » I am neither long nor short them, have looked at a few but couldn't make a decision.
    18 Feb, 06:41 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (676) | Send Message
     
    Greece aims to conclude a deal with its euro zone partners "soon".

     

    http://reut.rs/1BoX8l3

     

    "We are doing everything to reach a mutually beneficial agreement. Our aim is to conclude this agreement soon," Gabriel Sakellaridis told Skai TV. "We are trying to find the common points."

     

    Indicates that they try to find common points but there are none so they won't find any.
    19 Feb, 03:45 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4569) | Send Message
     
    Author’s reply » "DSK Isn’t a Pimp": http://bloom.bg/1L8CY0l another claim that rarely needs to be made when it is 100% true.
    17 Feb, 11:15 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (676) | Send Message
     
    What I find difficult is to determine where to cross the line between informative statements and unnecessary statements. See for example this one:
    http://on.ft.com/1EnNIEi

     

    At the end it says: "The Group remains committed to its AIM listing."

     

    I wonder whether this is this an unintentionally unhandy remark or should it be interpreted as "we will keep our listing on the AIM (UK) but watch out because the exchange could delist us" or "we keep listed until the ceo buys out the other shareholders".

     

    As with some other Chinese smallcaps listed on foreign exchanges this Camkids netnet has way more cash than it needs and probably more cash than would be good for them. They do pay a dividend though.
    18 Feb, 07:18 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4569) | Send Message
     
    Author’s reply » Ruerd, good question. In the example that you gave, I don't know the answer and would not even hazard a guess because I have not been through base lining their statements. The key is to find historical examples and to elicit current examples of truths that are 100% verifiably true. One needs to know exactly what one sounds like, looks like, and acts like when telling the truth. That is why table banter is so important in poker. That makes it much easier to judge deviations. Otherwise, a lot of evasion detection is more snake oil than real science. Some people (including me) are fidgety and are have trouble sitting still when we are lying and when we are telling the truth. It is not a tell. So it could be misleading to point to any one action unless one can first monitor truth telling in response to a low pressure question.

     

    -C
    18 Feb, 07:24 AM Reply Like
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