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From the folks who shot down Rino International (RINO) - its auditor is invalidating financial...

From the folks who shot down Rino International (RINO) - its auditor is invalidating financial statements for the past three years - the next Chinese stock fraud could be Orient Paper (ONP -7%). "We are confident that ONP is a fraud," the Muddy Waters research report begins. "Its purpose is to raise and misappropriate tens of millions of dollars."
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Comments (2)
  • Jake Huneycutt
    , contributor
    Comments (1360) | Send Message
     
    It's only going to get worse. So many of these Chinese micro/small caps traded on US-only exchanges have major issues and many are outright scams.

     

    I don't know enough to specifically say which ones are frauds; but I know that from investigating the financial statements of about 20-30 firms, that a substantial portion of them had a lot of red flags. Still wouldn't short them, though, because even if you pick out 10 potential scams and you're right on 7 of them, you'll potentially get burned on the three you're wrong about so much that it will probably cancel out any gains.

     

    The real money to be made here is from figuring out which of these perceived "scam" firms might actually be legit. I'm willing to wager there are a few; but I don't have enough knowledge or confidence in this arena to take advantage.
    19 Nov 2010, 05:13 PM Reply Like
  • Tom Au, CFA
    , contributor
    Comments (6777) | Send Message
     
    If Chanos could figure out how to identify these stocks, he'd do very well.
    19 Nov 2010, 07:53 PM Reply Like
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