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  • What Is The World's Largest Net Lease REIT Worth? [View article]
    Brad - Great analysis. Question: wrt the Red Lobster rental, what's the difference between $118,500 cash rent you calculated from the purchase price and the $163,107 figure you used to calculate the NAV? Shouldn't the $118,500 figure be used to calculate NAV? Thanks
    Jan 30, 2015. 12:39 AM | Likes Like |Link to Comment
  • Universal Display +23.8% on LG Display deal [View news story]
    Jan 26, 2015. 09:45 AM | Likes Like |Link to Comment
  • Value Trap, Or Why The Prospects For Dorian LPG May Be Bleak [View article]
    Jan 25, 2015. 05:34 PM | Likes Like |Link to Comment
  • U.S. Equipment Rental Demand Makes The Correction In United Rentals A Buying Opportunity [View article]
    Jan 24, 2015. 10:13 PM | 1 Like Like |Link to Comment
  • American Realty: Schorsch Falls, AFFO Rises [View article]
    all of the senior management were NS's appointees. they must all go. this is a net lease business. they don't need expensive managers to collect rent from the portfolio
    Dec 16, 2014. 10:41 AM | 1 Like Like |Link to Comment
  • Valuing Sears Holdings' Subscription Rights [View article]
    this analysis is flawed. you need to assume that the enterprise value remains the same post the offering (unless you believe this financial transaction adds value) the issuance of additional bonds effectively displaces equity value as the bonds are senior to equity and the intrinsic value of the equity decreases. fliper is correct
    Nov 3, 2014. 10:28 AM | Likes Like |Link to Comment
  • How NQ Mobile Is Like Longtop Financial Technologies [View article]
    is this a serious question? if you don't know why YTD needs to be audited then you have yet to understand the concerns with NQ and the dubious role YTD plays in all this. if NQ was receiving payments from China Mobile directly or from a truly independent SP, we wouldn't be here discussing this. YTD is acting as a shell to generate fake revenues for NQ. NQ could easily act as their own SP (YDT only has 15 employees and there's nothing technologically challenging about what they do), but they don't because they will need to show to their auditors cash receipts and documentation from China Mobile. Much easier to have a related-party like YDT produce all the documentation required for NQ's auditors to fool investors like you
    Nov 9, 2013. 02:48 AM | 1 Like Like |Link to Comment
  • How NQ Mobile Is Like Longtop Financial Technologies [View article]
    buddy, you're missing the point. stock ended at around $11.00 the day it completed the transfer of cash and it's sitting at $11.50 at the moment. my point was if cash was all the market cared about, it should have recovered to pre-MW levels. the shares are still 50% down. besides, the stock easily moves +/- 10%+ per day, so 20% isn't a big deal - could just be shorts locking in profits or naive buyers jumping in thinking cash is all it matters..
    Nov 8, 2013. 02:27 PM | 1 Like Like |Link to Comment
  • How NQ Mobile Is Like Longtop Financial Technologies [View article]
    Exactly. Existence of cash does not exonerate NQ, and the market agrees - since the announcement of the cash transfer, the shares have hardly budged. However, I doubt the cash will be there once NQ management gives up trying to convince investors. So, this will be a very binary outcome. Any investors thinking that the downside is a $300m valuation is being foolish.

    The market is clearly focusing on YDT. It would go a long way to dispel the short case if YDT just came out and allow itself to be audited. That's the least they can do and certainly would be in YDT's best interests to do so, considering NQ is YDT's largest customer and all the negativity surrounding NQ can't be good for YDT's business. Not to mention, NQ has given YDT's loans at favorable terms in the past and allowed them to share infrastructure to YDT's benefit, so it's not asking too much to help out a friend in need.

    The fact that YDT has not done this is a clear sign that they are in fact hiding something..
    Nov 8, 2013. 12:30 PM | 4 Likes Like |Link to Comment
  • NQ Mobile: Behind Smoke And Mirrors Lies The Truth, Part 2 [View article]
    Toro, thanks for your reponse and I mean no disrespect whatsoever. Just sharing some thoughts, which have been learned through experience investing in that part of the world. We will not agree but that's what makes a market! The market in the long run is a weighing machine and time will tell who's right

    I have no further comments. I will go back to my trolling ways. Best of luck!
    Oct 31, 2013. 05:21 PM | 2 Likes Like |Link to Comment
  • NQ Mobile: Behind Smoke And Mirrors Lies The Truth, Part 2 [View article]
    Discount on fees is a great excuse to use a related party, like YDT. If it makes economic sense, why not use YDT for all of their China volumes? The SP business is an incremental business and highly competitive. The marginal cost to process an additional claim is very low once the overhead investment has been made. If YDT can offer 50%+ discount on fees, surely the larger SPs could offer even a greater discount and still be profitable. If YDT's objective is to maximize profits, they would be out there soliciting other SPs for lower fees; or at the minimum, spread the revenues around so as to not be so reliant on a particular SP. The SP service is rather commoditized. So, could it be that the true benefit of using a related party like YDT is that it allows NQ's to manipulate its revenues?

    I respect your work. But you've spent a lot of time answering noise (i.e, level 1 vs level 2, SAIC filings, etc etc.), and I understand why you're doing it - you have a large vested stake (more than just monetary but also reputational) and you need to clear the air for a lot of naive investors. However, at the end of the day, the 2 fundamental questions that need to be answered are:

    1. Are revenues from YDT (and possibly other SPs) real?
    2. Is the cash there and will it stay there?

    As for (1), only a few people knows the answer to that - and that includes the inner core of the NQ management team in China (I doubt any of the gweilos in the company have a clue, including Omar), YDT, and the account representatives at China Mobile who covers YDT (I bet someone really smart is already trying to reach out to them to get info). I don't know the answer, nor do you, nor the research analysts covering the company, nor does the company's auditor. No diligence on NQ is complete without diligence on YDT - and speaking with Mr. Rong Xu to confirm the veracity of NQ's revenues does not count! Unfortunately, for this industry, having SPs as middlemen makes it just too easy for mobile app providers to fake their revenues if they can find a complicit SP. The SP is outside the jurisdiction of NQ's auditors and fake revenues and account receivables can magically appear initially without even having to roundtrip the cash! Eventually, they will need to roundtrip cash as the a/r age but I guess that's what the proceeds of the IPO and CBs are for! Ahh, and the long DSOs - how convenient.

    As for (2), NQ showing the cash gives me no comfort except to know that it is there. Sure, I have no doubt it will be there when it needs to be there; and the Chinese management really have no incentive at this point to run away with it, because they can do that anytime at their option. The money is onshore and there are no legal consequences to stealing it. Trivia for you: have any perpetrators of frauds at previous US-listed Chinese ADRs been punished?

    With that said, the ultimate solution is to solve for (1). YDT revenues have been a key foundation of NQ's revenue growth. Without it, there is no way it could have IPO'd or completed the CB offering, which is then used to perpetuate further revenue growth as alluded above. Unfortunately, it will be difficult to diligence YDT without YDT or the carrier's cooperation.

    The next best solution is to triangulate NQ's revenues by determining its market share. Well, NQ hired Frost & Sullivan to do exactly just that so us lazy investors don't have to do it ourselves - lest we might actually come to a different conclusion! We can ridicule MW's surveys all we want, but anyone who knows more than a handful of smartphone users in China will quickly surmise that NQ is not a major player in the face of Baidu, Tencent, and Qihoo, let alone the #1 market share leader!

    Getting market share data for almost any industry in China is extremely difficult. Most companies that need to fund-raise would pay a reputable firm to publish an industry report. Unfortunately, given the challenge in acquiring data, these firms end up relying on the company to provide them with the data! I've professionally invested in private financing situations in Asia for over a decade, and I see this happening all the time. Effectively, the companies are "renting" the brand name of these firms.

    A recent case in point is a company called Prince Frog that produces baby lotions and listed in Hong Kong. I believe its shares are currently suspended. The company, as part of its IPO in July 2011, released a report written by Euromonitor and paid for by the company that was intended to confirm the company's #2 market share in China behind market leader JnJ. It is highly unlikely that they make even top 5. See below link for further details

    Anyways, I rarely comment on SA. I'm a leach. I trawl through the site for investment ideas (short and long) and offer very little in return. However, I'm a sucker for trivias and your trivia question got me into this diatribe. Also, I hate frauds. I come across them from my work in China all the time. After a while, you know what to look for and what raises red flags.

    Just too many red flags on NQ and the dots just don't seem to connect. For the retail investors out there, save your money. If you're invested, just get out. If you so desire to punt on multi-bagger potential opportunities and risk is not an issue, why not punt on Yelp or Groupon where the growth is legit or a junior oil & gas explorer in a developed country? If there's any fraud by management, sure you'll lose all your money but at least the management also goes to jail...
    Oct 31, 2013. 02:53 PM | 5 Likes Like |Link to Comment
  • NQ Mobile: Behind Smoke And Mirrors Lies The Truth, Part 2 [View article]
    Sinotech energy, ipo'd by ubs and citi in jan 2012, was a fraud. No disrespect to jefferies, but jefferies was a fly by night outfit in Asia. The major banks probably passed up on NQ and the company went public at the height of the bull market in 2007 when Chinese frauds was less well understood by the American public and perhaps less scrutinized

    The IPO process certainly makes it harder but chinese companies are very clever at counterfeiting. There is no dispute that YDT is a related party and the fact that it makes a significant share of NQ's business scares me. The fact that end users are users of China Mobile, China Telecom, or China Unicom and if YDT is just a SP, how is it able to corner such a large percentage of NQ's revenues. Shouldn't NQ's revenues be more equally distributed consistent with the market share of all SPs - i doubt YDT is a major SP in the market

    There are better investments in the market to participate in than to guess whether YDT is truly legit. Even if the cash is there I'm suspicious the revenues are inflated. No one i know in China have heard of NQ. The likes of Baidu and Tencent have a stronger brand and offering similar products for free. How can a no-name like NQ compete? Just common sense tells me to stay away
    Oct 31, 2013. 08:34 AM | 1 Like Like |Link to Comment
  • Amerco: Move And Store Your Cash In This Stock [View article]
    Thanks kerrisdale. A succintly written, well-argued, and thoroughly analyzed piece. Perhaps the best ive read on SA.
    Mar 12, 2013. 12:52 PM | Likes Like |Link to Comment
  • Angie's List: Just Another Paid-Directory Website [View article]
    Good catch. Is this in the filings somewhere? A huge red flag if true.

    The issue with shorting angi is that the borrow cost is 15%+ pa! They've obviously reduced sg&a this past quarter to boost profitability. Im curious as to their marketing efficiency and customer acquisition metrics. How much does a reduction in sg&a lead to lower future revenue growth and what is the latency in results?. Im concerned they reduce sg&a again in q1 to demonstrate growing profitability which would create another major short squeeze.
    Mar 11, 2013. 06:02 PM | Likes Like |Link to Comment
  • Sony's Common Stock Could Double [View article]
    This analysis is oversimplified to the point that it is practically useless. The usage of price to sales does not take into account debt and profitability. I can throw money at a money losing business to generate sales but zero profits, but using price to sales will always imply that business has value when in fact it could be negative value. I Suggest using ev to ebit multiples to derive sony's sum of the parts enterprise value then net off the debt to get to an equity value estimate.
    Mar 10, 2013. 07:34 AM | Likes Like |Link to Comment