alertmeipp

I am just wondering one thing. Does the following disclaimer really make MW's trouble-free if their report turn out to be inaccurate? "As of the publication date of this report, Muddy Waters, LLC (possibly along with or through our members, employees, and / or consultants) has a short position in the stock (and / or options of the stock) covered herein, and therefore stands to realize significant gains in the event that the price of the stock declines. Following publication of this report, we intend to continue transacting in the securities covered herein, and we may be long, short, or neutral at any time hereafter. Muddy Waters, LLC has obtained all information contained herein from sources we believe to be accurate and reliable. However, such information is presented "as is," without warranty of any kind – whether express or implied. Muddy Waters, LLC makes no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results to be obtained from its use. All expressions of opinion are subject to change without notice, and Muddy Waters, LLC does not undertake to update or supplement this report or any of the information contained herein."

There is manipulation in stock market. Not all shorts are evil, naked short is different and should be banned completely. If one publish a false report intentionally while shorting/longing the underly stocks (or related stocks) should be prosecuted. No one knows for sure whether MW's report on Sino is accurate, semi-accurate or not. No one knows for sure whether Sino is a fraud, semi-fraud or not. Just because some Chinese RTOs are fraud, it does mean all of them are. Each company is different. In each case, at the end, it's the fact that matters. If any of you disagree with any of of the above, let me know.

Very nice discussion indeed, it comes down to whether you know your company good enough to act properly when the news like that hits. I am frozen in TRE case because it's hard for me to tell whether some of allegation are true or not. As far as I know, doing business in China is all about relationships and it's definitely less rigid than here. There are millionaires or even billionaires out there who got rich because they know so and so. At the end, fact is fact is fact and nothing else matter. MW or TRE's business is on the line. I will be pissed if TRE does a 100 pages report back to counter MW's point just like FAIRX did on JOE as I have already took my lost on puts. Anyways, this saga leads to discover a list of Chinese companies. My focus now is trying to do a basket approach on the Chinese co. Many of them looks awful cheap to me. I think even 1 in 3 turns out to be fraud, it will make awesome returns. TRE will be on my list. Thinking to do 10% allocation on them. Thoughts?

The market is not perfect. The MW report had 2 main claims against TRE and that is what the press release from TRE tried to refute. Most of the rest of the MW report tried to pull stuff from the past to show some kind of trend to back up their 2 main points. The first item was clearly refuted as the revenue in question was clearly disclosed in the 2010 Q1 & Q2 MD&A. I am surprised MW missed this. The 2nd claim comes down to land ownership. MW claims they don't own the land while TRE says they do and that MW assummed they only purchased in Gengma, when they puchased in 25 other counties of Yunnam province. The auditors will likely come back and say nothing is wrong, but MW will say "where's the proof of the land records" and try to drag this out as they know TRE won't release that information for confidentiality reasons. In the end, if Paulson doesn't see anything wrong then he will buy shares at these depressed prices and there are only so many shares that can be shorted. I think MW has bitten off more than they can chew and are not accurate in their reporting of TRE, regardless of how successful they may have been in the past. I picked up some share of TRE today for the first time. I hope this is what ends up happening. But I'll guarantee you this: If it was so obvious that the MW report is fake and if the company's response was so strong, why is the stock where it is? If it's "manipulation", well, shit - you should be buying hand over fist. The manipulators just got you a dollar bill for 25 cents! Like I've said repeatedly, TRE doesn't need capital so there is no way to drive them out of business with an analyst report. There can be no run on the bank here. All that can happen is the stock goes down, the company restores confidence over time (and pays out cash flow via dividends), and the stock price returns to it's "fair" market value. I want to repeat: I have no idea the validity of the MW report. They very well might have gotten it wrong. I just highly doubt it. I'm not sure why you'd take a PR by the company at face value if any of this stuff is true. What do you expect them to say? Regarding Paulson, many smart investors have been duped with China stocks. First Starr with CCME and then very sophisticated hedge funds with LFT. Doesn't mean a lot having someone like Paulson involved. He can be duped, too. I agree. Who is on the short side on the long side doesn't matter here. It's the facts that matters. After all, WB lost 80% on Irish bank too.

Of coz, u can't get short after the report, because most of the float available to short was shorted. That's how the ppl in the know profit. Naked short is another issue altogether but it would be involved here too. Who knows. I don't want to be conclusive here until I see details.

manipulation in this scale is not obvious in most cases, just as fraud. You won't see through it until details emerge. The fact that no shares is borrowable prove what? All borrowable short to short is used up and rightly so... but what's your point on pointing that out? I am not saying this is manipulation or fraud - I don't know until I see more info.

The part I frustrated the most is TSX was halted but pink sheet was not. One can easily manipulate the price in the less regulated pink sheet and when TSX opens, it creates a panic effect.

Hold or buy is the action one make. The decision one could made is don't do anything until more info comes along. If you have shares, your action is HOLD. If you don't, your action is NOT BUY. See the difference? It's funny that what some think make clear sense, others think it's non-sense sometimes. Actually, I won't blame myself for losing money if I were straight commons. Just the way I do naked put without spread is stupid and I sold more than the amount i want to own. In short, I am not prepared for 70% drop.

We will have to agree to disagree on this one. For me, Sell, Hold and Buy are three distinct decisions. I see that disregard tax implication and trading cost, Hold = Buy financially. But when case involve huge uncertainty like "yet to be proven fraud"" - I will just HOLD - I won't buy/add into it BUT I won't sell if I have position neither. I will act when information become available. I would rather take bigger informed lost then uninformed big lost. ;) Next time when u hit with similar case, come back to share with us what u do. :)

That means nothing in this case as well. Anyways, I expect Paulson and Davis, etc... would be doing their validation as we speak, we will know soon enough. One of the allegation MW makes was the inflated assets price and don't you think the CFO's reply nail that well in the PR?

I managed to grab some at around 3 this morning in the pink as well, it helps to lower my lost but still hurts. But lesson learned.

Huh? This isn't theory. Your past decisions and your cost basis have no bearing on your decision today. Missing a profit vs. "recovering a loss" is exactly the same thing in investing. Money is money, it doesn't matter whether you are "playing with the house's money" or your own. It doesn't matter whether you've paid $15, 5, or 1 a share. It doesn't matter if you bought it yesterday or five years ago, though your capital gains rate will change. All that matters is if you wouldn't buy a stock today at the current share price, you shouldn't own it regardless of what your cost basis is. Again, this isn't theory. The only caveat I will give is for taxes but that's irrelevant in this and most cases and investing based on tax decisions is a losing proposition, usually. This is one of the biggest mistakes investors (and gamblers) make. I am just saying not selling without knowing the facts is very different from buying without knowing the facts. One of the biggest mistakes is also selling in panic. You know it might be not wise to buy with that report out there until the company provides some proof, but it doesn't mean selling isn't a wise idea neither. But we are know certainty is an expensive thing and fraud could be priceless. The decision to not sell and buy is very different in this case.

>>Your cost basis/past decisions are all sunk and should not factor into your decision today. In theory, yes. In real life, holding a position can't be compared to establish a new position because missing profit is one thing, sell only to discover the report is bogus is another. As mentioned earlier, I did cover my puts today. Took some big lost but could have been worst.

it's tough, it's weighting against many different scenario: Taking 70% loss without knowing all the facts (sell now). Taking 90-100% loss if the facts in the report are true. Much less loss if some of these allegation are proved to be false. Profit is the report is bogus. Etc.... If I were just long, I will probably just hold and see until I see more facts. But having short put is a different story as u won't be able to act quickly when new info comes. Pure stupid move on my part.

LOL... just one video got you. Anyways, took the hit and bot back some puts. I hated the spread and liquidity with the puts in this kind of situation. I may as well go straight long. Half of my gain this year is gone so far on this stupid idea. Dang it.

Well, they did point out couple examples where the report is incorrect. And that couple pts are not small ones.

It depends on whether the report is based on fact or not. If it is, then it's fine. If it's not, MW will face charges IMO even with the disclaimer.

TRE responds, trading will resume shortly.

It was a great lesson. could be an expensive one. :'(

You can use this: http://www.m-x.ca/nego_cotes_en.php?changeLang=yes&symbol=tre&image_x=0&image_y=0&image=Submit&AlertBDMTeamSent=NowSafeStringSeeHeaderForDetails&

I agree completely. And the value of short sellers is not limited to detecting frauds; if not for them, LinkedIn would still be trading at 40x "normalized EBITDA", itself a very generous estimate. Having "smart money" players investing alongside you (while better than not, I suppose) is not a foolproof Buy signal in and of itself. The recent RTO blowups all involve some institutional participation, from Hank Greenberg's Starr International to some of the biggest PE funds (employing the most well-paid and ,on occassions, smartest guys :)) on Wall St. I happen to find Muddy Water's deep-dive work, albeit undoubtedly containing a certain degree of exaggerations, to be persuasive. Then again I don't know my way around the Chinese accounting system nearly as much as the players involved. The problem I have with the report is there is quite a bit of guess work and assumption used. I don't want to go in to details because I don't want to look more stupid. LOL. ;)

CDE - Montreal exchange, it was a stupid trade looking back. I sold some 16,17,18 puts almost in the last few days. Hope it's not a complete fraud. 0094.hk is also halted pending news.

If all the puts I sold get exercised, TRE.TO will be become a sizable position for me at cost base of 14-15 bucks. Buying call maybe be viable as the lowest strike is 16 bucks (or else I would have put a spread instead of short put!). If TRE comes back with credible response, it won't be cheap anymore. If not, $16 strike is probably too expensive even at 5 cents. The US + CDN (halted mid-afternoon) volume combined is about 20M - most of the volume is traded above at teens. So we are talking about ~200M worth of volume. 10% of the float. Will see how it goes when TRE responds.

Muddy Waters timed the report really well. It's released right after Sino had the conference call to explain how good they are and will be. It's hard to gather the board and mangement at late night, let alone the auditors and I don't think the auditors will do a join press release. To counter this properly, they need to be well-prepared - release the quarter result, announce buyback, and management buy in.

Must have some following. I can't remember a stock having trading halted over an analysts report. I'm assuming they were short before the release. :o ;) The stock was acting really weak in last month or so. I was thinking it has to do with stocks like CCME causing concerns on Chinese-related stocks. Now, I think someone was building short positions and was the reason why the puts was so pricey. :'(