lessthaniv

These rights are transferable and will be listed on the TSX. The rights are not likely to provide full value to the seller as any buyer of the rights would only execute his/her purchase if he/she is getting an arbitrage opportunity of some sort otherwise they would just buy the stock. However, they should hold some value given the steep discount in the current stock price and the tailwind with pulp pricing moving forward as Fibrek. If you were a hedge/mutual fund wanting to establish a position in the stock post conversion, the rights market may provide a 21 day window of opportunity. Once the rights issue is completed, investors will look forward to a corporate structure that has cleaned up its balanced sheet, reduced its interest costs and is enjoying very high pulp prices. Yes, dilution will effect the valuation metrics however the stock remains cheap from its current level including dilution. Also, the share price should begin to trade freely again once the financing is complete. Ultimately, we'll have to see what the market is like for the rights, but shareholders who can't afford to pony up another 30% to this position likely won't be fully diluted. They should get some value for their rights in the secondary market, I would think.

This is why I think, more than ever now, that something must be in the works. As I said earlier, why would they announce the rights offering without announcing the subscription price? They have left themselves open for exactly what is happening! The only thing that I can think of to rationalize this decision is if they already know another transaction will raise the price. Failing that, I think they made a big mistake. (unless there is some securities law that forced the announced early - none that I'm aware of?)

Cardboard, I agree with everything but what I've quoted. If their intention is to sell assets, doesn't their thinking necessarily need to be shorter term given the cyclical nature of pulp prices? Pulp prices are not likely to stay up at $1000/tonne for too long. I think an asset buyers interest would be peaked knowing they have a tailwind on pulp prices. If you wait too long and pulp price trends reverse with increased supply you're not likely to get top dollar walking into that headwind. That's a hard one to answer, I guess.

Well, what's interesting about this is: a) the subscription price hasn't yet been set (see my post above) and b) consider the implications to the subscription price if a proposed deal was in the works? Allow me to speculate for a minute. If management knew a deal was in the works and the outcome was likely to drive the share price up ... all of a sudden they wouldn't be so worried about the subscription price not being set today as is usually done. Say the price got driven up to $2.50/share on news that Domtar was buying St. Felicien. If SFK then set the subscription price at $2.25 the dilution is alot less! ($40M/$2.25= 17.7M shares - down significantly from my above example). Fairfax has protected themselves from just such an event as they are requiring the lessor of the 5/40 day weighted average share price. In this case the 40 day weighted average share price would be materially less and they get a 20% discount. I also agree with SD that the dates are interesting. The conversion to a corporation according to a recent press release could happen as early as May 25th assuming they get final court approval on May 20th. Yet, the rights offering is expected to close around July 20th. That leaves about a fifty days between the time they convert to Fibrek and when the rights offering would be closed and subsequently priced. As Dazel suggested earlier ( although subsequently deleted in the hijacking of the website), SFK's assets are worth much more to an entity that can supply themselves with woodchips. Add it all up and it gets more interesting by the day. <IV

No, not quite Oldye. Every shareholder will receive one right for every share held. So initially there would be about 91M rights issued. But the subscription price hasn't been set yet. Let's say it was set at $1.50/share not taking into account any discounts. So every shareholder gets the right to buy another share at $1.50 for a fixed (short) period of time. They want to raise $40M so this would involve issuing another 27M shares (@ $1.50/share). Remember though there are 91M rights floating around so there would be a conversion ratio established. In my example it would take 3.37 rights to acquire 1 new share (91M/27M). In other words, for every share you currently own they are offering you roughly 30% more shares at the favorable price (1/3.37). As a shareholder you will get your rights issued and then have a decision to make. You can (a) subscribe to the rights issue in full, (b) ignore your rights or © sell the rights to someone else as they will get listed on the TSX. They value of the rights should theoretically offset the dilution you'd experience. So, if you choose (b) and do nothing, you will be diluted and Fairfax will scope your part of the deal.

Two other points to consider; 1) It's strange and somewhat irregular to announce a rights offering without fixing a subscription price? The door is opened up to manipulation by enterprising investors who have too much time on their hands. One could conceivably drive the stock price downward 5 days prior to the filing of the final prospectus. The price would be set at the lessor of the volume weighted 5/40 day averages. The 5 day would be likely be lower in such a situation, thereby setting a lower subscription price. This would seem to further support the notion that they anticipate a higher share price and are not worried? No? 2) More of a comment really. Fairfax has about 20% ownership in SFK. To invest more dollars, they would have had to made a bid for the entire company. By doing this rights offering, Fairfax gets paid to increase their stake in SFK at a 20% discount without having to make a bid for the whole company. Let me say that again. They get paid to increase their stake in SFK at a 20% discount without having to make a bid for the whole company. These guys are smart!

In my opinion this is a big positive for SFK. Questions surrounding how they planned to deal with their maturing debt (with tight credit markets and no cash in the bank) have now been answered. I would be interested to see if they were able to negotiate better interest rates too? It also puts a wad of cash in their hands to deal with the debentures that are approaching maturity. The market has expected dilution in one form or another. This is why Prem is backstopping the deal, I'm sure.

SFK Pulp arranges refinancing for conversion 2010-05-12 20:20 ET - News Release Ms. Patsie Ducharme reports SFK PULP ANNOUNCES REFINANCING TRANSACTIONS SFK Pulp Fund has made a series of transactions intended to, among other things, refinance its existing credit facilities. The refinancing transactions, which are conditional upon the closing of the reorganization of SFK Pulp into a corporation, consists of: * A five-year term loan with a subsidiary of Societe generale de financement du Quebec, for an amount in Canadian dollars equivalent to $75-million (U.S.) (SGF loan); * A $40-million (gross proceeds) offering of rights to subscribe for common shares (rights offering) of Fibrek Inc., the successor entity of SFK Pulp Fund following the completion of its reorganization into a corporation, for which Fairfax Financial Holdings Ltd., SFK Pulp's largest unitholder, has agreed to purchase any common shares that are not otherwise subscribed for under the rights offering; * A $75-million three-year asset-based secured revolving facility with GE Canada Finance Holding Company (GE Capital). "The board of directors and management of SFK Pulp thoroughly considered various alternatives in light of the upcoming maturities of the existing credit facilities," said Hubert T. Lacroix, chairman of the board. "We believe that the refinancing transactions will provide an opportunity to implement a capital structure that will appropriately respond to the needs of SFK Pulp's business and will provide the necessary financial flexibility and capital resources to pursue its development and improve the stability and sustainability of its business model," said Pierre Gabriel Cote, president and chief executive officer. Pursuant to the refinancing transactions, SFK Pulp will repay its existing revolving credit facility maturing on Oct. 30, 2010, and existing term loan maturing on Oct. 30, 2012, in the total principal amount of approximately $143-million as at March 31, 2010. The refinancing transactions will also provide SFK Pulp with approximately $60-million of liquidity after full repayment of the existing credit facilities (excluding transaction costs) based on SFK Pulp's March 31, 2010, financial position. "The refinancing transactions will generate financial stability and flexibility as SFK Pulp continues as Fibrek," said Patsie Ducharme, vice-president and chief financial officer. "Fibrek will be set to profit from a recovering economy with a substantial debt reduction, superior liquidity and the ability to better pursue its business objectives." Each of the components of the refinancing transactions is conditional upon the closing of the reorganization of SFK Pulp into a corporation, which is subject to the approval of SFK Pulp's unitholders at the annual and special meeting to be held on May 19, 2010, and upon the closing of all the other components of the refinancing transactions. Each of the components of the refinancing transactions is also subject to necessary approvals, including approvals from regulatory authorities and the Toronto Stock Exchange, as applicable. It is anticipated that the closing will occur on or about July 20, 2010. TD Securities Inc. is acting as financial adviser to SFK Pulp in connection with the refinancing transactions. SGF Loan The SGF loan will provide for a five-year secured term loan in a principal amount in Canadian dollars equivalent to $75-million (U.S.) and is subject to the satisfaction of certain customary closing conditions including the completion of due diligence and the negotiation, execution and delivery of definitive documentation. All obligations in respect of the SGF loan will be secured by a first-ranking hypothec on all the assets, movable and immovable, present and future, of Fibrek and its subsidiaries, with the exception of the assets securing the asset-based revolving credit facility. The SGF loan will contain and provide for certain covenants and events of default as are customary in transactions of this nature. Rights offering Following the completion of the reorganization of SFK Pulp into Fibrek, Fibrek intends to file a short-form prospectus qualifying the distribution of rights to subscribe for and purchase common shares in the capital of Fibrek for gross proceeds of $40-million. Each shareholder will receive one right for each common share held. Holders of rights who will exercise their rights in full will be entitled to subscribe pro rata for additional common shares. Fibrek will apply to list the rights and the common shares issuable upon the exercise of the rights on the TSX and the approval of such listing will be subject to Fibrek fulfilling all of the listing requirements of the TSX. TD Securities Inc. is acting as dealer manager for the rights offering. If a shareholder elects not to exercise the rights issued to him, or elects to sell or transfer those rights, the value of the common shares currently held by that shareholder may be diluted as a result of the exercise of the rights by others. The rights will be fully transferable by holders. A holder of a right will not, by virtue of such right, be a shareholder and will not have any of the rights of a shareholder. Pursuant to a standby purchase agreement, Fairfax has agreed, subject to certain terms and conditions to purchase, at the subscription price, all of the common shares not otherwise purchased pursuant to the rights offering at the expiration time. In consideration of such commitment, Fairfax will be entitled to a $400,000 standby fee, representing 1 per cent of the total gross proceeds of the rights offering. The subscription price, which was determined by negotiation with Fairfax, shall be equal to the lesser of: (a) the volume-weighted average price of the common shares on the TSX for each of the trading days on which there was a closing price during the five trading days immediately preceding the date of filing of the final prospectus, less a discount of 20 per cent; and (b) the volume weighted average price of the common shares on the TSX for each of the trading days on which there was a closing price during the 40 trading days immediately preceding the date of filing of the final prospectus, less a discount of 20 per cent. The commitment of Fairfax is subject to certain customary conditions, including the completion of the reorganization of SFK Pulp into a corporation and the execution and delivery of definitive documentation with respect to the SGF loan and the asset-based revolving credit facility, as well as regulatory approvals. GE Capital asset-based revolving credit facility SFK has entered into a commitment letter with GE Capital for the $75-million asset-based revolving credit facility which will have an initial term of three years and is subject to the satisfaction of certain customary closing conditions including the completion of due diligence, field examinations and the negotiation, execution and delivery of definitive documentation. The amount available to be drawn under the asset-based revolving credit facility will vary from time to time, based upon SFK Pulp's accounts receivable and inventory levels. The obligations under the asset-based revolving credit facility will be secured by, among other things, a first priority security interest on all of the existing and after acquired accounts receivable and inventories of the borrowers and their subsidiaries. The asset-based revolving credit facility will contain and provide for certain covenants and events of default as are customary in transactions of this nature. Documentation A copy of the binding agreements to which Fibrek and SFK Pulp are parties and certain related documents will be filed with the Canadian securities regulators and will be available on SEDAR as soon as practicable following their respective execution. We seek Safe Harbor.

I was just quietly awaiting voting day so all this nonsense would stop! ;)

Maybe Spyro got out of jail?

Oldye, The balance of the article says that North American prices are going to $1000/tonne to bring them in line with Canfor, Mercer, Abitibi, Domtar, Tembec. European pulp prices go up $30/tonne to bring the cost to $970/tonne. In Europe, Canfor's at $960 and Domtar is at $970.

yesterday a large block of shares was entered through BMO at $1.92. that block is back again today at $1.90. looks like two accounts for approximately 325,000 shares. perhaps someone who purchased on the lows and was looking to sell into the CFX news? i would guess this is a retail trade only because it was entered as an entire block and its approximately 100% of the average trading volume over the last few weeks. i would guess that most institutions on the sell, given the good news at CFX, would likely enter their trades in chunks of 5000 or so. anyways, the market will have to push through those shares first to move higher.

Here is an interesting article about pulp prices from the Montreal Gazette. Most notably is the following comment from Paul Quinn - the analyst covering the stock for RBC. "Paul Quinn, an analyst with RBC Capital Markets, said pulp should remain strong through summer. His average 2010 price forecast is $950 U.S. a tonne while for 2011 it is $900 U.S." He is calling for high prices for some time. Read More: http://www.montrealgazette.com/business/Softwood+pulp+prices+peaking/2945468/story.html <IV

The comparison of yoy sales to yoy cost of sales makes me smile! It almost all made it to the bottom line.

Canfor had a strong Q1! Canfor Pulp earns $32.5-million in Q1 2010 2010-04-26 20:18 ET - News Release Mr. Terry Hodgins reports CANFOR PULP INCOME FUND ANNOUNCES STRONG FIRST QUARTER 2010 RESULTS AND INCREASE IN MONTHLY DISTRIBUTION Canfor Pulp Income Fund has released its first quarter 2010 results as well as the results of Canfor Pulp LP in which the fund has a 49.8-per-cent ownership. The partnership reported sales of $239.5-million and net income of $32.5-million, or 46 cents per unit, for the quarter ended March 31, 2010. The partnership generated EBITDA (earnings before interest, taxes, depreciation and amortization) of $44.1-million in the quarter. The fund reported net income of $16.5-million, representing the fund's share of the partnership's net income and a future income tax recovery of $300,000 In the quarter, the partnership generated adjusted distributable cash of $41-million, or 57 cents per unit, and the partnership and the fund declared distributions of 32 cents per unit. Improved partnership results compared with the fourth quarter of 2009 were attributable to higher prices for the partnership's pulp and paper products, lower unit manufacturing costs, and increased pulp shipments, partially offset by the stronger Canadian dollar. First quarter results were negatively impacted by a shutdown at the Prince George pulp and paper mill, which reduced pulp production by approximately 22,000 tonnes and reduced EBITDA by approximately $11-million. Included in these amounts were approximately 4,000 tonnes and $4-million attributable to advancing the annual maintenance outage originally planned for the second quarter of 2010, which was moved to coincide with unplanned maintenance requiring the shutdown of the mill's recovery boiler. Mitigating the production loss was a record quarter at the Northwood pulp mill for both total tonnes and average daily rate. Pulp markets remained strong as steady pulp demand coupled with large incremental supply side reductions maintained world inventories of pulp at very low levels throughout the quarter. The tight markets allowed producers to implement further price increases in the quarter. NBSK U.S. dollar North American list prices were $830 (U.S.) per tonne in December, 2009, rising to $910 (U.S.) in March, 2010, with announced prices for May of $1,000 (U.S.). Mitigating the impact of stronger global pulp markets for Canadian producers was the 3 per cent appreciation of the Canadian dollar in relation to the U.S. dollar from December, 2009, to March, 2010. The pulp market is expected to remain strong through the second quarter of 2010 as inventories held by producers and customers are well below what is considered to be a balanced market. Industry downtime is expected to continue to impact the supply/demand balance. Factors impacting industry downtime include reduced production due to planned maintenance downtime in the second quarter of 2010, delays of Chilean mills returning to capacity after the Feb. 27, 2010, earthquake, and delayed restarts of idled mills. On April 21, 2010, the fund announced the monthly distribution of 12 cents per fund unit for the month of April, 2010, to be paid on May 14, 2010. Today the fund announced an increase in the monthly distribution to 20 cents per fund unit for the month of May, 2010, to be paid on June 15, 2010, to unitholders of record at the close of business on May 31, 2010. Additional information A conference call to discuss the first quarter 2010 financial and operating results will be held on Wednesday, April 28, 2010, at 8 a.m. Pacific Time. To participate in the call, please dial 416-641-2140 or toll-free 1-800-952-4972. For instant replay access, please dial 416-695-5800 or toll-free 1-800-408-3053 and enter participant passcode 4188430. The conference call will be webcast live and will be available at the fund's website. CONSOLIDATED STATEMENTS OF INCOME (LOSS), COMPREHENSIVE INCOME (LOSS) AND PARTNERS' EQUITY (in millions of dollars, except per-unit amounts) Three months ended March 31, March 31, 2010 2009 Revenue Sales $239.5 $186.3 ------- ------- 239.5 186.3 Costs and expenses Manufacturing and product costs 157.9 149.8 Freight and other distribution costs 31.1 28.8 Amortization 11.6 12.0 Selling and administration costs 6.4 5.5 ------- ------- 207.0 196.1 ------- ------- Operating income (loss) 32.5 (9.8) ------- ------- Interest expense, net (2.0) (2.6) Foreign exchange gain (loss) on long-term debt 3.4 (3.9) Gain (loss) on derivative financial instruments 0.4 (5.7) Foreign exchange gain (loss) on working capital (1.8) 0.6 Other - (0.2) ------- ------- - (11.8) Net income (loss) and comprehensive income (loss) $32.5 $(21.6) Net income (loss) per partnership unit Basic and diluted $0.46 $(0.30) We seek Safe Harbor.

I believe Canfor Pulp reports today which should give us our first good comp for Q1. Anyone going to the AGM tomorrow? I'm going to try and get there if I can make it work. <IV

Got it. Thanks - I'm back on the rails and I see your point on the overstatement of cost of sales. Much appreciated.

SD, I understand where you are going with your comments. Trying to estimate how much the cost of sales may change with changes in volume. And then estimating volume to arrive at an estimate for operating profit. And finally adjusting the 2009 annual S&A for savings and one time items to work towards and estimate of 2010 EBITA where you can slap on an appropriate multiple to value the company. However, I am not understanding something in your comments: " & divide incremental sales by incremental tonnage to estimate COS sensitivity to volume. About -1.334 for NBSK, and -.476 for RBK." Your ratios of NBSK and RBK are -1.334 and -.476, respectfully. They seem to have been derived from the following math (Broke out the case for NBSK here but the calculation for RBK is the same): (Change in tonnage 2009-2007)/(Change in Cost of Sales 2007-2009). For example looking at NBSK: (309,299-323,845)/(249,089-238,186)= -1.334 Firstly, I think you mean - "& divide incremental cost of sales by incremental tonnage to estimate COS sensitivity to volume. However, I remain confused. Your ratio of -1.334 has units (vol/cos$) but your wording suggests the ratio should be expressed as (cos $/vol) which makes more sense to me. Don't you want the inverse to understand how the COS may change with changes in volume? <IV

SD, it must be late in my day because I have been staring at your comments and in regards to the following ... I can't seem to grasp how you got your numbers.... Can you kindly enlighten me! "divide incremental sales by incremental tonnage to estimate COS sensitivity to volume. About -1.334 for NBSK, and -.476 for RBK."

http://seekingalpha.com/article/199069-paper-stocks-poised-to-rally Excerpt: Finally, we like SFK Pulp Fund (SFKUF.PK). SFK owns an NBSK pulp mill in Northern Quebec, and two RBK (Recycled Bleached Kraft) pulp mills in the US, in Michigan and West Virginia. The units closed at $1.54 Canadian. SFK generated $389 million in 2009 revenues on curtailed production, versus $532 million in 2008. This company was an income trust organized in 2002 for the tax-free income flow through. Unfortunately, they picked a very cyclical business to package, as a stable income entity, and predictably, cash flows were hammered and the distributions disappeared. However, after several equity raises in the past at higher prices, the company restructured its debt covenants and has survived, and is now converting to a corporation. The company is running at capacity in Quebec, and is enjoying the best product and input pricing it has had in its history. The company received $20.9 million under the aforementioned Green Transformation Program to build a third co-generator and sell electricity into the grid. The recycling mills in the US had a tough time last year as producers reverted to virgin pulp to gain the aforementioned black liquor government subsidies. Wastepaper costs have been volatile. These negatives are probably disappearing and these plants usually have positive operating margins. In 2008, SFK earned $47 million in EBITDA, and that was a year that slumped in the last quarter. At 10 times $50 million EBITDA, the stock would be worth over $3.30, without assuming any repayment of their $200 million in debt. Debt reduction would add to equity value as the mills require only moderate amounts of maintenance capital expenditures. The company reports its Q1 earnings on May 4th.

Yes, thanks for posting. Good read.

It also appears (if you have access to a bloomberg) that ML has been unloading a position over the last week or so. They have owned the ask and yesterday, the pressure finally eased a bit.

There is a few questions that I would love Charlie to ask: 1) "So Jim, can you please explain to our viewership how it came to pass that Elliot Spitzer's (aka Client #9) high priced call girl - Ashley Dupre was your house sitter in the Hamptons? You were a big campaign contributor to Elliot Spitzer too, correct? What's up? http://wallstfolly.typepad.com/wallstfolly/2008/03/spitzers-hooker.html 2) Your hedge fund was funded with $ from Dirk Ziff , at the recommendation of Marty Peretz - Jim Cramer's partner at TheStreet.com. What did you agree to when you accepted those funds and is this why your short positions overlap David Rocker's (one time largest shareholder of TheStreet.com) so much? You guys both playing the same game? 3) I understand that Kynikos means Cynicism in Greek? Should we be cynical of you? 4) Can you please explain your communications with Morgan Keegan analyst John Gywnn with respect to Fairfax Financial? How is it that you used inside information to profit from a short sale on Fairfax and never got arrested? Source: http://www.deepcapture.com/sac-capital-on-the-outs-over-insider-trading/ Excerpt: It all started on December 11, 2002 when Kynikos employee Mark Heiman alerted Chanos that he had just learned from an analyst at Ziff Brothers Investments that a Morgan Keegan analyst was about to publish a negative report on Fairfax. From: Mark Heiman (Kynikos Analyst) Sent: December 11, 2002 11:06 PM To: James Chanos (Kynikos President), Douglas Millett (Kynikos COO) Subject: Fairfax ——————————————————————- I just got off the phone with ZBI’s insurance analyst, Michael Ting. He just talked to a new insurance analyst at Morgan Keegan, and apparently that analyst is about to initiate FFRX at “Underperform,” with the thesis being that they are extremely under-reserved into the $3-$5 BN area. Also, there may be an article in Forbes or Fortune soon that will be similarly critical. Ting said he thought that analyst was one of the best P&C analysts he has talked to, and wanted to give us the heads-up, as well as hear how we’re coming at it. The next day, Kynikos employee Matt Cantrell apparently contacted Gwynn, as he sent Ting several documents relating to Fairfax subsidiaries, with the comment, “John Gwynn believes these might be of interest to you.” Four days later, Heiman spoke to Gwynn personally, having a conversation which he summarized in the following report to Chanos: From: Mark Heiman (Kynikos Analyst) Sent: December 16, 2002 4:46 PM To: James Chanos (Kynikos President), Douglas Millett (Kynikos COO), Charles Hobbs (Kynikos Managing Partner) Subject: Fairfax ——————————————————————- Just spoke to John Gwinn at Morgan Keegan, and he was more critical of FFRX than I’ve ever heard a sell side analyst. It looks like his criticisms of from the top to the bottom–everything from underwriting to accounting to dishonesty. He gave me his basics, as he is somewhat restricted because he hasn’t officially launched. It will be interesting to see how much of this the people who run the research department there will let him publish! On December 18, 2002, Chanos forwarded Heiman’s email to Jeff Perry, then a senior portfolio manager at SAC Capital. The day after Fairfax began trading on the NYSE, Gwynn’s revelations became much more explicit as he shared with Kynikos employee Heiman portions of his forthcoming report on Fairfax. From: Mark Heiman (Kynikos Analyst) Sent: December 21, 2002 6:03 PM To: James Chanos (Kynikos President), Douglas Millett (Kynikos COO), Charles Hobbs (Kynikos Managing Partner) Subject: Fairfax ——————————————————————- Last night John Gwinn at Morgan Keegan faxed over to me an outline detailing the issues at FFH, basically those he will be publishing on. He has been a huge help and even offered to talk to me from his home today. We can look at these and talk to him next week–I just wanted to come in today and take a look at what he sent to get a head start on what he sent. In the days to follow, Gwynn and SAC Capital Portfolio Manager Forrest Fontana held a face to face meeting where they discussed Fairfax. Fontana followed up on that meeting via email to Gwynn: From: Forrest Fontana (SAC Portfolio Manager) Sent: January 06, 2003 8:57 AM To: John Gwynn (Morgan Keegan Analyst) Subject: RE: hope you had a nice holiday! ——————————————————————- you available to touch-base on Fairfax sometime this week? Followed by Gwynn’s prompt and eager reply: From: John Gwynn (Morgan Keegan Analyst) Sent: January 06, 2003 9:01 AM To: Forrest Fontana (SAC Portfolio Manager) Subject: RE: hope you had a nice holiday! ——————————————————————- Name the time. Fontana proposed a conversation the following day and requested a spreadsheet summarizing Gwynn’s analysis on Fairfax, which Gwynn promised to send. On January 13, 2003 Fontana sent his boss, Steven A. Cohen himself, a summary of his planned activities for the week, which included: Tuesday 1/14: Morgan Keegan expected to launch on Fairfax with sell rating – we will be covering into this. As it turns out, Gwynn’s report was published on the 17th of January, not the 14th as Fontana expected. Still, it’s clear that SAC Capital was formally planning to trade ahead of the information received by Gwynn. Trading records produced by Kynikos and Third Point all tell the same story: heavy short selling in anticipation of Gwynn’s report, and highly profitable short covering in the days that followed. Uncle Jim, Say it ain't so!

abyli, We don't! As I stated, that number was pulled from some readings that I've done. I think most would agree that the renminbi is undervalued but the 40% number is a guess from economists. txlaw, You've echoed the way I'm thinking about this in your comments and I was hoping my thoughts would be reinforced by others. Thx.