cwericb

When you see something like this you have to wonder if someone knows something we don't?

Frustrating as hell watching the share price erode day after day. Used to be the price would run up wildly before reports were released, then after the release the bottom would fall out. Perhaps this time it will be the opposite. This is me trying to be an optomist. :)

“If you are referring to the opinion I expressed” I wasn’t referring to anything you said oec2000. This was a remark made some time ago. Please read my previous posts. For about the 10th time I am not, nor have I, defended Sino other than to say that I suspect Block’s claims were exaggerated. I have never advised anyone to buy TRE. This could be XYZ company and the report could have been made by Bernie Madoff. I am simply surprised that so many gave so much credibility to the report report without waiting for more supporting information. End of story.

:) Of the numerous previously posted questionable items about Block's background, education was by far the least important. But if you only read what you want to... As far as Wellington's track record is concerned one might suspect that perhaps, just perhaps they have had some successes in the same period? then again Davis and Chandler are losers in your book as well? Here's an interesting little article that just came out: http://community.nasdaq.com/News/2011-07/sinoforest-corp-adding-to-yesterdays-strong-showing-up-another-5-today-and-near-5-mark.aspx?storyid=86627

I am sure that by now people are tired of my trying to make my position clear time after time. Unfortunately it seems to be beyond the comprehension of some here. For the record and for the last time: 1) At no time have I ever defended Sino 2) I have never said that Block’s report is completely false 3) I have never said that there is no fraud involved at Sino 4) I have cited numerous points of concern about Block’s background. WOW! Hester that is so wrong it barely deserves comment. If Bernie Madoff wrote the report, would you make the same statement? If Sino put out a glowing report would you believe that? Consider the source. I am beginning to wonder - do you perhaps know Carson Block personally? A report is no better than the person that wrote it. I have looked at a lot of things about Carson Block that has given me serious doubts about his credibility. Aside from the fact that he is by no stretch of the imagination an unbiased party, he has already seen a major part of his analysis embarrassingly discredited * and he has also retracted significantly from his original position**. * Standing lumber issue ** From “a multi-billion Ponzi scheme” to “an overstatement of hundreds of million dollars” I believe the PWC report will likely show some problems at Sino. I also think that there are probably a lot of public companies that could not undergo the microscope that PWC will put them under without some dirty laundry being exposed. However, I doubt those problems will destroy the company and I believe shares will have value. Perhaps I was under the misapprehension that value investors looked for opportunities in companies that were out of favour for one reason or another. This may (or may not) be a classic case. Time will tell. Until relative recently I had never held shares in TRE. I did, however, pick up a small amount under $3.00 - which look pretty good at this point. (And FYI I have owned FFH for years before you joined this board) PS I have no intentions of getting into a pi**ing match with other board members her because I respect and learn a lot from them - even the ones I disagree with :) .

"Can you quote anyone who is arguing the short position using Block's authority standing?" No, I don’t know if anyone has. I am just surprised that people have been so quick to jump to the conclusion that Block’s report is completely legitimate. And when someone expresses the opinion that this debate has no place on a value investors board I keep wondering... suppose Block's report is shown to be mostly inaccurate and and exaggerated? Would people have just missed an excellent oportunity?

Rabbitisrich It was a couple of weeks ago and may have been in the Globe & Mail but I am not sure. I believe that the reasoning behind this was that some of the analysts felt it would be premature to make the tour before the PWC report was released. Given the fact that PWC are doing an investigation into the company one might think that Sino’s hands may be tied until the report is released. Since their whole business has been called a fraud, until the independant report is produced I doubt analysts would trust anything Sino says at this point. As far as analysts dropping coverage, are they dropping/stopping coverage or are they just suspending coverage until the PWC report comes in so that they know the results. I’m sure analysts would be reluctant to express any opinions until they know if Block’s report holds water - muddy or not. There is some good information on the SEDAR site and the Gengma situation is explained there. See “other” and "News release - English", both June 20. http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00001894

Not at all. I am simply saying that we have two sides of this question and I feel that one side is simply more credible than the other. On one side we have one individual (and MW consists of one person, Carson Block). Block’s credentials are somewhat dubious and he has stated that Sino is a complete fraud and a multi billion dollar Ponzi scheme. By no stretch of the imagination is he an unbiased analyst. He is a self styled short seller who’s goal is to drive Sino’s share price down. Furthermore, he promised a release of further supporting evidence of his claims that he has never produced. For those reasons I think that, at the very least, he has overstated his case for his own gain and therefore I view his assessment of Sino with a lot of suspicion. The other side is simply composed of two entities who have said nothing. But actions speak louder than words. One has just purchased 11% of the company and the other has increased its holdings to a similar level. Now if they believed Blocks assessment of Sino, would they have done that? They have the ability to have far more detailed research into Sino’s operations than I do and obviously they believe that Block’s report is wrong or at least vastly overstated.

Correction on Chandlers purchase. I believe that they only increased their holdings by 10% and purchases about 2.5 million shares yesterday. Still their net ownership stands at slightly less than 11% and it would seem to be a positive sign since they are buying rather than selling.

Libor, I was quoting from Hester and that was not aimed at you. I think that you and I are the same page, it is just a matter of degree. On the credibility factor, MW also released another report on a different company (I forget which one) and it was shown to be false. If he accurately uncovers fraud, more power to him, but if he tries to take a company down with innuendos and false or misleading information, then that is a whole different story. Also, I don't care how big a company is, no company blows $100,000,000 without a good possibility of return. Yes it may be small potatoes on the grand scale of things, but don't you think that if they lost $100,000,000 that some people are going to have to account for that? Companies just don't work that way. A hundred million or so may not be a significant portion of their net worth, but I can assure you that it does matter to some department and in turn some employees. "Sorry boss but I just blew a hundred mil on that Sino deal but it's no big deal cause we've got lots more." Don't think that would cut it. And now that another fund has come in at over $4.00 wouldn't you expect that they feel the company is worth much more?

"Besides if MW went the legal route, some other firm would eventually short the stock, write research and end the fraud much quicker than the legal process ever could." Once again you make the assumption that Block's allegations are correct. What, other than Block's say so and a belief that all Chinese stocks are frauds, leads you to this conclusion? Just a note of interest to all those who put so much faith in Carson Block. Do you just ignore the fact that Wellington has acquired 11.5% of this company. Do you really think they would do that if they believed this was a multi billion dollar Ponzi scheme? And now it has just been announced that Richard Chandler Corp has just purchased 10.9% of the company at about $4.06 per share. So, going back to the credibility issue, who do you believe? These separate funds, who have jumped in with both feet and invested hundreds of millions of their own money or Carson Block?

I guess I don’t do a good job of making a point. Point: Why do you all accept what Block says and nothing that Sino says? Maybe you don’t like Sino, maybe you don’t like Chinese stocks or China in general. I don’t care. My question is simply why some here are so willing to accept Block’s accusations at face value and yet completely dismiss anything Sino says. I am not saying Block is wrong. I am not saying Sino is right. The truth may lie somewhere in between. But I do find it a little hard to swallow Block’s statement that Sino is a milti-billion dollar Ponzi scheme. Believe what you may, but if you are going to base your opinions on what someone else says than that individual’s credibility becomes very important. Couple of comments: “objective evidence” Haven’t seen any, let’s wait for the PWC report. “Nobody should base investing judgement on anyone's reputation, good or bad. I'll stick to the Sino specific facts.” Seriously?? And yet you believe Block’s unsupported accusations? And what ‘facts’ are you sticking to? “However, Globe and Mail uncovered supporting evidence of misrepresentation and TRE cancelled an investor meeting.” Okay, well firstly regarding G&M ‘supporting evidence’. Did you not read the reply to that filed by Sino on SEDAR? Secondly, to say TRE cancelled the investor meeting is a distortion of the facts. To clarify matters, it was an analyst’s tour in China that was postponed. But it was the analysts that asked Sino to postpone the tour. Yes it was Sino's tour and therefore technically only Sino could cancel it but it was the analysts who asked that it be postponed. To simply say TRE cancelled the tour is misleading. Analysts correctly wanted to wait for the PWC report? And furthermore I would hesitate to use Chou and Watsa’s name in the same sentence as Block. If anyone thinks that their backgrounds are similar than perhaps they haven’t researched these parties very well. PS. Does it not concern anyone that Block serves his own interests by driving down the share price? Do you not think that may effect his credibility and objectivity?

Claphands - “(1) Financial expertise, from his father and schooling.” By his own admission he spent most of his time partying and had a low grade average. “(2) understanding of chinese culture, from working in Shanghai and living in Asia “ Reportedly fraud is rampant in China. Block portrays himself as an expert on fraud in China. He seems to have mastered the craft. After a tour of Orient paper he reportedly demanded payment of $300,000 to write a positive report. When he didn’t receive it he published a very negative report. “(3) understanding of business practices in China, from setting up his business in Shanghai “ Again by his own admission, he ran a small storage company - Love Box - that is essentially broke. “(4) ability to communicate his ideals effectively with investors, from his dad who runs an equity research firm “ Check his father’s company website. Check the address for his research firm. Then run it through Google Earth. You will see that it is a residential condo in California. Something like the firm of Muddy Waters, with no employees or fixed address. “(5) an irreverent attitude toward authority, not necessary for short sellers but seems to be a running streak. “ Does he strike you as a reputable person on who’s judgement you would base investment decisions?

“ I do find it odd that so many on this board are so vehemently anti-shorts” If you look at the history fo Fairfax (this is a Fairfax based board) and their experience with some specific hedge funds who used unsavoury tactics (to put it mildly), you will see how some might be predisposed to have a bad view of shorts. However, Fairfax also made a lot of money in essentially shorting the mortgage industry (CDS). Now while I really have a lot of trouble with the whole concept of naked shorts being allowed, I don’t have much problem with individual investors shorting stocks. It is when large investors unite or hedge funds get involved in intentionally trying to drive stock values down of an otherwise good company that the practice begins to smell. Add to that Parsad’s comments on the lack of regulation and you can see why “short” becomes a bad word. In the case of Sino, if Carson Block proves to be right he has done the investment community a service. However, if it turns that he simply made up most of his allegations simply for personal gain, would that not leave a bad taste in your mouth? If that turns out to be the case he will have cost investors billions in loses and have caused serious damage to a legitimate company. And then to add insult to injury, the company has almost no recourse or defence against these practices. One final comment - people like Block would not have the influence they do without trigger happy people who are so willing to immediately believe everything negative that they read.

“If I were a Chinese Regulator in the Securities Market I would be getting very concerned that the baby is going to get thrown out with the bath water. If this persists it will kill legitimate foreign investment in China for years to come. ” Absolutely, and I think they have now gotten the message. Anyone who thinks these guys are stupid needs to rethink. They may not be as well organized as much of the rest of the world and they may do business in a different way but look at what they have accomplished in such a short period of time. Look at the Sino situation. Are some people are letting prejudices interfere with their good judgement? Does anyone really still believe Block’s statements that is a complete fraud and a multi Billion Ponzi scheme? It is nearly seven weeks since Block’s report came out. In that time Block has either backtracked (from a “multibillion-dollar Ponzi scheme,” to “an overstatement of several hundred million dollars”) or been proven wrong (misunderstanding of Sino’s business and standing lumber). And he has yet to provide the further details he promised. On the other hand, Where are the management resignations? If there was imminent exposure of fraud, wouldn’t you expect to see some directors and management be jumping ship? Where are the disgruntled employees offering to provide evidence against Sino? With nearly 4,000 employees wouldn’t you think someone would have spilled the beans by now? Sino has been criticised by some here for doing nothing in their own defence. But they have posted over a dozen news releases and filings on SEDAR explaining in detail their defence and re-affirming their financials. When guys like Horsley sign off on submissions to SEDAR do they not risk serious consequences if that information prove wrong? Would he still be doing this if PWC were about to expose major fraud? http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00001894 There has been a big issue made of the fact that most analysts have suspended coverage. Why is that unexpected or a suggestion of fraud? There is an extensive, thorough, and independent audit coming out shortly. Why is it any surprise that they are waiting for that report before commenting further? As Uccmal says “It may become a value investors wet dream one day.” Perhaps that day is closer than we think. There may be some dirt here, but consider the situation if Block is discredited and shown to be some sort of clown out to make a quick buck. It may take a while for legitimate China stocks to recover from this but is that not the value investor’s opportunity?

Yes, and in case anyone misinturprets my position on Block and fraud, I want to make it clear that I hold anyone in the highest regard who uncovers actual fraud, whether they be an investigative journalist or a whistleblower. They are very brave people and deserve much more respect than they get. Should Mr. Block turns out to be right in all his accusations and this turns out to be a mulit-billion Ponzi scheme, then I would grudgingly have some respect for him. However, if he is mearly throwing accusations around hopeing that something sticks and therby cost a lot of people a lot of money as well as hardship for a legitimate company while he makes money for himself, then he is truly a- cockroach.

I am not defending Sino Forest but I am amazed that so many people, would put so much faith and risk so much money on Mr. Block’s completely unsupported accusations. Even if Block turned out to be right, is the market so fragile that a clown like Block can cause supposedly intelligent investors to dump billions in stock simply on his say so? With that in mind I would make the following remarks. “The founder of Muddy Waters LLC” That sounds rather prestigious for a ‘firm’ that has a dubious reputation, no employees, no office and no fixed address. “I know a lot more about … China than these [analysts] will ever know,” The guy is 35, runs a self storage business that he admits is barely solvent. “This is the big leagues,” ... “These guys {Sino] have a lot of money.” Oops, I thought he said they were a fraud and Ponzi scheme worth zero? “[Canada] is a totally different market where nobody knows us and we don’t have credibility.” Precisely where exactly does Mr. Block have credibility? “We know there will be immense pressure for somebody to be prosecuted so we have to be very careful to make sure we do not overstep. We know with some bad breaks we might be looking at the wrong end of that gun” Well if the shoe fits.... “On disguising himself in a one-on-one meeting with Sino-Forest’s head of investor relations:” “I even combed my hair forward for a “Dumb and Dumber” kind of look. I tried to sound really dumb and speak even more slowly than usual. I went in with a rumpled appearance. I just tried to seem like an idiot.” Did Mr. Block ever hear of the old saying “ask a stupid question, get a stupid answer”. Couple of more points. 1) When Block released his unsupported accusations he promised that he would be soon be following up with the details. Does it not seem strange to anyone that it is now a month and a half later and he has produced no additional information? 2) Has anyone noticed that what was a “multibillion-dollar Ponzi scheme,” is now “an overstatement of several hundred million dollars”?

Niels, Satellite photos, I am impressed. Can you tell us where a person can order satellite images as I have trouble getting up to date imagery of areas I am interested in.

I was a lot more sceptical of management a couple of years ago than I am today and they have made some good moves recently. The union agreement has been signed, the debentures have been retired and the cost plus agreement on 50% of RBK production gives those plants some much needed stability. Hopefully they will soon be able to have most of their RBK production contracted on a cost plus basis which should finally remove that drag on the company. I also am waiting to see how they fared with the FDA on the use of RBK in food packaging. So they do seem to be making some good moves, I just hope that they don’t get over ambitious in other areas. And by the way, quite some time ago I came to the conclusion that FBK management does read what we say here so if I am right - keep up the good work and let’s make some money! As for pulp prices, I guess we just have to keep our fingers crossed. But in comparison to the situation a couple of years ago prices certainly have stabilized and look pretty good at this level. FBK probably represents (depending how you look at it) about 8% of my portfolio - today. It fluctuates so widely this can change pretty quickly. I originally bought in at about $1.72 three or four years ago, but have averaged down to around $0.85 so I can’t really complain. Guess we will know more in a month’s time when the Q2 numbers come out, but It would be nice if sometime a report containing some really good news and numbers.

Not surprising that Block won't reveal his address. I'm waiting for the headline that says "Block Missing in China".

Anyone expecting anything interesting in the next report or has everyone bailed and gone elsewhere? I keep telling myself that patience is a virtue, but I have a fair amount tied up here and while I have conceded that I'm in it for the long run, I'm just not sure how long that will be.

Couple of quick points 1) It is refreshing to see some objective analysis here for an change. 2) I think that we will see “gray” areas-, but how much & how gray is my concern. 3) Yes fraud is fraud, at least in the Western world. But in some other areas it is not so cut and dried. Payoffs under the table and off the books may be hard to explain, but are simply the cost of doing business in some place. 4) Being a Canadian company I thought they had to conform to GAAP accounting rules with audited oversight? The saving factor for Sino may well be that it is a major player in a very important commodity for China

libor.plus1 I’m not sure of the point you are trying to make, but you keep confusing the G&M article with a press release. There could be a big difference in bias. I also don’t know where the BS comes in. “Wow... umm. Sino forest postponed the analyst tour for their forests... the excuses they give are bullshit. This is really not a good sign.” “They would need to meet with Poyry, and that they need to get more info from mgmt/PwC. Apparently this isn't possible, and the only party in a position to tell that to the analysts is the company. Bullshit. “ Anyone who has followed this for any time knows that we all have to wait for the PWC report to come in before we know what is going on and that is nothing new. That is simply a fact and not BS. Kraven Agree with what you are saying, but don't you think that because things are not so simple in China and that this company is spread fairly wide, that this is why the audit will take a while. Also & I may be wrong here, but wasn't their regular auditors E&Y and now PWC is doing this special audit?

given2invest As far as long or short is concerned I wasn't even in this thing until a couple of weeks ago when I bought a very small amount, but right about now I wish I had bought a lot more. Boy I wouldn’t like to be in Paulson’s shoes. He looks bad however this turns out. Right now he has lost a bundle. If it goes to zero he looks bad for getting into it in the first place. But if this thing recovers he will look even worse.

"That being said, I didn't see that news article." At least I'll concede points for honesty.