fuluvu

As a Buffett follower and admirer, it takes him too long to learn this. Buffett stated that shorting is a bad business more than once. First, it is so obvious that shorting a good business is dangerous. Secondly, shorting even a bad business or a fraud is dangerous too. It is hard to get the timing right and so many forces are working again you. For the investor, the shorting position is just a fraction of his portfolio, however, for the fraudster, it is his life. He would make all his efforts to make the fraud going as long as possible.

Warren Buffett never shots stocks. He said that he has never been wrong on the overvaluation of a stock, but problem for shot is that it is difficult to get the timing right. Pabrai has similar comment. I am not smarter than Buffett and I never shot stocks. That's all I want to add to this topic.

"How are you going to screw me?" In the book "big short" by Lewis, there is a story about Eisman who was the first to identify and short the mortgage market. This is not the exact quote. But the story goes like this. A Japanese business man went to meet Eisman and want to raise capital for his business. He showed Eisman sheets of beautiful financial of the firm. But there is no details like its top customers or suppliers and so on. Eisman throw the sheets to the trash can and tell the Japanese. Just tell me "How are you going to screw me?". Now come back to CCME. It is equally or more important what is not said in the 10ks than what is said in the 10k or 10Qs. Is there enough disclosed? Read the earnings releases and reports of CCME and compare it to other companies in the industry. Is there similar disclosure as other companies? What is the ad rate it charged to customers? How much total ad times available to sale? What's the proportion ad slots sold? so on and on. Without these details, nobody can do an intelligent or even a reasonable analysis on it. Jason, if you find these details and do an analysis, please share with us. You are right. Risk comes with opportunities. Without these details, only question people can ask is "How are you going to screw me?."

This is easy to understand. First, the insider buy is the response to short seller's accusation of fraud by false acquisition. Second, it can work this way: 1. Raise $30 million by selling shares to investors. (Chinese small caps are very good at this.) 2. Using $25 million to buy a company that was set up by my brother with 50K initial investment a year ago. 3. Using $5 or $10 million to buy shares. If I am the con artist, I do not mind to spend the $5-10 million to show my confidence. That is not my money originally. And most likely, insider will keep the money and won't buy shares without being accused.

"sleep well test": Can I sleep well at night if 60% of my capital invested in this stock? With 200/350 fraud rate of these US listed Chinese stocks, I can't. So I do not invest, no matter how attractive the return will be. On the other hand, if you do have real insights about the business and the people involved, you can find wonderful opportunities. Like BYD. Do I have these insights? NO, I do not!

There are certainly redflags in its financial reports. For one, CCME's revenue grew more than 24 fold from 2006 to 2009 while its sales force almost remained flat. CCME reported revenues of $4 million, $26 million, 63 million and $95 million for year 2006 2007, 2008 and 2009, correspondingly. The reported people in sale force for 2006, 2007, 2008 and 2009 are 58, 76, 63# and 63, correspondingly. #: 63 in 2009 is the reported number on June, 2009. 2008 number is a approximation based on the statement "There were no significant difference in the size of the sales force for the six months ended June 30, 2009 and 2008" on page 148 of form DEFM14a. One can argue that CCME just charge more per ad as it expands its network. Thus, it can increase revenue without increasing sale force. This is good just for the national advertisers, like COKE or GM. Most advertisers are local to provincial markets. As CCME expands to more provincial markets, it need to add sales force to that market. Anyway, same number of sales people handle sales from 4 million to 95 million. Maybe, it makes sense for certain industries, but it is beyond my knowledge to understand it. I put it on the too hard pile.

Barron had this article " Beware of this Chinese export". It describes the frauds in some US listed Chinese companies. http://online.barrons.com/article/SB50001424052970204304404575449812943183940.html?mod=BOLFeed#articleTabs_panel_article%3D1 A Chinese value investor who knows the problem well said at the Value Investor Congress that 200 of the 350 listed companies are frauds. To me, CCME's numbers are too good to be true. I am not saying that CCME is fraud, but how can you rule it out? If you can not be sure that it is not a fraud, then there is no margin of safety to invest in it.

Pershing, Winthrop to Buy Debt in Peter Cooper Village/Stuyvesant Town Complex http://online.wsj.com/article/SB10001424052748704388504575419280732933048.html?ru=yahoo&mod=yahoo_hs

The stock guru's top pupil, baseball star Lenny Dykstra, was secretly paid to plug stocks on TheStreet.com and give access to Cramer, reveals Randall Lane in his new book, The Zeroes. http://www.thedailybeast.com/blogs-and-stories/2010-06-28/jim-cramer-lenny-dykstra-stock-scandal-reports-the-zeroes/

agree with T-bone. You take the risk not being able to buy it back at lower price. Unless you have trading shares other than core holding positions.

On Oct 16, 2008, Warren Buffett wrote the article "Buy America, I am." The S & P 500 was at 900 level the day before. Now it is at about 1000 level. If you agree with Buffett, the market is still at the buying range. I am not selling.

Investors bet on Detroit housing market, http://money.cnn.com/2009/06/11/real_estate/investing_in_Detroit/?postversion=2009061113