given2invest

I never said that someone who puts out a fraudulent report and knowingly spreads lies in the market shouldn't be prosecuted to the fullest extent of the law. All I have said was for every time this happens, there are a dozen situations where the short got it right and helped make the markets more efficient. I don't know the specifics of FFH, but I do know how people on this site use incredible hyperbole when discussing shorts whether it's Steve Cohen or a seeking alpha report on EBIX. RE; the price of the stock being in the "hundreds", the price of a stock is irrelevant, that can be manipulated via reverse splits (see BH). No reason to make a claim that because a company trades over $100 a share it's any more legitimate than one that trades at $10 a share. My main point is I would say that for every FFH there are 100 stocks that are touted fictitiously on the LONG side that costs investors even more.

Aha! But Fairfax didn't go bankrupt did it? Investors stepped in and saved them because they viewed the reports as inaccurate. That's exactly my point.

Hester is correct. Did David Einhorn cause Lehman to go bankrupt or did their poor real estate investments? The only time a short can even "cause" a bankruptcy is when they are a financial services firm/leveraged firm that needs access to capital to survive. I, too, challenge you to find me examples of a company that has gone belly up that shouldn't have in hindsight - that's a real company, something over $500 Million in market cap at peak. Shorting is really, really, hard. It seems kind of silly to dismiss a report based on the fact that 1 time out of 30 they got it wrong or potentially distorted their case when we know that Block has literally been 4/4 in the last 12 months on China frauds. I have no idea where TRE ends up and there are certain things about the Block report that bother me but I would not want to be on the long side there. In regards to him marketing/selling his report before he published it, so what? If I had smoking gun evidence of a fraud of a multi billion dollar company I would absolutely want to make as much money as I could before showing the evidence to the world. Why is that bad? That's the industry we are in. The way Block was going to get paid was to sell his research. Releasing it on the internet once the sales were over is not in the least shady, nothing different than someone posting a report on seekingalpha after pumping their ideas in a newsletter the week before. It's up to the market how they want to interpret the report.

Wow Steve Cohen is Hitler now? :) Also, Godwin's Law for the win! http://en.wikipedia.org/wiki/Godwin's_law I hate to break it to you guys but Steve Cohen doesn't spend a whole lot of time shorting let alone trying to put companies out of business. He operates a HUGE business with as many as 90 portfolio managers. He probably had almost nothing to do with Overstock, Fairfax, etc. P.S. Overstock was a great short.

You're probably wrong. Personal experience is an overweight contributor when making predictions. ;D :P

In 12 months, most people on this board will still not have felt the touch of a woman.

The post of the thread... Why not forget about MW and just discuss the numbers, from what oec2000 has here this company is blowing it out of the water. Similar thing happened with CCME, looking at their statements one could conclude they had the worlds most profitable business model, but in fact it turned out to be a fake. The question I keep asking is if all of those RTO Chinese companies are as amazing as their statements make them out to be why are they trying to raise capital? Cash rich companies with high growth rates, high cash returns out looking for equity? Why not bank financing, much cheaper, instead they go for the highest cost option, just seems fishy to me. Well, at least TRE has been spending the capital and has been negative FCF. That's actually a positive the way I look at it. CCME (and others) raised round after round at absurdly low valuations while generating copious amounts of FCF. Most importantly, they had no capital needs! They weren't spending money on any cap ex! Also TRE raised a lot of debt, too. Frauds usually will not raise debt. I also take aim at MW claim that it's a ponzi scheme. A ponzi scheme raises new money to pay out old investors. How did TRE do that? They just kept raising new money to (apparently) steal more and more money, not to fund the fraud and pay out old investors/bondholders, right?

Not at all surprising and I figured they did this but... Muddy Waters 'Pre-Marketed' Report to Funds, Dundee Says (1) 2011-06-07 20:13:21.204 GMT (Updates with analyst's comment in third paragraph.) By Matt Walcoff June 7 (Bloomberg) -- Muddy Waters Research, the firm founded by short seller Carson Block, "pre-marketed" its June 2 report on Sino-Forest Corp. to hedge funds for the past five weeks, said an analyst at Dundee Securities Ltd. Shares of Sino-Forest have tumbled 78 percent in Toronto since June 1, the day before Muddy Waters said in its report the Hong Kong and Mississauga, Ontario-based forestry company misled investors about its land holdings and production. Block stands to make money from declines in Sino-Forest's shares. "Muddy Waters pre-marketed this smoking-gun report on Sino-Forest to hedge funds over the last five weeks," Richard Kelertas, an analyst at Dundee in Montreal, said today in a conference call with investors and reporters. Kelertas changed his recommendation on Sino-Forest to "under review" from "buy" on June 3 following the Muddy Waters report. He said the report was inaccurate and there's nothing fraudulent about Sino-Forest "to the best of our knowledge." Dundee was among institutions that helped Sino-Forest sell shares in December 2009 and also in May 2009. "These hedge funds got involved with Sino-Forest in a big way," he said. Kelertas declined to name the funds or say how he obtained the information. "The short position almost doubled in two to three weeks," he said. Shorted Stock Short selling, or selling borrowed shares with the hope of profiting when they fall, more than doubled to a record 35 percent of Sino-Forest's outstanding stock as of June 3, up from 17 percent at the beginning of May and 13 percent at the end of 2010, according to Data Explorers, a New York-based research firm. Sino-Forest is the most-shorted stock in the Standard & Poor's TSX Composite Index, which has an average short interest of 4.8 percent. Sino-Forest dropped $2.15, or 35 percent, to C$4.01 as of 4 p.m. on the Toronto Stock Exchange. The shares will recover "much faster than people suspect," Kelertas said. No one immediately responded to telephone and e-mail messages for Block seeking comment.

Enron had an absurd number of shares trade the weeks before it became a 0, all the way down... I'm sure a lot of that was "smart money". Just cause there is a buyer doesn't really mean much.

Anyone who has their life savings in one stock had no business investing in the stock market, yanno? But I'm sure there are some employees with a lot of money tied up in it that even if it is a fraud had no idea. Very sad. Still early to throw in the towel, lots of innings to be played out here yet. But I doubt there will be a happy ending :-\

It's factually true what you said it's just a terrible justification for making an investment.

No, it's faulty logic because the worst case scenario for any investment is 0 and you could invest in anything, lose money, and have it to write off against your gains.

Now that's some faulty logic if I've ever seen it!

Seems more likely that when it was up yesterday you let the market confirm your thoughts that it would be proven to not be a fraud so you jumped in and now that it's down big today you have changed your mind. Just saying :)

In the post right above mine you wrote: ??? ??? ???

Getting hammered today. Anything new out?

http://www.bloomberg.com/news/2011-06-06/muddy-waters-block-takes-down-giants-paulson-greenberg-with-china-shorts.html

Very well said.

Or be on the sidelines and stay away from it all?

:o I knew you were the Sith Lord. That conference call in 2003 or 2004, I can't remember when it was, is still the greatest conference call I have ever listened to.

I never claimed manipulation doesn't happen in the market. I just find it hilarious that some people on this board think every short report is manipulation, every employee who works for SAC is a felon, etc. You do realize SAC has some 90 portfolio managers right? I know some of them. One of them is the finest individual I have met on Wall Street. I am a bit different than most on here. I have never owned FFH or BRK and only found this board through a random google search. I realize your unwavering loyalty to all things FFH and because they went through a "bear raid" that was proven to be fruitless, many now think all hedge funds and shorts are evil. I think you are doing yourself an incredible disservice with this line of reasoning. And "Dr." Byrne is a complete lunatic.

Run far, far, away. Hey, you asked for my thoughts. :)

The last 10 or so replies have been fantastic. I don't feel there is much left to say about the matter.

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.

Friend, I've worked at the largest investment bank and large hedge funds and have friends who currently work at all of them. There are bad apples everywhere and I know this whole board thinks everyone who works at SAC is the devil, but I hate to break it to you - you're wrong. The point that the shares aren't borrowable is that there can only be 1 kind of seller hitting the stock down right now - long sellers. Yes, I know Patrick Bryne wants you to think naked short sellers ruined his company. Actually, lack of profits ruined his stock price - nothing more. It's a weekend, and I'm tired. Bottom line: Good luck with this one, I've said my peace - just like I did in the CCME thread on this website before it got halted. I know almost nothing about TRE so I have no idea what will end up here. I actually hope it's not a fraud. I highly, highly, doubt it though. But I have no skin in this game so it won't effect me either way. But don't tell me that I haven't been around long enough. I'm certain I've seen as much "action" as you have.