given2invest
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Posts posted by given2invest
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How about Fairfax? When the stock was hammered to $57, where exactly where they supposed to get financing once the spigets were turned off? Fairfax would not be around today if it wasn't for Cundill, Longleaf & Markel. Coordinated attacks happen all the time. Insider trading happens all the time. How about Dendreon? Their drug would not be around today.
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.
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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.
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But Parsad, how do you reconcile the fact that the amount of frauds Hempton, and especially Greenberg, have reported on or taken negative stances on out number the amount of legitimate companies they mistakenly thought were frauds by a large factor? I just don't get how saying Hempton/Greenberg are involved lessons the likelihood of fraud. If they've uncovered more fraud than they've been wrong on, then if they're involved the odds of fraud go up right? Isn't that just basic math? There is 30 correct frauds for every Fairfax in Greenberg's career.
Wouldn't the fact that their fraud batting average is well over .500% make the odds that Sino is a fraud higher?
Isn't that like saying it's ok if a few innocent men receive the death penalty, since the bulk of them are guilty?
There are two views on Hempton, Greenberg, Chanos, Cohen et al:
1) They use all their resources to uncover fraud, and they've done a good job at catching many.
2) They use all their resources to coordinate short attacks and drive vulnerable companies out of business.
Take your pick. I believe there were many people who were also sympathetic to Hitler when he was alive. Time tells a different tale! Cheers!
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.
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In 12 months, most people on this board will still not have felt the touch of a woman.
You're probably wrong. Personal experience is an overweight contributor when making predictions.
;D
:P
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In 12 months, most people on this board will still not have felt the touch of a woman.
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Have we moved suddenly from the corner of BRK and FFH to the corner of Cramer & Cramer? What happened to Buffett's Rules Nos. 1 and 2?
The only justification buyers seem to be giving here is that the upside is many multiples of the downside. This is fine if the bet is a 50:50 bet. But, is it?
I haven't done much work on TRE or read the actual MW report but these are some of the things I gleaned from this TRE presentation: http://www.sinoforest.com/pdf/presentations/SFC-IR-ppt-Q410.pdf.
1) Poyry Consulting (independent valuer of TRE's forest assets) has, after a recent "internal risk assessment" decided that their valuation reports to TRE may no longer be made avaliable in the public domain. Red flag?
2) Anyone wonder how a commodity company like TRE has a 15-year track record that looks better than MCD, FFH and BRK? Phenomenal growth rates with hardly a stumble? CAGRs of 23% diluted EPS, 36% revenue, 43% net income! Redder flag?
3) This company generates 50+% gross margins simply from buying and selling standing timber. What's interesting is that these margins are higher than the 30-40% margins they get from felling and selling logs. We're wasting time arguing about whether to invest in TRE or not. We should get into the timber trading business. Even redder flag?
4) They report gross margins of 35% overall, yet their EBITDA margins are almost 60%. Net margins are around 20%. My flag just turned brigtht crimson.
There may be prefectly good explanations for these things and I do not know the forestry business at all so I may just be revealing my ignorance but it seems to me this is not a 50:50 bet.
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?
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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.
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Question. Given that there has been a huge number of shares traded over the past few days, would anyone care to speculate as to who has been buying?
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.
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buying with great uncertainty is tough but often how big $ is made. Too bad I don't know Sino enough.
a report with clear errors can take Sino down like that. Hope no one lost their life saving on this.
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 :-\
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then it is correct logic as I said 0.
It's factually true what you said it's just a terrible justification for making an investment.
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your correct as cap gains/losses are 50% discounted, so its 20 something %...but its an off-the-cuff calculation.
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.
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Worse case scenerio is TRE is a $0. I offset the loss with some other cap gains and I only loose half what I put down.
Now that's some faulty logic if I've ever seen it!
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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 :)
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Moody for possible downgrade. MW said will release more material "pretty soon".
Sino appoints independent reviewers.
Too hard to figure out pile.
In the post right above mine you wrote:
I am very tempted to build a full size.??? ??? ???
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Getting hammered today. Anything new out?
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I've thought this for a long time, but now would be a good time to just say it: I respect a great many people on this board. But I also feel that way too many people here like to fellate Buffett and hold FFH as gods. Buffett is a great investor, and FFH is a great company. But not everything is JUST LIKE THAT ONE TIME BUFFET INVESTED IN THIS or THAT ONE TIME EVERYONE TRIED TO SCREW FFH.
Also, how many people here really gave a shit about Paulson before the little headline grabber with GS? I dont recall anyone here quoting him and how awesome an investor he is. All of a sudden he's become the guy that can do no wrong? Give me a break.
It's true, not a lot of people know MW. But is that really what the crux of your defense is? "MW could be lying because they are the new guys on the block". As if the established guys (big bank analysts) were doing such a great job in the first place.
I'm just really surprised how hard some people on the board, who I've known to otherwise be rational are trying to ignore the report that MW put out. I almost feel like someone else hacked your accounts and is posting on your behalf.
Very well said.
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This is the time one can go rich or broke based on the decision.
Or be on the sidelines and stay away from it all?
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And "Dr." Byrne is a complete lunatic.
: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.
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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.
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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?
Run far, far, away. Hey, you asked for my thoughts. :)
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The last 10 or so replies have been fantastic. I don't feel there is much left to say about the matter.
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I know next to nothing about this company and skimmed the report so I can't comment on whether it's a fraud or not or whether the CFO adequately refuted MW claims. What I can say is MW has been right every time they have initiated on a china stock and their report was very damning. Of course, I'm telling you nothing the market doesn't already think.
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.
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This smacks of a brolgaboy style post. Anyone around here who isn't aware that manipulation / short attacks happen hasn't been around for long. This is all bringing back memories.
I bet you guys are big Glenn Beck fans. :)
Nobody is manipulating anything. If the company is legit and healthy then this will be the buying opportunity of the century.
Do you realize that there are NO shares borrowable to short on Interactive Brokers but there are 10's of millions I can buy at the current price level? My point is, I can't even enter a short position if I wanted to (and send the price down) but I can buy (as can anyone else) essentially unlimited stock at these levels.
The market is pure capitalism. If this was such an obvious manipulation, many large funds would be foaming at the math to buy all the shares they could and maybe some did today. But all this talk about short manipulation makes me lol.
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.
Block's Conduct Smells Fishy To Me!
in General Discussion
Posted
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.