TRE - Sino-forest put.

[Uccmal]

http://www.muddywatersresearch.com/research/

 

They are basically batting 1000, depending on how you look at it.

 

CCME, RINO, DGW, total frauds/zeros.

 

ONP - disaster but still trading.

 

All these reports came out then auditors resigned/trading was halted.   They have serious credibility, hence why the stock is down so much.   Nobody is forcing people to sell because of a research report.  

 

Maybe he's wrong this time.  He has jumped a magnitude in size for this one versus the others.  In a Con game the first thing to do to make the big score is to develop credibility.  The next thing is to exploit it.  He may have made a few hundred grand shorting the others.  This one he is probably made in the 10s of millions now.  Quite worth the background work even if you are utterly full of it, wouldn't you think.  

 

Sino's track record 15 years.  Muddy Waters - 7 months.  

I have no stake in this although I may take one.

 

[libor.plus1]

I think he is talking about me.

 

I just signed on the MW board because I wanted to keep up to date with their new releases. But, I've also been on this board since the first FFH dinner, so I don't know what to tell you.

 

I mean, its your money, so do what you want. But I think in hindsight you might regret being long. Also, everyone should keep in mind that the whole purpose of an RTO is to bypass security standards and procedures. The very essence of an RTO is based on the premise of avoidance.

[given2invest]

http://www.muddywatersresearch.com/research/

 

They are basically batting 1000, depending on how you look at it.

 

CCME, RINO, DGW, total frauds/zeros.

 

ONP - disaster but still trading.

 

All these reports came out then auditors resigned/trading was halted.   They have serious credibility, hence why the stock is down so much.   Nobody is forcing people to sell because of a research report.  

 

Maybe he's wrong this time.  He has jumped a magnitude in size for this one versus the others.  In a Con game the first thing to do to make the big score is to develop credibility.  The next thing is to exploit it.  He may have made a few hundred grand shorting the others.  This one he is probably made in the 10s of millions now.  Quite worth the background work even if you are utterly full of it, wouldn't you think.  

 

Sino's track record 15 years.  Muddy Waters - 7 months.  

I have no stake in this although I may take one.

 

 

You're absolutely right, though you think it's easy being the first one to find a fraud of any market cap size let alone doing it 3 or 4 times already?  CCME was a $1 Billion company, he made way more than a few hundred k. 

 

Also, the report is a lot more than "THIS IS A FRAUD!!!!!111!111!11!"  There was a ton of work that went into it. 

 

There are thousands of stocks in the market.  This one is probably left best alone. 

[ValueBuff]

The other stock may have had that marketcap, but they were extremly thin on trading.  it takes a lot less cash to push around something illiquid.

 

TRE has been around for 15 years and is based on of Toronto, not China

[S2S]

If I were long TRE (which again I hold no stake of, either long or short), I'd be very concerned that all of the support thus far has come via attacking the messenger, instead of actually tackling the allegations MW brought up.

[ValueBuff]

so everybody can see it.

 

FOR IMMEDIATE RELEASE

SINO-FOREST COMMENTS ON SHARE PRICE DECLINE

TORONTO, CANADA, June 3, 2011 – Sino-Forest Corporation (TSX: TRE) (“Sino-Forest” or the

“Company”), a leading commercial forest plantation operator in China, today commented on the share

price decline on June 2, 2011 as a result of the allegations made in a ‘report’ issued on a website by a

short seller operating under the name Muddy Waters, LLC. The Company was not contacted by Muddy

Waters for comment ahead of publication of its report.

The Board of Directors and management of Sino-Forest wish to state clearly that there is no material

change in its business or inaccuracy contained in its corporate reports and filings that needs to be

brought to the attention of the market. Further we recommend shareholders take extreme caution in

responding to the Muddy Waters report.

As indicated in the report, Muddy Waters has a short position in the Company’s shares and therefore

stands to realize significant gains from a share price decline that it precipitated. Muddy Waters expressly

admits that it makes no representation as to the accuracy, timeliness, or completeness of any information

contained in its report. Further, its website discloses no address or ownership information, nor the

credentials of any of the authors of the ‘report’. Neither the Ontario Securities Commission nor the

Securities Exchange Commission website lists Muddy Waters or its author as being registered as an

advisor. Nevertheless, due to the substantial impact that the report has had on the prices of the

Company’s securities and the reputation of the Company, the Board has appointed an independent

committee consisting of three of the Company’s independent directors, William Ardell (Chair), James

Bowland and James Hyde. All three of these directors are financially qualified professionals and two of

the three are recent appointees to the Board. The independent committee’s mandate is to thoroughly

examine and review the allegations contained in Muddy Waters’ report, and report back to the Board. The

independent special committee has appointed Osler Hoskin & Harcourt LLP as independent legal counsel

and will retain the services of an independent accounting firm and such other independent advisors as it

deems necessary to assist with its examination. During the course of the independent committee’s

examination, the Company will provide any updates as appropriate. Following conclusion of the report,

the key findings of the independent special committee will be released to shareholders.

Allen Chan, Chairman and CEO of Sino-Forest commented: “We are committed to a high level of

corporate governance and stand by the integrity of our company, our 16-year operational track record and

our financial statements. Our company has continuously retained the services of internationally

recognized law firms, auditors and expert consultants from Canada, the US, Hong Kong and mainland

China.”

“It is important that our independent committee thoroughly address Muddy Waters’ allegations, and they

will have my full support and those of the management team in doing so. However, let me say clearly that

the allegations contained in this report are inaccurate and unfounded. Muddy Waters’ shock-jock

approach is transparently self-interested and we look forward to providing our investors and other

stakeholders with additional information to rebut these allegations.”

David Horsley, Senior Vice President and CFO of Sino-Forest commented: “I am confident that the

independent committee’s examination will find these allegations to be demonstrably wrong, as for

example:

Page 2 of 2

(a) Muddy Waters fundamentally misunderstands and misrepresents the most basic items in our

published Management’s Discussion & Analysis with respect to revenue generated from Yunnan Province,

which we report as being approximately 45.5% of the Company’s standing timber revenue of

approximately US$508 million. Muddy Waters alleges that it is impossible that such revenue existed

because achieving such levels would greatly exceed allowable cutting quotas and it would be impossible

to truck close to that volume in the period. However, that revenue was very clearly disclosed in our MD&A

filed for Q1 and Q2 of 2010 as revenue resulting from the sale of the standing timber - there is no cutting

or transport involved, as the trees were sold but not harvested and therefore are not considered part of

the quota for the region until the harvesting is conducted by the buyers.

(b) Muddy Waters alleges that the Company overstated the assets in Yunnan Province, based on its

erroneous and narrow assumption that our only purchases in Yunnan Province consisted of purchases of

20,574 ha of plantations in Gengma. However, this allegation ignores the fact that in addition to the

purchased plantations in Gengma county, we have purchased approximately 173,000 ha of plantations in

approximately 25 other counties in Yunnan Province as of December 31, 2010.”

As at December 31, 2010, the Company had approximately US$1.26 billion in cash, cash equivalents and

short term deposits as reported in the audited consolidated balance sheet. As at March 31, 2011, the

comparable amount was US$1.09 billion. The Company’s cash remains intact with the majority of it in

banks in Hong Kong and offshore.

As previously announced, the Company intends to file its Q1 2011 results on June 14, 2011.

[given2invest]

The other stock may have had that marketcap, but they were extremly thin on trading.  it takes a lot less cash to push around something illiquid.

 

TRE has been around for 15 years and is based on of Toronto, not China

 

Huh?  Not true at all.  CCME was super liquid as were the puts.  They made millions and millions there, I'm sure. 

 

But all of this debating is absurdly dumb.  Read the report and refute it.  If you are comfortable, then buy it.  But the report is a lot more than "The CEO doesn't shower every day!"

 

Regarding the company dismissing a few of their large claims, they make probably 50 claims in the report.  The company refuted 2. 

[ValueBuff]

I am showing CCME has 34 mill shares O/S.  How liquid can that be?

[S2S]

I am showing CCME has 34 mill shares O/S.  How liquid can that be?

 

Both liquidity and price  ;) haven't been quite what they used to be since it moved to trading on pink sheets.

 

http://moneycentral.msn.com/investor/charts/chartdl.aspx?PT=7&compsyms=&D4=1&DD=1&D5=0&DCS=2&MA0=0&MA1=0&CF=0&D7=&D6=&showtablbt=View+price+history+with+dividends%2Fsplits&nocookie=1&SZ=0&symbol=US%3aCCME

[king888]

http://finance.yahoo.com/echarts?s=CCME.PK+Interactive#symbol=ccme.pk;range=2y;compare=;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=off;source=;

 

CCME was trading with 500k -2 million share per day in Nov 2010 - Jan 2011 . It was very liquid from what I remembered. I was about to buy the share back in Jan but feel susceptible with its legitimacy (too good to be true profitability)  so I didn't .

[libor.plus1]

ValueBuff,

 

I understand you have a position in the stock... But I would ask you to consider that there is a chance you may be wrong on this. I would also recommend you ask yourself if it's worth it. Speaking strictly from your posts, you seem to be fighting a very uphill battle with regards to this one stock. In a month, it may be possible that you will look back on this thread and think "Maybe I should've just let it go"

[alertmeipp]

it's tough, it's weighting against many different scenario:

 

Taking 70% loss without knowing all the facts (sell now).

Taking 90-100% loss if the facts in the report are true.

Much less loss if some of these allegation are proved to be false.

Profit is the report is bogus.

 

Etc....

 

If I were just long, I will probably just hold and see until I see more facts. But having short put is a different story as u won't be able to act quickly when new info comes. Pure stupid move on my part.

[given2invest]

Your cost basis/past decisions are all sunk and should not factor into your decision today. 

 

Would you go long at this price?  If you would, then hold your very out of the money naked put.  If you would not go long at this price given the current circumstances, then cover your naked put and move on.

 

 

[alertmeipp]

>>Your cost basis/past decisions are all sunk and should not factor into your decision today. 

 

In theory, yes.

In real life, holding a position can't be compared to establish a new position because missing profit is one thing, sell only to discover the report is bogus is another.

 

As mentioned earlier, I did cover my puts today. Took some big lost but could have been worst.

 

[scorpioncapital]

excuse the pun, but some are missing the sino-forest for the trees here. You can't do business with crooked managements, or ethically borderline. Even if the minor allegations are true about the decisions these people made, I would consider not touching it, despite cheapness because the final outcome , whether now or years from now, can't possibly lead to superior investment returns.

[given2invest]

>>Your cost basis/past decisions are all sunk and should not factor into your decision today. 

 

In theory, yes.

In real life, holding a position can't be compared to establish a new position because missing profit is one thing, sell only to discover the report is bogus is another.

 

 

Huh?  This isn't theory.  Your past decisions and your cost basis have no bearing on your decision today.   Missing a profit vs. "recovering a loss" is exactly the same thing in investing.   Money is money, it doesn't matter whether you are "playing with the house's money" or your own.  It doesn't matter whether you've paid $15, 5, or 1 a share.   It doesn't matter if you bought it yesterday or five years ago, though your capital gains rate will change.   All that matters is if you wouldn't buy a stock today at the current share price, you shouldn't own it regardless of what your cost basis is.   Again, this isn't theory.   The only caveat I will give is for taxes but that's irrelevant in this and most cases and investing based on tax decisions is a losing proposition, usually.  

 

This is one of the biggest mistakes investors (and gamblers) make.  

 

[given2invest]

excuse the pun, but some are missing the sino-forest for the trees here.

:D

 

[ValueBuff]

I think you guys misunderstood my position.  I held the shares for about 45 minutes.  I got a fast 15% on the morning bump as was out.  hence, then shares "paid for my weekend".  I didn't have a position prior to this report.

 

I am interested in the rhetoric here, but I will wait for more details prior to going long and strong with a meaningfull position.  

 

The company is in a blackout period around earnings currently.  If the company states earning and annouces a major share buyback, then that would be one of the things I am looking for.  Someone else pointed out that they do not need to raise money, so having that cash offers them flexibility to capture benefit for the stock price movement...if the report is bogus.  

 

I would not write off TRE here...based only on the report, as I think many people are.  These guys are as sketchy to me, as are the claims they making about TRE.  That is my point.

 

Going into the weekend, I hold no shares and am very interested in how this develops.

 

The million dollar question is...how much wood could a woodchuck chuck if its Sino forest wood?

 

as an aside...the TRE 2017 bonds have a YTM of around 9-10% per.  The bond market is giving them a better chance to survive than Greece lol ;D

 

 

[given2invest]

CCME and LFT reported earnings and announced buybacks before they were halted for fraud.  Means nothing. 

 

 

[alertmeipp]

>>Your cost basis/past decisions are all sunk and should not factor into your decision today.  

 

In theory, yes.

In real life, holding a position can't be compared to establish a new position because missing profit is one thing, sell only to discover the report is bogus is another.

 

 

Huh?  This isn't theory.  Your past decisions and your cost basis have no bearing on your decision today.   Missing a profit vs. "recovering a loss" is exactly the same thing in investing.   Money is money, it doesn't matter whether you are "playing with the house's money" or your own.  It doesn't matter whether you've paid $15, 5, or 1 a share.   It doesn't matter if you bought it yesterday or five years ago, though your capital gains rate will change.   All that matters is if you wouldn't buy a stock today at the current share price, you shouldn't own it regardless of what your cost basis is.   Again, this isn't theory.   The only caveat I will give is for taxes but that's irrelevant in this and most cases and investing based on tax decisions is a losing proposition, usually.  

 

This is one of the biggest mistakes investors (and gamblers) make.  

 

 

I am just saying not selling without knowing the facts is very different from buying without knowing the facts.

One of the biggest mistakes is also selling in panic.

 

You know it might be not wise to buy with that report out there until the company provides some proof, but it doesn't mean selling isn't a wise idea neither.

 

But we are know certainty is an expensive thing and fraud could be priceless. The decision to not sell and buy is very different in this case.

[alertmeipp]

I think you guys misunderstood my position.  I held the shares for about 45 minutes.  I got a fast 15% on the morning bump as was out.  hence, then shares "paid for my weekend".  I didn't have a position prior to this report.

 

I am interested in the rhetoric here, but I will wait for more details prior to going long and strong with a meaningfull position.  

 

The company is in a blackout period around earnings currently.  If the company states earning and annouces a major share buyback, then that would be one of the things I am looking for.  Someone else pointed out that they do not need to raise money, so having that cash offers them flexibility to capture benefit for the stock price movement...if the report is bogus.  

 

I would not write off TRE here...based only on the report, as I think many people are.  These guys are as sketchy to me, as are the claims they making about TRE.  That is my point.

 

Going into the weekend, I hold no shares and am very interested in how this develops.

 

The million dollar question is...how much wood could a woodchuck chuck if its Sino forest wood?

 

as an aside...the TRE 2017 bonds have a YTM of around 9-10% per.  The bond market is giving them a better chance to survive than Greece lol ;D

 

 

 

 

I managed to grab some at around 3 this morning in the pink as well, it helps to lower my lost but still hurts. But lesson learned.

[alertmeipp]

CCME and LFT reported earnings and announced buybacks before they were halted for fraud.   Means nothing.   

 

 

 

That means nothing in this case as well.

Anyways, I expect Paulson and Davis, etc... would be doing their validation as we speak, we will know soon enough. One of the allegation MW makes was the inflated assets price and don't you think the CFO's reply nail that well in the PR?

[given2invest]

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.   

 

And the decesion to initiate a new buy vs. selling an old long on a report that sends a stock down huge is exactly the same decision. You might think it's different psychologically, but it's exactly the same decision, taxes not withstanding.  I'm sorry you don't see it like that.   

[alertmeipp]

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.   

 

And the decesion to initiate a new buy vs. selling an old long on a report that sends a stock down huge is exactly the same decision. You might think it's different psychologically, but it's exactly the same decision, taxes not withstanding.  I'm sorry you don't see it like that.   

 

We will have to agree to disagree on this one. For me, Sell, Hold and Buy are three distinct decisions. I see that disregard tax implication and trading cost, Hold = Buy financially. But when case involve huge uncertainty like "yet to be proven fraud"" - I will just HOLD - I won't buy/add into it BUT I won't sell if I have position neither. I will act when information become available. I would rather take bigger informed lost then uninformed big lost.  ;)

 

Next time when u hit with similar case, come back to share with us what u do. :)

 

[given2invest]

I'm not saying it's easy to behave like a robot and not let emotions get to you, I suffer from emotions like anyone else.  But there is no economic difference between holding a stock vs. buying it fresh.  Emotionally?  That's a whole different story. 

 

In all seriousness, best of luck to you.  The worst part of these china frauds is the huge money its costing investors.  There is nothing fun or funny about any of them. 

 

You said "lesson learned" but I wonder what lesson you learned.  Not to sell puts?  Not really a lesson to be learned.  If you owned the stock outright, you'd have suffered the same results.  What's the lesson?  How would you have known this was a (potential) fraud before this report came out? 

 

Me, my lesson was on TXIC many months ago.  After that, I vowed to never touch another Chinese company that's listed in the U.S.  There are plenty of fish on the sea that I don't need to fish for those.