Block's Conduct Smells Fishy To Me!

[Guest Hester]

2)  How is it that both Herb Greenberg and John Hempton had involvement with Block?  Of all the people in the world that could have been associated with this report and the CNBC interview, how is it that these two were the ones?  You mean there weren't any other hedge funds, journalists or institutions that would have been interested.  I think it says something about a person by who they associate with.

 

Greenberg is the resident skeptic and short seller reporter on CNBC. Of course Block would interview with him. He also interviewed with bloomberg and other CNBC reporters.

 

Block mentioned Hempton off-handedly, as a specific case. Hempton is an active player in the space. Block gave no opinion on whether Hempton was right or wrong.

 

Who cares? Again, if Greenberg and Hempton are such manipulator's, why have they correctly nailed many Chinese fraud's.

 

A serious and not facetious question. What did Greenberg do to Fairfax to manipulate it? I was under the impression that his analysis was just wrong. We are all wrong at some point in time. I'd appreciate if you could point out where Greenberg tried to intentionally manipulate/mislead.

[Parsad]

A serious and not facetious question. What did Greenberg do to Fairfax to manipulate it? I was under the impression that his analysis was just wrong. We are all wrong at some point in time. I'd appreciate if you could point out where Greenberg tried to intentionally manipulate/mislead.

 

When both he and Jim Chanos called Fairfax a "fraud" in front of 400+ hedge fund managers at the very first Value Investing Congress in New York.  Is that just an error?  Also, when I asked him if he read any of Fairfax's 10-Q's or 10-K's before writing his articles, he said "no, that he relied on information provided by two very good sources who had read them."  

 

If your suggestion is that Greenberg had no direct correlation in manipulating Fairfax stock, then you may very well be correct.  At the very least though it would make him a culpable idiot assisting those that did manipulate the stock.  Maybe that's why he's not in the lawsuit.  

 

Perhaps Muddy Waters is in the same category and was assisted with their research by those also interested in manipulating Sino-Forest.  Block apparently is relying on research that his "accounting expert" provided.  There was a large short position developing before he published his report.  Several analysts or employees of firms have now come out and stated that they were aware or approached to participate in the growing short position.  Finally, the usual culprits are coming out of the woodwork.  Joe Weisenthal is the latest, and I would guess it won't be long before Bethany MacLean, Peter Eavis, Gary Weiss or Tracey Conen jump on the bandwagon.  Cheers!

[Ballinvarosig Investors]

"Step 2 - Identify a sector of the markets that is weak. Currently Chinese companies. Back in the day, Insurance companies. No one wanted to invest in insurance during the lead in to the Gulf War... What is all this Hempton isn't a bad guy crap? I haven't replied in a while because I'm tired of posting and hearing nothing but the replies of henchmen paid to help pull off a fraud"

;D

 

Oh come on now! The insurance sector might have been "weak" ten years ago, but at least everyone knew that it was real. The Chinese sector on the other hand isn't so much "weak", but rather non-existent. The litany of frauds exposed over the past year has been relentless and if you had went long on any stock that had a report issued on it by the likes of Muddy Waters then you would have lost almost all of your investment.

 

Excuse the pun, but some folks can't see the woods for the trees.

[cwericb]

Seems to me that somewhere during this whole discussion some board members have become polarized in their views.

 

I don't think that anyone said that the MW report was wrong or simply made up as a tool for shorts. I don't think anyone said that all Chinese stocks were great investments. I think that the point most were trying to make is that we are surprised that investors would immediately accept this report at face value. Obviously a lot did, look at the huge drop in share price.

 

I think the point was, just hold on a minute, don't accept this report as gospel because we have seen examples in the past where some extreme reports like this have been fabricated in an attempt to manipulate stock prices. You talk about hyperbole, how many times does Block use the term "fraud" in his report. Somehow I can't see RBC or TD using words like that in a research report. Bottom line - just because some guy wrote a report that accuses TRE of being a fraud does not make it necessarily true. It may be, but time will tell. It is much easier to make accusations than it is to defend your self when something like this comes right out of the blue.

 

And yes there is hyperbole in some of the comments, but if you were to actually research the details of the Fairfax story you would see that events took place that were so extreme that they seemed to have come from a cheap spy novel and an example of hyperbole itself. Those familiar with that story have good reason to be cautious about accepting a report like this at face value.

 

Carl: Yes. I was simply trying to make the point that just because FFH or a similar company survived, didn't mean that a lot of investors didn't get hurt. If I had bought TRE at $18 last week and had to sell this week for $5 I wouldn't be a happy camper especially if I later found that report to have been wrong and created to try to destroy the company. If the company later recovered it wouldn't help me much. However the reality is that I bought a few shares in the $3.90's a couple of days ago and so far, so good.

[cwericb]

Interesting comment from a respectable organization:

 

“We are going to provide you with some information on why Muddy Waters research is a pile of crap,” said Richard Kelertas, an analyst at Dundee Capital Markets, during a conference call he held with clients on Tuesday afternoon. “We believe there’s nothing true in that report.”

 

Yet some on this board would choose to believe some guy living in China who will not give his address because of death threats and who stands to make a killing as TRE’s stock price goes down?

 

Anyone who defends the Block report or and his associates should read the following:

 

http://business.financialpost.com/2011/06/07/muddy-waters-sino-forest-research-pile-of-crap-dundee/#more-60753

[cwericb]

And just one more quote from that article.................

 

"Furthermore, Mr. Kelertas claimed that this isn’t the first time that Muddy Waters has acted dubiously. He said a researcher with the short seller told management at Orient Paper Corp., the first Chinese company targeted by the short seller back in 2010, that he would write a research report for them in return for US$300,000. Mr. Kelertas said Orient Paper declined the offer and two months later, Muddy Waters issued their initial report calling the company a fraud.

 

Mr. Kelertas pointed out that since then, Orient Paper has refuted every single claim, while Deloitte & Touche, hired as independent auditors found Muddy Waters guilty of using false information."

 

Yup, Mr. Block seems like a fine upstanding guy to me.

 

So Dundee still has faith in TRE, are they alone?

 

No

 

"RBC Capital Markets analyst Paul Quinn also came out in favour of the company, maintaining an Outperform rating on the stock"

 

So who do you believe? The guy with no address or RBC, Dundee, Paulson?

 

As someone said back a while ago, "if Block is right some heads are going to roll"  Of course, right or wrong, Block probably made millions.

[oddballstocks]

That article doesn't really do much to convince me.  They go after the messenger instead of the message and they use the SAIC claims by Benjamin Wey to support their claim.  As posted either in this thread or the other one Benjamin Wey has a bunch of baggage as well that kills his message in a similar manner.

 

I don't know who's right or who's wrong in this one, I do know there's a lot of crappy companies in China with dubious financial statements which means my radar is up.  One thing that doesn't make sense to me is why would MW target this company if there are a lot of companies with lower quality.  If the point is just to make a buck it seems better to short more obvious frauds more often instead of investing in the big fish variety.  Just thinking aloud, if I was going to engineer some sort of short attack I think I'd go straight to crappy companies to start with and plunge the dagger in a bit further instead of taking on something where there could be doubts about my allegations.

[cwericb]

"They go after the messenger instead of the message"

But if you can't trust the messenger....

[libor.plus1]

Just on a side note.. Dundee is the investment bank for Sino...

 

And that RBC guy has apparently spent a grand total of 5 weeks over the span of 5+ years physically visiting Sino (he said this as if it were a great thing)... Yippy Ka Yay!

[lessthaniv]

So, out of pure side show interest, I did a quick look into this story. Googled for about 10 minutes.

So far, I've come up with the following associations to Carson Block in my very limited time.

 

Chanos

Greenberg

Hempton

Roddy Boyd

Andrew Left (stocklemon)

SAC Capital

 

I'd venture a guess and suggest "the enterprise" is back in action.

 

Sadly,

 

lessthaniv

 

EDIT: "Sanjeev, looks like the Tracey Coenen association is already established. She's been writing about China Media which was another company hit by Andrew Left and Carson Block...."

 

http://www.sequenceinc.com/fraudfiles/2011/02/09/china-mediaexpress-massive-fraud-or-victim-of-short-sellers/

 

It's unbelievable to me that this coordinated group of racketeers is still in business.

 

[oec2000]

So who do you believe? The guy with no address or RBC, Dundee, Paulson?

 

And the world would be a better place if everyone trusted all the sell side analysts?!

 

Try asking the Enron shareholders who lost everything. I guess they trusted Arthur Andersen and the big name Wall Street firms.

 

What about the Madoff fiasco? Who would you have trusted - the SEC who gave him a pass or the Markopoulos (?) guy?

 

And, I guess you would buy anything that Goldman is selling without doing your own analysis. After all, Goldman is the king of Wall Street and therfore must be trustworthy, right?

 

As I have tried to point out in other posts, we owe it ourselves to do our own brainwork, not subcontract it out to "trusted experts" who are not infallible. Arguing by reference to an "authority" is intellectually lazy, if not suicidal. Case in point: I bought some Canwest back in 2008 relying purely on FFH's purchases. After looking into more closely at the facts, I realised I had made a mistake and sold out for a large percentage loss (thankfully not as large as FFH's. :) Do I blame FFH? No. I blame my laziness and stupidity.)

 

Btw, you will note that none of the TRE naysayers here are saying to trust Muddy Waters or short TRE. We are merely pointing out that we should exercise caution and review the facts/info more closely before jumping in.

 

On the other hand, the only thing the TRE supporters and/or MW bashers have consistently used are "guilt by association" or "virtue by association" arguments. You tell me which is the more rational approach? Taking the road of ignoring the message simply because you "can't trust the messenger" is exactly how the SEC dropped the Madoff ball.

 

[given2invest]

Btw, you will note that most (perhaps, none) of the TRE naysayers here are saying to trust Muddy Waters or short TRE. We are merely pointing out that we should exercise caution and review the facts/info more closely before jumping in.

 

On the other hand, the only thing the TRE supporters and/or MW bashers have consistently used are "guilt by association" or "virtue by association" arguments. You tell me which is the more rational approach? Taking the road of ignoring the message simply because you "can't trust the messenger" is exactly how the SEC dropped the Madoff ball.

 

/thread

[Myth465]

Btw, you will note that most (perhaps, none) of the TRE naysayers here are saying to trust Muddy Waters or short TRE. We are merely pointing out that we should exercise caution and review the facts/info more closely before jumping in.

 

On the other hand, the only thing the TRE supporters and/or MW bashers have consistently used are "guilt by association" or "virtue by association" arguments. You tell me which is the more rational approach? Taking the road of ignoring the message simply because you "can't trust the messenger" is exactly how the SEC dropped the Madoff ball.

 

/thread

 

Post of the day, at least thus far.

[oec2000]

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.

 

Sanjeev, even if you believed (2) ("all their resources"), which is a stretch with the possible exception of Chanos, this "guilt by association" argument is a dangerous and unfair one. We have absolutely no evidence that Block is colluding with any of these characters. Being interviewed by one of them and mentioning another does not add up to collusion.

 

How different is this from someone saying that Prem and FFH are dishonest simply because they have associations with the "miscreants" at Megabrands who are accused of insider dealing? None of us would jump to this conclusion. I think drawing conclusions this way is even worse than what the evil shorts do - at least they try to back up their accusations with "facts," however loose they may be.

 

For the record, I share your disgust for shorts who knowingly spread falsehoods and there seems to be enough evidence to link the people FFH is suing to such activities. But we are in no position to determine whether Greenberg and McLean were "evil" or simply misguided and manipulated. Until we are, we should not tar everyone, regardless of the degree of association, with the same brush. We should not make the same mistake that we are accusing these people of.

[Guest Hester]

It's pretty clear to me that this board, with a few notable exceptions, has a lot of emotional anger towards the people were involved in the Fairfax saga, and that is causing many to assume manipulation despite the fact that the records of these manipulators of finding fraud is very good.

 

It's now come to the point where many are convinced that this is a clear manipulation of Sino stock. For that to be true, the report would have to be entirely wrong and have no basis in reality. But the discussion isn't on that of course.

 

"Chanos

Greenberg

Hempton

Roddy Boyd

Andrew Left (stocklemon)

SAC Capital

I'd venture a guess and suggest "the enterprise" is back in action."

 

This lame guilt by association just doesn't work. Why? Because you could make that statement for dozens of other proven Chinese frauds. Those guys were all over them. All those guys apply to CCME. How did that work out? If this is an evil nazi underground manipulation super army back in action, why are they nailing fraud after fraud correctly. Why are they shining the light on criminals who steal from US investors? That's not very Hitler-like. What makes Sino different from CCME? Oh yeah, you'd actually have to take off the tin foil and read the MW report to know that.

 

[lessthaniv]

It's pretty clear to me that this board, with a few notable exceptions, has a lot of emotional anger towards the people were involved in the Fairfax saga, and that is causing many to assume manipulation despite the fact that the records of these manipulators of finding fraud is very good.

 

It's now come to the point where many are convinced that this is a clear manipulation of Sino stock. For that to be true, the report would have to be entirely wrong and have no basis in reality. But the discussion isn't on that of course.

 

"Chanos

Greenberg

Hempton

Roddy Boyd

Andrew Left (stocklemon)

SAC Capital

I'd venture a guess and suggest "the enterprise" is back in action."

 

This lame guilt by association just doesn't work. Why? Because you could make that statement for dozens of other proven Chinese frauds. Those guys were all over them. All those guys apply to CCME. How did that work out? If this is an evil nazi underground manipulation super army back in action, why are they nailing fraud after fraud correctly. Why are they shining the light on criminals who steal from US investors? That's not very Hitler-like. What makes Sino different from CCME? Oh yeah, you'd actually have to take off the tin foil and read the MW report to know that.

 

 

 

6 days on the board, huh?  ;) What brings you here?

[ubuy2wron]

It's unbelievable to me that this coordinated group of racketeers is still in business.

 

 

Why would they not be still in business, these gangsters have made a great deal of money not one has been charged with anything and the worse thing that has happened is "Wacky Patty" has written some unkind things about some of the participants. I believe that some of these Chinese RTO's were DESIGNED TO FAIL they were scams from inception and that the guys short were involved in their creation. The vicitims are anonymous as are the criminals ALL market participants however suffer from their presence .

[S2S]

6 days on the board, huh?   ;) What brings you here?

 

Funny - you're not the first to jump on Hester for that. 

 

I guess when attacking the messenger doesn't do it, attacking opposing board members is the natural next step.

[lessthaniv]

Well, before this gets into a he said/she said I'll offer up to take the high road.

 

Let it be noted, however, that my opinion is that these guys are a bunch of racketeering hacks and I believe that as time passes the facts will develop in Sino's favor.

 

Off to do better things. Perhaps I'll check back in time and see how "off base" my opinion was.

 

<IV

[Kraven]

6 days on the board, huh?   ;) What brings you here?

 

Funny - you're not the first to jump on Hester for that.  

 

I guess when attacking the messenger doesn't do it, attacking opposing board members is the natural next step.

 

Oh lord, come on people, get a grip.  I have no dog in this fight.  Other than finding the various threads amusing and interesting, I really don't care all that much about Chinese RTOs.  I know Hester and he has no connection to any of these nefarious characters.  He is a very good, smart guy.  Of course, I am just another anonymous poster and haven't been around all that long either.  So perhaps the plot thickens.  The paranoia is getting to people.  If my (albeit anonymous) word isn't good enough for people, I'd be happy to privately let Sanjeev know who I am.  I can certainly demonstrate to him that my word means something and that when I vouch for someone that is meaningful.

[libor.plus1]

Glenn Beck, is that you?

 

(addressed to more than one person)

 

At this point, any intelligent argument and point-counterpoint has run its course. This is becoming Yahoo. Let's just chill out and see what happens next and how this unfolds.

[Guest Hester]

Glenn Beck, is that you?

 

(addressed to more than one person)

 

At this point, any intelligent argument and point-counterpoint has run its course. This is becoming Yahoo. Let's just chill out and see what happens next and how this unfolds.

 

LOL. I agree. When I start being compared with Nazi sympathizers and get accused of being a paid shill for a band of lawless shortsellers, with no proof other than "hey, you're new here..." I start to tune out. I think we can officially say the discussion has run off the rails.

 

With the heavy scrutiny and the authorities looking into the Sino matter, I think there's a good chance we'll know whether Sino is a fraud or not by the end of the year, if not much sooner. I'll revisit this topic then, or when we get substantial new info worthy of discussion.

 

Now it's time to go back to my evil lair.

[cwericb]

oec2000

 

It comes down to who you feel is more reliable or reputable Muddy Waters or say, RBC.

 

Now RBC, Dundee, etc could be wrong but I would have a lot more faith in their analysts than I would have in Mr. Block.

 

If really believe that MW's reports are more likely to be correct, knowing that they have mislead people before and knowing that they have a vested interest in destroying TRE, than I simply have to disagree. I think the odds - no guarantee - but the odds of accuracy are in RBC's favour. IMHO.

[oec2000]

oec2000

 

It comes down to who you feel is more reliable or reputable Muddy Waters or say, RBC.

 

Now RBC, Dundee, etc could be wrong but I would have a lot more faith in their analysts than I would have in Mr. Block.

 

If really believe that MW's reports are more likely to be correct, knowing that they have mislead people before and knowing that they have a vested interest in destroying TRE, than I simply have to disagree. I think the odds - no guarantee - but the odds of accuracy are in RBC's favour. IMHO.

 

My point is that we should only trust ourselves and make the decision based on our own analysis. Relying on blind faith is not my preferred route.

[Tim Eriksen]

WSJ has an article out today on Block.

 

http://blogs.wsj.com/deals/2011/06/10/china-researcher-carson-block-captures-investors-interest/