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10:05 am
March 2, 2011
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darkgreen
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| Member | posts 25 |
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For those who haven't seen it, Muddy Waters released a video exploration of the busses and such that CCME claims to have advertising gear on: http://tinyurl.com/4r4nejp
Some parts of the video could be explained away by just having the wrong vendor info for who makes the ad machines, but the bus count numbers seem a bit harder to explain.
Just sharing because I know some watch this, I have no position on any side.
From the report:
We present a recorded telephone conversation that contains an admission that CCME is engaging in securities fraud. The conversation took place on February 23rd between the CCME salesperson who provided us with the advertiser kit we cited in our February 3, 2011 report (the “Report”) and one of our analysts. The CCME salesperson initiated the conversation without notice in response to investigative actions taken by CCME’s auditor,Deloitte Touche Tohmatsu (“Deloitte”). During the conversation, the salesperson stated that:
CCME has been doubling the number of buses on which it has installed equipment for purposes of its SEC filings; and
CCME replaced recently replaced the salesperson’s hard drive due to the increased scrutiny.
We document that in the course of rebutting our Report, Chairman Cheng provided fabricated information. In Chairman Cheng’s February 7, 2011 letter (the “Chairman’s Letter”), Chairman Cheng challenged our assertion that CCME’s largest purported contract does not exist. His proof includes an “excerpt” of buses he claims are covered by the disputed contract. The excerpt contains license plate numbers of three buses. We have official documentation (shown in Appendix A) from the Shanghai Public Security Bureau Traffic Management Administrator (the “Traffic Administrator”) that shows these three license plates numbers are fabricated.
We present the sales presentation we received in January from the aforementioned salesperson (the “Sales Presentation”) that shows CCME has fewer than half of the buses it claims. The Sales Presentation (Appendix B), which shows CCME’s buses by province and city, corroborates the following facts we presented in our earlier Report:
CCME has fewer than half of the buses it claims; and
Its largest purported contract (with Shanghai Ba Shi for 1,892 buses) does not exist. The number of buses for Shanghai-based operators in the presentation matches the number in the spreadsheet we received – 296.
We present a mini-documentary of the largest purported operator – Shanghai Ba Shi – specifically focusing on its inter-city buses and drivers. The film shows that CCME’s hardware is not installed on the buses, despite CCME’s claim to have had hardware on these buses since at least mid-2008.
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8:37 pm
February 19, 2011
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Turniptruck
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Post edited 7:38 pm – February 19, 2011 by Turniptruck
Given that the Global Hunter report has invalidated the most obvious of the pumper/dumper fabrications (lies) and that the shorts have made a respectable return in the past month or so by creating this uncertainty/fear, I'd think the reason we are seeing rah, rah go team commmentary is that this same crowd has now covered their short positions, gone Long the stock, and will ride the growth story back up to fair value… making money both ways.
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10:26 am
February 19, 2011
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Jae Jun
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yes I dont see CCME as a fraud, but my gut tells me the numbers are exaggerated.
Only time will tell but for all the talk about CCME being the best stock in the world, the intrinsic value people are assigning CCME has a 80-100% upside at the moment.
Until the fiscal year results are released and everything checks out, $50 price is unheard of at the moment.
Which makes me want to ask, why are people on seeking alpha and pumpers claiming it to be the best stock in the world?
Even GGP was better from 2008-2009 but people were not calling it the best stock.
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7:37 pm
February 18, 2011
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john_allen
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On holding – yes, but it was just luck. As someone that also fancies themselves a value investor I'm uncomfortable with the way the worm has turned. Am I correct in thinking, Jae, that you figure it's not an outright fraud but that the numbers are exaggerated?
best to all,
John
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1:41 pm
February 18, 2011
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Jae Jun
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good that you held!
With the Global hunter report, it has changed the minds of a lot of people, but I decided to sell.
http://www.oldschoolvalue.com/…..ings-ccme/
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7:47 pm
February 15, 2011
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john_allen
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I think everone can sympathize with getting hammered in a stock and the feelings that can evoke, even when we try to be as rational as possible. I wasn't being snide when I asked about whether you would buy the stock today- my point is that the stock doesn't know you own it, and in theory if the answer to the question is no, then you must reassess your position.
I have to admit that I am torn on this one too, but I am going to hold for now. That could change anytime, but that's where I am right now.
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6:01 am
February 15, 2011
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Jae Jun
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Nobody likes to see their position drop from $22 to $12 so drastically, but remember that price is a tool, not a guide.
Meaning, don't take the price of an equity to mean that there is something you don't know.
It's even more clear with CCME that price is driven by emotions. So my advice would be to take a step back, get rid of the price quote. Then pull out the reports, filings, readings that you need to cover and go over it to reassess your position.
Keep the decision objective and ask yourself whether your research tells you that CCME is cheap at $12 or whether you can smell something that isn't so pleasant.
I haven't watched CCME price action for a few days now and have just been thinking about the big issues at hand and whether it is worth holding or not.
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6:00 am
February 15, 2011
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Collin
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Frankly, if you cant sleep properly because of this, I think you should sell all. When you bought in, you are already speculating because you do not have a strong belief in it, and only depending much on other people opinion. This is also one of the first few mistakes I did. (Luckily it was not a lot for me)
When you buy even a share of company, you should have done your own work. Other people's opinions are just there to support or to share with you something which you might have overlooked. They are and should not be the basis for your investment. The basis for your investment should be your own calculations, your "feel" of the management, the company's outlook etc.
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3:22 am
February 14, 2011
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avinv2010
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Thank you John for your reply. To answer your question… Of course not, today, after fraud allegations, I would buy a very small position. But I happened to buy about a week before the MW and Citron reports.
I am aware that no side can be proved 100% right or wrong now. My worry is that even next audited annual report may not prove one side 100% right or wrong. As Jae has pointed out, there actually ways to fake cash, even if that's difficult, but the possibility exists. So if an auditor can not detect it once, I have to admit that it can happen again.
I am now thinking to sell at least half or more of my shares, take the resulting loss, and keep the other half. This way if it ends up being a total fraud the amount I will lose will still let me sleep properly…
Do you mind sharing what you are thinking to do?
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6:48 pm
February 13, 2011
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john_allen
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Hi, I'm on the hook for this one right now, too. So you do have lots of company.
I think at this point no one can say with a high degree of certainty which side is likely to be proved right. If I knew more about the auditing process at Deloitte Hong Kong, I would feel better. Without rehashing the whole situation, perhaps the old quote about what to do if you truly can't sleep at night still applies – sell to the sleeping point. Would you buy this as the largest position in your portfolio today? Probably not. But in terms of selling out and then trying to get back in – this is clearly a highly volatile stock, and thinking you can get back in becuase it may take a long time to go up ( a la ONP, similar situation?) could be quite wrong. But you alone must decide what to do. It's a tough situation, and they happen sometimes.
Best,
John
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3:45 pm
February 13, 2011
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avinv2010
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Hi fellow Oldschoolvaluers,
I am kind of panicking over CCME and I would appreciate if some cool-headed investors could help me come back to logic thinking.
I started a position in CCME a few weeks ago buying 400 shares @19, estimating its fair value at over 30. I am not familiar with chinese businesses, nor with reverse mergers, so I piggybacked on investors I follow and admire, trying to do my analysis. I know it is not the smartest way to go. You can tell me so again, so next time I will remember.
Now I am down about 40%, and this is the biggest position in my little portfolio.
I don't mind if I have to keep the shares for 10 years before they climb up.
My question is: could somebody hep me to understand what variables I shall take into consideration to make a choice: sell now, or keep until we understand better whether CCME is a fraud or not.
I am thinking to sell now, and get back in if there will be less uncertainty about CCME, because I think that even if a totally perfect doubt-blasting audited 10K came out in march, the stock price will take long to recover.
In the meantime I am learning a lot about my tolerance for risk and price fluctuations…
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