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Q&A With Geo's whitetiger, part 2
Maj, thank you for taking the time to answer my questions! I imagine that running a hedge fund takes a lot of time/ effort, so I appreciate it that you would respond to the issues I’ve raised. Plus, since you’re THE rock star among all those who attack Chinese equities (in my opinion), it’s a rare treat to be able to have this dialogue with you.
I’m pleased to know that you find a number of my questions funny, as I like to bring joy into other peoples’ lives when possible. Also, I was happy to hear that my “Some Info About GeoInvesting” posts were just a hoot for you and the other members of the GeoTeam. It’s nice to be able to bring a ray of sunshine into your days filled with making one heck of a lot of money destroying Chinese companies, and, apparently, committing stock price manipulation.
I’m actually glad to read your response that you are not offering a course which will teach investors your secret sauce for destroying US-listed Chinese equities. In my opinion, any company which would offer such a course would be opening itself up to a large number of lawsuits from other companies which were attacked by investors you had personally instructed on how to ruin their common stocks’ value. Plus, considering the information that has been provided on hitpieceresearch.com about how you are apparently actively engaging in market manipulation (and that you are supposedly being sued by a number of companies over your hit pieces and shorting tactics), any more lawsuits would be difficult to deal with. In addition, as a number of companies/ investors have apparently contacted the SEC to complain about actions you have taken, there is the possibility that the SEC might actually start an investigation into your business. So, taking on the potential of additional lawsuits on top of those you’re already, allegedly, going to be dealing with, could be quite straining.
Would you please help me with understanding a little better some of the answers you’ve given? Thanks, in advance, for your time!
Question 1: (About how New Energy is a fraud with respects to its SAIC filings)
Isn’t it possible that the reason why there are material differences between the docs you have and New Energy’s docs is because you made a mistake and don’t have all the information you are required to have? If New Energy is committing fraud in this area, why would Jack Yu personally make sure that all the SAIC filings were filed properly and were up to date? Since you are a China expert, you must know that those found guilty of committing white collar crime here in China could be executed for their actions: do you think that New Energy’s chairman is willing to risk death just to deceive investors? Plus, since the Chinese government is, according to your own statement, too incompetent to figure out this fraud, why not contact the Chinese authorities and let them about know the information you have? That way, the Chinese govt. can determine whether New Energy is a fraud or not.
Question 2: (regarding phantom shares)
I liked your response: it’s a great piece of deflection and distraction (which is why, as I have stated before, I am of the opinion that you are THE rock star among those who attack Chinese equities).
Come on – you run a hedge fund! Do you really mean for me to believe that you aren’t aware of the huge number of FTD trades that New Energy has been attacked with? Since you started your red flag campaign against New Energy, there has been a massive spike in the number of illegal trades conducted using phantom shares (according to the SEC). These illegal trades have made it IMPOSSIBLE for the stock to appreciate in value, in my opinion, as the massive downward pressure they put on the share price is almost impossible to fight against.
Should individuals who engage in this illegal activity be prosecuted for their crimes, in your opinion? Very simple question…
Question 3: (regarding Dan David)
Again, a nice response that avoided answering the question; according to a poster on Yahoo, a private investigator followed Dan David around for a while and determined that he just manages a few Dollar Stores and drives a limo on the weekend.
Does Dan David run a few Dollar Stores and drive a limo on the weekend? This should be an easy question to answer with a ‘yes’ or ‘no’.
Question 4: (regarding Bob)
As you are of the opinion that Bob is such a great attorney, why not supply interested individuals with his name and information like where he works, what university he graduated from, etc? This should be something you’d be proud to provide if he is really as amazing as you’ve made him out to be.
I said this before in another post, but everybody know somebody, and it just so happens that I am close to a number of attorneys here in China. A few of them are Party members, and have followed with great interest the information that I have told them regarding how Geo makes a lot of money attacking US-listed Chinese companies. When I told them that Bob is helping you to kill these companies’ stocks, they were keen to find out more information about Bob.
So, again, why not provide everyone with his real name and additional bio information? This should be easy for you to do.
Thank you, in advance, whitetiger, for taking the time to respond to my questions!
Xian/ kobe1/ Wang – please feel free to use whichever name you’d like to.
Q&A with Geo's whitetiger
I have been allowed back onto the Geo website, and had a Q&A session with whitetiger. I'm sure that running a hedge fund requires a lot of time/ effort, so I appreciate it that he made the effort to respond to my questions:
You stated in another post, "Now,I do believe that, going forward, companies will find ways to have SAIC match SEC, especially the ones that were only committing tax fraud, that are well connected or operating in areas where SAIC agencies struggle with inefficiencies (such as New Energy Systems (NEWN))." I was hoping that you could explain what, specifically, New Energy is doing that is fraudulent in this area.
• My response: That is a question you need to ask NEWN. All I can say is that information i have differs materially from what the COMPANY eventually provided. Allow the auditor and other third parties access Tax docs directly at the SAT agency like Deloitte did with China Mediaexpress Holdin (NASDAQ:CCME). That could go a long way.
Plus, would you please respond to my question regarding the trading in phantom shares, which is rampant with New Energy: should individuals who engage in the illegal trading of phantom shares be prosecuted for this crime?
• My response: I do not know what the punishment would be for 5%+ owner of stock who sells stock without filing the appropriate form. All we know is that one day Bo had shares and then one day he did not. I have not been able to locate the paper trail.
Also, is it true that you are offering, for $25,000, the opportunity for individuals to learn how to attack and destroy the value of US-listed Chinese equities?
• That is pretty funny. But sorry to inform you that this is not true. However, just read my articles for free to determine what red flags to look for. Then you can run this class yourself and become independently wealthy!!!!
And, how do you respond to the allegations that Dan David (an individual with a large amount of responsibility at Geo) actually just manages a few Dollar Stores and drives a limo on the weekend?
• Again pretty funny. Let me just tell you that I am glad the person who wrote this is not helping us with our own DD, as he would be wrong every time.
In addition, would you please supply us with Bob's real name and credentials? A large number of people here in China are curious to find out more information about an individual who is being employed by a US hedge fund to destroy Chinese companies.
• If you would like his credentials just read our reports. And he is here to protect investors from being destroyed by unscrupulous behavior.
Plus, out of curiosity, why have almost all of the NEWN threads on Geo been deleted? I was looking for some that had previously been posted but couldn't find them.
• Sorry. Posts in the boards you are referring to are now only for premium members. They have not been deleted.
http://geoinvesting.com/forums/SingleMessageView.aspx?mid=10120&view=T#singleMsg
Weeblewobble, I’ve read your posts over the past year and have found you to be a good guy (which is why, a number of times previously, I wished you well on your future investments), so I don’t like having this sort of exchange with you.
The company has stated that they entered into a 4 year contract with these 8 consultants in August of 2009. According to a conversation I had with Ken Lin and Jack Yu regarding these individuals, 6 of the consultants were contracted to perform financial consulting services (the details of the work they perform can be found on page 18 of the 2010 10K), while the remaining 2 consultants were contracted to perform branding strategy consulting services.
After these consultants were hired, New Energy went through two major acquisitions which grew the company considerably without taking on any debt in the process. And, since the company did not use any underwriters or banks to facilitate these acquisitions, it seems to me that the company initially got a good bang for the buck on the work that these 6 financial consultants initially performed.
I understand from your posts that you believe that the Kim Fai deal stinks and that you think that the company has probably just acquired a company which it was had control of anyway. If, on the other hand, the company did not commit this fraudulent act, and instead bought a company legally with the assistance of these 6 financial consultants, then I believe that this adds to the argument that the price they paid appears to have been fair.
The company has alluded to the fact that they may be acquiring another company sometime this year (the shelf filing and the LOC that Jack Yu is backing with his own stock would seem to indicate that this is a possibility – the company was also, in all likelihood, assisted in these two actions by their financial consultants). And, since the company is still contracted with those 6 financial consultants, it would appear that their consultants will be helping out in the deal. Therefore, I believe that this deal, although initially expensive, has been good for the company so far.
My reason for bringing up GE was not to say that New Energy and GE are similar companies, but was to make the point that no company is required, as far as I understand, to provide the names of all the companies that they enter into contracts with (whether they be consultants, cleaning service providers, or transportation service providers) in their company filings. I guess I could have picked any company for this example, but I thought that GE would be an easy one to check to see whether this is true or not.
I don’t know why the company won’t say who these consultants are, but my experience is that most companies are careful to not disclose information that they are not required to. Take the financial consultants, for example. Maybe the reason why New Energy’s management hasn’t disclosed this information yet is because these consultants are actively involved in deciding which direction the company will take with respects to its future investment activities and at this time they want to keep the names unknown to the rest of the investing world. Maybe they don’t want other companies to know who they are for competitive reasons. Again, I don’t know.
However, to think that these 8 consultants are actually insiders in the company (company management) just doesn’t make much sense to me. Could they be? Of course they could! But I am not seeing anything which would indicate that they are.
Weeblewobble, I think that if I were to look at any company, anywhere in the world (where I am proficient enough with the language) I’d be able to find red flags with their operations as well. The thing is, with New Energy, the red flags that have been brought up so far appear to me to be just nonsense which is intentionally being spread and made more important than it really is in an effort to spread fear and help to drive down the company’s share price. Of course, while this is happening, those who are shorting the stock engage in potentially illegal activities to their benefit.
Myself and others have covered GeoInvesting ad nauseum, so I don’t need to talk about all the things that have been mentioned before about the company and the way it conducts its business (the alleged $25,000 dollar seminar to learn about how to kill Chinese equities, the fact that none of the key contributors appears to be qualified to research stocks in general [Chinese ones in particular], etc, etc, etc) and the other red flags that have been brought up previously regarding this company. One new thing did stand out: a site has been created that, using GeoInvesting’s own postings, appears to show that whitetiger is possibly involved in fraud himself: http://www.hitpieceresearch.com/ . The author’s concluding paragraph is very telling: “Ultimately we believe these “hit piece” providers have no desire to do either of the above [speak to co. first for explanation/ report co. to the authorities] prior to trading on the information as they wouldn’t profit as handsomely from such actions. In the end, we ask ourselves how is what is happening in this situation any different from the Galleon case which is highly publicized in our media today?”
Weeblewobble, you are absolutely welcome to your opinion.
Let me ask you something: how many consultants, in a year, do you think that GE contracts with? If you go through GE’s annual report, do you find each and every consultant that they have entered into a contract with listed? In your opinion, wouldn’t every single consultant which does business with GE want to have their name out there? Then, why wouldn’t GE supply the entire world, in GE’s quarterly and annual reports, with the names of each consultant they do business with? Why are they hiding that information?
Let’s change the contract type from a consultant’s contract to a cleaning contract: why aren’t companies required in their filings to list the names of each and every company they contract with to clean their facilities? Or, why isn’t every company listing in their quarterly an annual reports every transportation company they enter a contract with which is contracted to drive employees to and from airports? Since these also aren’t included in companies’ reports, should this also be considered a “red flag” for almost every single company in the world?
Simply put, unless I’m mistaken, companies are not required, by law, to list each and every company they enter into contracts with in their quarterly and annual reports, and implying that New Energy is committing fraud by NOT including this information in a quarterly/ annual report sounds too much like an ungrounded conspiracy theory to me.
Plus, since you’ve brought up the subject of “red flags”, I thought I’d ask you a question: do you think that Santa Clause exists?
If you say you don’t, then I have to ask you something: where is your PROOF that he doesn’t exist? Isn’t there a North Pole? And, since people have lived in the North Pole for some time conducting scientific research, isn’t is possible that someone like Santa could have a workshop up there? Plus, haven’t humans learned how to make machines fly? Isn’t it possible that Santa has a sleigh which can fly to deliver toys and gifts to little boys and girls all over the world on Christmas Eve? In addition, isn’t it possible that Santa has the magic to make all his elves, workshop, and sleigh invisible to all kinds of detection so that we can’t find his operations? Should these be considered “red flags” to you answer, if you say he doesn’t?
On the other hand, if you say that he does exist, I have to ask you: where is your PROOF? Have you ever actually seen/ met Santa? Do you think that someone can fly all over the world and deliver gifts clandestinely? Is it possible for a rotund human to slide down a chimney with a sack full of toys, deliver them, eat his cookies/ drink his milk, and then magically pop back up the chimney to deliver gifts to the next house? Should these also be considered “red flags” to your answer, if you say that he does?
This game can be played with any subject, which is exactly what companies that are creating hit pieces on China RTOs (like New Energy) are relying on: bring up potential “red flags” and then keep pushing them out there to confuse and concern investors. Of course, they never bother to answer these questions, or give other/ logical reasons why events may have occurred, or to first receive a response from the company that they don’t agree with, but simply imply that companies are frauds (of course, again, they never state that they are frauds) and manipulate stock prices down (in my opinion) while pumping out over and over again their nonsense (again, in my opinion).
10Ks Consultant Share Count Difference Explained
This can't be posted on Yahoo for some reason (I have tried over and over again without any success), so I'm posting it here.
New Energy's 2009 and 2010 10Ks have different share counts when it comes to shares that were issued to consultants who were contracted to perform work starting on August 18, 2009.
I contacted the company to find out why the numbers didn't match, and this is their response:
The original agreements with those 8 consultants was signed on 8/18/09.
The term of these agreements are 4 years.
The original agreements required NEWN to issue these 8 consultants 1,930,000 shares based on the price at signature date around $2.70 for their 4-year agreement's compensation.
In order to issue these shares, the Company prepared a S-8 to register 1M shares and issued to these 8 consultant.
However, when S-8 was prepared and ready to issue, the stock price jumped to $8.81.
Therefore, the Company and these consultant agreed to a supplemental agreement.
These supplemental agreements indicated those 1M shares which these consultants have received will be all compensation for their 4-year of services.
The rest of the shares was canceled and the Company is no longer obligated to issue any more share to these 8 consultants.
So, another potential "red flag" has been busted.
Ken Lin response to Kim Fai/ Anytone:
This was just posted on Yahoo by a different poster:
Ken Lin's response to my question-
"What was Anysolar (Anytone Solar) & Kim Fai relationship? There is no evidence of "Kim Fai" existing prior to the purchase and this is confusing.
answer-
Anysolar is just a domain name. Anysolar is not equal to Anytone Solar. This is a misunderstanding.
For example, there are lots of "i"Phone related product name. italk, ibook, ipower...etc
Samsung has "Anycall" and in the market, it's normal that there are Anymore, Anysolar, Anydigi...etc other different brand name and companies.
Kim Fai is the legal company registered at SAIC in China.
Many thanks to those who have sent me messages of encouragement about my GeoInvesting posts. One individual let me know that he has had a post removed from another board and was told not to post something like that again, which is quite disappointing to me.
I have an update to my "Some Info About GeoInvesting" topic (which can also be found on the Yahoo message board):
This will be a quick one, but some important information has come to light regarding GeoInvesting/ The Market’s Edge.
Many thanks go out to jeffs48009 for his post regarding Dan David, a person who seems to have a lot of responsibility at GeoInvesting, The Market’s Edge. It appears that Dan’s primary jobs are to manage a few Dollar Stores and to drive a limousine on the weekends (according to jeffs48009’s post on the Yahoo NEWN board). This is quite striking to me, as, according to his GeoInvesting bio page, he is also responsible for the following:
1. Overseeing daily operations and all sales functions for GeoInvesting
2. Leading investor relations and serving as a liaison with investment banks
3. Serving as director of investor relations for The Market’s Edge
4. Working as The Market’s Edge’s chief compliance officer
5. Plus, apparently, he’s a General Partner for The Market’s Edge
How is it possible for him to do all these jobs, in addition to managing 3 or 4 Dollar Stores and driving a limo on the weekend? Plus, as I have indicated before, what are his qualifications for serving as The Market’s Edge’s chief compliance officer?
Does GeoInvesting/ The Market’s Edge honestly expect people to believe that this individual is capable of doing all this work? In my opinion, that is very unlikely.
Also, thanks go to hlarcher2000 for pointing out that the GeoInvesting ‘About Us’ page has been changed; I should note that there is a strong possibility that this might have happened as it appears, in my opinion, based on the information provided on the previous ‘About Us’ page, that NONE OF THE KEY CONTRIBUTORS HAS ANY EXPERIENCE WHICH WOULD QUALIFY HIM TO RESEARCH CHINESE EQUITIES! For those who are interested, I have posted the previously-available ‘About Us’ page on the NEWN message board on Yahoo under the title “GeoInvesting’s Previous ‘About Us’ Page”.
Some Info About GeoInvesting, Part 2
An update to what has happened since my previous postings seemed appropriate at this time. Thank you, again, to all who have expressed interest in this subject. Also, please note that the opinions expressed are just my own opinions. Please confirm for yourselves the information I have provided.
1. It appears that The Market’s Edge has removed DLC Laundromat off of its venture capital ‘success stories’ page. Of course, no one who works directly or indirectly for GeoInvesting/ The Market’s Edge and who posts on the Yahoo message board or, unless I missed it, on the GeoIvesting website, has any comment about this. Could this be because The Market’s Edge was misrepresenting its success?
2. It also appears that The Market’s Edge has removed almost all of the real estate ‘success stories’ off of its real estate page. Again, of course, no one who works directly or indirectly for GeoInvesting/ The Market’s Edge and who posts on the Yahoo message board or, unless I missed it, on the GeoInvesting website, has any comment about this. Could this also be because The Market’s Edge was misrepresenting these successes? Plus, a VC success story is also repeated as being a real estate success story, so the company really only has 5 VC ‘success stories’ (most of which are owned or controlled by the same people who run The Market’s Edge/ GeoInvesting) and 2 real estate ‘success stories’ (one of which was, in all likelihood, either directly or indirectly owned by Maj, the founder of GeoInvesting/ The Market’s Edge). Wow… Way to go, guys: it looks like you pretty much have had no successes outside of companies (and one real estate deal) you either directly or indirectly own/ owned or control/ controlled.
3. New Energy Systems, in response to allegations made by GeoInvesting that the company’s SAIC and SEC filings don’t match, is making publicly available all of its SAIC filings so that investors who wish to confirm that the company has not lied about its financials may do so. GeoInvesting, in my opinion, was caught by surprise by this action, and is losing ground on the ‘filings don’t match’ campaign (interestingly enough, GeoInvesting never supplied any proof of these allegations so we are just supposed to take their word for it). Now, it appears that GeoInvesting is trying to save face by posting allegations that the company has somehow lied about the ownership of Kim Fai as evidence that New Energy has acted in a fraudulent manner. Good luck with that one, GeoInvesting.
(As an aside, I have posted this a few times before, but I wanted to remind people that individuals who are convicted of committing white collar crime in China may be executed for their crimes. Do people really think that New Energy’s management is so determined to defraud the Chinese government and investors that they are willing to risk death or other punishments like life in prison to do so? In my opinion, they are not.)
4. It appears that GeoInvesting is, in my opinion, losing credibility with investors as a result of its various attacks on New Energy being shown to be nothing more than one part nonsense, one part BS, and one part hot air. So, the people who run GeoInvesting are using the examples of the ‘successes’ they’ve had with researching other companies as proof that their research into New Energy also should be taken seriously. Give me a break… Just because you found ‘red flags’ regarding the business practices of some companies does not mean you are correct about other companies (like New Energy).
5. Thanks go out to Jettabab18 from Yahoo, who posted that the individuals who run GeoInvesting/ The Market’s Edge apparently are offering, for $25,000, a private course which lays out a blueprint for attacking Chinese stocks. The course comes with a booklet called The Red Flags for Fraud. The mission statement apparently is named Lucrative Settlement, and the goal is named Devastating Impact on the Stock Price. Unbelievable. If this is true, how could anyone think their research would be objective?
Employee Bios
I thought that a good place to continue with the examination of GeoInvesting would be to review the information provided on the website’s ‘About Us’ page.
Majed Soueidan, founder of GeoInvesting and The Market’s Edge.
It’s interesting that the founder of GeoInvesting and The Market’s Edge (a hedge fund) has, according to his own bio, absolutely NO EXPERIENCE working for any company on Wall Street (or, I guess, on any street) performing equity research. His lone experience working in finance, which is indicated on the ‘About Us’ page, is that he worked in the investor relations department of Vanguard.
Wow… So he worked in investor relations for a company whose founder (John Bogle) is famous for insisting that the performance of index funds, over a long period of time, will be better than that of actively-managed funds. Plus, I have to state this again: he worked in IR! IR is the group that, when you contact a company, offers to send you an investor packet which will explain, in more detail, a company’s operations (to be fair, it appears that he, through his IR experience, packaged various investments [probably Vanguard funds] together for clients). How could working in an IR department for Vanguard (of all companies) qualify Maj for running a hedge fund? In my opinion, it does not.
Also, please note that Maj, according to his own bio, has no experience researching Chinese equities for a major investment firm. In addition, it appears that he has never done any VC deals in China, nor has he lived in China or can speak/ read/ write Chinese. How is he qualified to research Chinese stocks? I’ll answer this question by stating that, based on the information provided, in my opinion he is not.
Dan David, an individual who apparently has a lot of responsibility at GeoInvesting, is up next: he oversees the daily operations of GeoInvesting and is The Market’s Edge’s chief compliance officer (among other things). Dan was previously, apparently, the president of The Skippack Community Sports Complex, which (as I have indicated before) is listed on The Market’s Edge as both a VC and real estate success story. In addition, he has extensive experience in management for a jewelry company named Finlay Enterprises.
In all likelihood, given his work history and description of his responsibilities, it looks like he is qualified for most of the work that he is required to perform. One thing did stand out for me, though: what are his qualifications for being The Market’s Edge’s chief compliance officer? This is an important and complex job, and yet I don’t see that he has any experience working in the compliance department of any other company, nor do I see that he has any legal education with respects to the securities industry (or any other field, for that matter). Therefore, how is it possible for this man, in addition to all the other responsibilities he shares between GeoInvesting and The Market’s Edge, to be The Market’s Edge’s chief compliance officer if he has no background in the field and did not study this type of law? Based on the information provided, in my opinion he is not qualified for this position.
Craig Bach is up next. According to his bio information, he’s a research partner at The Market’s Edge with a focus on interviewing management, and is also credited with founding a private investment firm. As with Maj, NOWHERE is there listed any experience working for a major investment firm on Wall Street (or anywhere else) performing equity research, in particular researching Chinese equities. In addition, like Maj, it does not appear that he has done any VC deals in China, nor has he lived in China or can speak/ read/ write Chinese. How is he qualified to research Chinese stocks? I’ll answer this question by stating that, based on the information provided, in my opinion, he, too, is not qualified.
Al Rivera is also a research partner at The Market’s Edge. His background – auto sales! Seriously, I’m not kidding – please check for yourselves: for 18 years he held sales management positions in the auto industry. How the heck does that qualify him to research Chinese equities? Plus, according to his bio, he doesn’t appear to have any equity research experience for a major investment firm on Wall Street (or anywhere else), has not done any VC deals in China, hasn’t lived in the country, and can’t speak/ read/ write Chinese. How can he be qualified to research Chinese stocks? Again, in my opinion, he is not.
Another person who conducts equity research at GeoInvesting/ The Market’s Edge is Zou Soueidan. According to his bio information, his background is in Engineering, which, for those who aren’t aware of this, is not considered to be a financial field. So, how did he get to work for GeoInvesting/ The Market’s Edge? His bio information states that from the engineering field he “made a smooth transition to Wall Street” and is now part of the GeoTeam. Engineering to Wall Street? That’s like me saying, “I started out working at Jiffy Lube, and then made a smooth transition to working in animal husbandry.” Plus, what sort of Wall Street experience does he have? According to his bio page, he doesn’t appear to have any equity research experience for a major investment firm on Wall Street (or anywhere else), has not done any VC deals in China, hasn’t lived in the country, and can’t speak/ read/ write Chinese. How can he be qualified to research Chinese stocks? Based on the information provided, Zou, too, in my opinion, is not qualified to research Chinese equities.
Andy Schmoyer is a trading assistant, and has been one for 8 years (according to his bio). The person who wrote his bio said some nice things about his contributions to the company, but in investment firms a trading assistant is really just the guy you turn to at 10:30 when you’re feeling like some Starbuck’s and you know that the caterer won’t be arriving for at least another hour. You pull a $10 bill out of your pocket, hand it to him, give your order, and let him know he can order whatever he’d like to with the change. Of course, trading assistants also enter trades into the trading system and perform other tasks, but they’re often treated like gophers.
On The Market’s Edge’s website, there is one person mentioned who is not on the GeoInvesting website, and that person is Michael Markowski, who is also credited as being the founder of Overbrook Capital, LLC (which, interestingly enough, also employs Majed Soueidan, Craig Bach, and Al Riviera). This individual also used to work at Vanguard. Just as with the other individuals who work for these companies, he doesn’t appear to have any equity research experience for a major investment firm on Wall Street (or anywhere else), has not done any VC deals in China, hasn’t lived in the country, and can’t speak/ read/ write Chinese. How can he be qualified to research Chinese stocks? Based on the information provided, this person, too, in my opinion, is not qualified to research Chinese equities.
So, let’s sum up what we’ve found out so far:
1. Even though the company refers continuously to accounting irregularities as being red flags, it seems that none of these people appears to be a CPA or have any extensive accounting experience.
2. Based on their own bio information, none of these people has had any equity research experience for any major investment firm prior to working at GeoInvesting/ The Market’s Edge.
3. According to their own bios, not a single person, apparently, can speak/ read/ write Chinese. In addition, it appears that anyone has ever lived in China or done any VC deals there. Plus, and probably most importantly, according to their own bios NOT A SINGLE PERSON HAS EVER RESEARCHED CHINESE EQUITIES FOR ANY MAJOR INVESTMENT FIRM! None!
Why do people still turn to this company for guidance regarding US-listed Chinese equities when, in my opinion, not a single individual who works for the company is qualified to research Chinese equities? The company repeatedly states that it is just looking out for its retail investors, but that is not entirely true in my opinion, as it appears that the company will enter in a position (short or long) prior to attacking or praising a company. Plus, if the information provided by Jettababe18 about the course on how to attack Chinese stocks is accurate, the company apparently has no interest in providing objective research into Chinese stocks, but instead just intends to raise ‘red flags’ about these companies as a means to destroy the value of their common stocks while GeoInvesting/ The Market’s Edge will apparently make money by shorting these stocks.
If all these things are true, why should anyone trust this company’s advice?
Some Info About GeoInvesting, Part 1
I am not a PUDA shareholder, but am a shareholder of New Energy Systems (NEWN), a company which GeoInvesting published some negative reports about. I thought that I should look into this company a bit more to determine whether they are qualified to research Chinese equities.
wallshite, great thread about GeoInvesting
(http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_N/threadview?m=tm&bn=111191&tid=8577&mid=8577&tof=7&frt=2).
I decided to verify your information to see if it matched up and did it ever! Thank you for your research and letting us know who is really behind these companies. I also decided that I’d like to find out more about The Market’s Edge/ GeoInvesting and the people who are listed as working there, and I came up with some interesting information. As I found out a lot of information, I thought that it may be best to start a new thread instead of tying yours up. Whenever I use information you have originally researched, I will make sure to reference that it was you who found it out.
First, I turned to www.corporationwiki.com to see what I could find out about Majed Soueidan (as well as Soueidan Majed, as he is sometimes referred to) and companies he is listed as being an officer of. Some of the companies are found on this link:
http://www.corporationwiki.com/Pennsylvania/Collegeville/1116-Pheasant-Ln-Collegeville-PA-19426-a2433949.aspx.
Some additional information can be found here: http://www.corporationwiki.com/Florida/Coral-Springs/markets-edge-frf-management-llc/28447925.aspx.
A few stood out for me. First, a number of businesses (like Medallion Transportation Ltd., the limo company mentioned before) are listed as being located at the same address as The Market’s Edge, so I decided to find out what sort of building this is. According to homes.com, the property at this address is actually a 4 bedroom, 2.5 bath residential home, not a commercial piece of property (link: http://www.homes.com/property/48309107/1116_Pheasant_Ln-Collegeville-PA-19426).
However, not only are The Market’s Edge and a limousine company located out of a residential home, but other companies associated with Mr. Soueidan are as well, such as Las Olas Management, LLC and Oriana Management, LLC. Also at this address is a company which is named Mms International, Limited, which is apparently the parent company of a coin-operated laundry and/ or drycleaner (which is indicated as being owned by Majed Soueidan) named DLC Laundromat (link: http://www.manta.com/c/mtmn8vl/mms-international-inc). Please remember DLC Laundromat’s ownership interest, as it will come up again later when we discuss The Market’s Edge’s Venture Capital activities.
Wow, this sure is one busy residential house! Talk about one-stop shopping: first, a company using this address will pick you up at the airport and take you to this residential home, where other companies, also listed at this address, will potentially offer you financial services, while a third company listed at this address will be happy to have its apparent subsidiary clean your underwear for the flight back home later on, and, again, the limo company will be able to return you to the airport. Amazing!
Is anything so far standing out as a potential red flag for anyone, yet, regarding GeoInvesting and The Market’s Edge? Doesn’t it seem strange that so many various businesses be located at one address, which, again, is listed as a 4 bed, 2 ½ bath residential address, including such companies as a HEDGE FUND (which appears to be what The Market’s Edge is referred to as being in the GeoInvesting About link: “Andy Schmoyer is a Hedge Fund trading assistant at The Market's Edge”) and a limo service?
The second thing that stood out for me and for wall(stuff – apologies, your name is being blocked) is - what is Thongs, Inc?! Was Mr. Soueidan, the founder of The Market’s Edge and GeoInvesting, previously the officer of an underwear company? It looks like the company was started in 2003 in Fort Lauderdale, FL (link: http://www.corporationwiki.com/Florida/Fort-Lauderdale/thongs-inc-4365059.aspx, and bear in mind I’ll bring up that address again when discussing The Market’s Edge’s Real Estate section). I checked his bio on The Market’s Edge’s website, and nowhere is Thongs, Inc. or (if it is/ was an underwear company) his supposed underwear company officer experience mentioned; there just is information about his extensive financial experience working in IR (note that he did NOT work for an equity, debt, or derivatives research group, or even on a trading desk – just in investor relations) for Vanguard and knowledge he has learned from his own personal investing experiences. I’ll get more into the employees’ bios of The Market’s Edge later in another post.
Turning to The Market’s Edge’s Venture Capital page, wall(stuff) has already shown that GeoInvesting’s domain name’s registrant is The Market’s Edge, Inc., but I also found it interesting that TownWatcher’s registrant is listed as The Market’s Edge, Inc. (http://www.whois.net/whois/townwatcher.com). Is TownWatcher, like GeoInvesting, also just another company owned and operated by the same people who own and operate GeoInvesting and The Market’s Edge? Also, wall(stuff) showed that the address listed for Medallion Transportation is the same as for The Market’s Edge, but this also appears to be true for DLC Laundromat, since, as I have stated before, it appears that the laundromat is a subsidiary of Mms International Ltd which is located at the same address as The Market Edge (http://www.corporationwiki.com/Pennsylvania/Collegeville/mms-international-limited/57973529.aspx). Plus, depending on the source, again, please note that the officer or owner of the laundromat is either Majed or Michael Soueidan.
In addition, I noticed that the company is indicating as one success stories the Skippack Community Sports Center on The Market’s Edge VC page. On the GeoInvesting site under the About Us section, the company notes that Dan David has served as president of RNC Properties, and that this company is “developing a 38 acre sports complex in Skippack”. Therefore, a project which The Market’s Edge invested in had one of its employees serve as the president.
I checked the Venture Capital page on The Market’s Edge, and nowhere is there any mention of the apparent ownership relationships that The Market’s Edge shares with GeoInvesting, and the potential ones it has with TownWatcher, Medallion Transportation, and DLC Laundromat, and the relationship, as president, one of The Market’s Edge employees has or had with a deal you invested in: why is that? I think that as a prospective client of The Market’s Edge, I would like to know what the relationship is between The Market’s Edge and 5 of the 6 companies listed on its VC ‘success stories’ page. Also, as Mr. Soueidan is indicated as being the founder of both GeoInvesting and The Market’s Edge, why is the GeoInvesting section only stating “The Market’s Edge helped build GeoInvesting”? Why use the word ‘helped’? If the founder is the same person for both companies, Mr. Soueidan didn’t ‘help build’ GeoInvesting, he ‘founded’ GeoInvesting. I would like to note that on the GeoInvesting website it is indicated that Mr. Soueidan founded both sites (hmm… verifiable discrepancies between websites… should this put The Market’s Edge outside of ‘The Hedge Fund Circle of Trust’?).
On the Real Estate page, the Fort Lauderdale ocean-front condo consultation caught my eye (it’s the first one mentioned). This stood out to me as I remembered reading that a few companies (Thongs, Inc., Markets Edge Management, LLC, and Markets Edge Advisors, LLC) also were listed between 2003 and 2004 as being located in Fort Lauderdale; all, of course, had Mr. Soueidan listed as their officer (http://www.corporationwiki.com/Florida/Fort-Lauderdale/100-S-Birch-Rd-Apt-2304-Fort-Lauderdale-FL-33316-a1938683.aspx). The building located at this address is called Jackson Tower.
I decided to follow the link given on the Fort Lauderdale listing and arrived at a webpage for MMG Realty (link: http://www.lasolasbeachclub.com/luxury-services.asp). Looking at their maps section, I tried to see if 100 South Birch (Jackson Tower) was listed on their site, and, sure enough, I found it (if you keep closing in on Fort Lauderdale find South Beach Park [it’s on 1A, just off the ocean], keeping going North a bit and you’ll locate Seven Isles – Jackson Tower is one of the red pegs to the right).
So, it appears that three companies in Fort Lauderdale which are listed as having Mr. Soueidan as their officer also were located in a building which, possibly, The Market’s Edge was consulted on for a real estate deal. Is it beyond a reasonable doubt to think that the real estate deal actually involved the sale of one of The Market’s Edge’s or Mr. Soueidan’s own properties? If this is the case, should this really be considered a consultation if the property involved in the deal actually belonged to The Market’s Edge or Mr. Soueidan in the first place?
Why are my GeoInvesting threads being deleted on IHub?
Harleyman quite possibly can confirm this: I posted, yesterday evening, a follow-up thread regarding information that I have found regarding the individuals who run GeoInvesting/ The Market's Edge. After the thread was started, the great white_tiger himself (Maj?), ignoring all the points brought up in the post, basically stated that time would be better spent researching Chinese companies instead. Afterwards, another poster came on the site and claimed that GeoInvesting is being exposed as a fraud. Judging by the English language skills of the retort, a quite possibly drunk/ incapacitated white_tiger went on the defensive about this individual's claims, and, again, ignoring all the points brought up in the original post I made, (I apologize for paraphrasing here) pretty much just said that they're doing good work and, as usual, brought up a few other companies that they're researching as proof that they're doing such a great job.
Now, these posts are gone. Thanks go out to solayalos and cicagt for the reposts.
Why are my posts being deleted? What TOS did I break? Plus, as has been already pointed out, why were white_tiger's (AKA - Maj's) and the other poster's responses deleted?
Doesn't this site's admin realize that GeoInvesting is, in my opinion, attacking New Energy Systems, and is posting hit pieces on its website to support the short position that GeoInvesting has taken in New Energy's common stock? Doesn't that make any information about the ability of GeoInvesting to research Chinese stocks relevant to New Energy Systems?
Or, is the reason why they've been deleted because I found out things about GeoInvesting/ The Market's Edge that they don't want other people to know?
For those who are interested, the posts can also be found on the Yahoo message board:
http://messages.finance.yahoo.com/mb3?s=newn
Thank you for the repost.
ciciagt, thank you.
Jan, as always, an excellent, well-thought post. I respectfully disagree about the merits of a share buyback, but I understand your thinking completely.
Thank you for sharing.
Please read this post about GeoInvesting/ The Market's Edge
I apologize for asking, but I was hoping that anyone who read my post regarding GeoInvesting/ The Market's Edge would please confirm what I have found.
Previously, I reported that The Market's Edge owns a laundromat named DLC Laundromat through a corporation named Mms International Inc (http://www.manta.com/c/mtmn8vl/mms-international-inc). I found out this information both on this website and on corporation wiki (http://www.corporationwiki.com/Pennsylvania/Collegeville/mms-international-limited/57973529.aspx).
Since I made this discovery, the individuals who run The Market's Edge have removed this company (DLC Laundromat) from the Venture Capital success stories page! (link: http://themarketsedge.com/venturecapital/).
Why was this removed?! What did I find that caused them enough concern to remove one of the 'success stories' off of the Venture Capital page?!
Some Information about GeoInvesting
Also posted on the Yahoo board:
wallshite, great thread about GeoInvesting
(http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_N/threadview?m=tm&bn=111191&tid=8577&mid=8577&tof=7&frt=2).
I decided to verify your information to see if it matched up and did it ever! Thank you for your research and letting us know who is really behind these companies. I also decided that I’d like to find out more about The Market’s Edge/ GeoInvesting and the people who are listed as working there, and I came up with some interesting information. As I found out a lot of information, I thought that it may be best to start a new thread instead of tying yours up. Whenever I use information you have originally researched, I will make sure to reference that it was you who found it out.
First, I turned to www.corporationwiki.com to see what I could find out about Majed Soueidan (as well as Soueidan Majed, as he is sometimes referred to) and companies he is listed as being an officer of. Some of the companies are found on this link:
http://www.corporationwiki.com/Pennsylvania/Collegeville/1116-Pheasant-Ln-Collegeville-PA-19426-a2433949.aspx.
Some additional information can be found here: http://www.corporationwiki.com/Florida/Coral-Springs/markets-edge-frf-management-llc/28447925.aspx.
A few stood out for me. First, a number of businesses (like Medallion Transportation Ltd., the limo company mentioned before) are listed as being located at the same address as The Market’s Edge, so I decided to find out what sort of building this is. According to homes.com, the property at this address is actually a 4 bedroom, 2.5 bath residential home, not a commercial piece of property (link: http://www.homes.com/property/48309107/1116_Pheasant_Ln-Collegeville-PA-19426).
However, not only are The Market’s Edge and a limousine company located out of a residential home, but other companies associated with Mr. Soueidan are as well, such as Las Olas Management, LLC and Oriana Management, LLC. Also at this address is a company which is named Mms International, Limited, which is apparently the parent company of a coin-operated laundry and/ or drycleaner (which is indicated as being owned by Majed Soueidan) named DLC Laundromat (link: http://www.manta.com/c/mtmn8vl/mms-international-inc). Please remember DLC Laundromat’s ownership interest, as it will come up again later when we discuss The Market’s Edge’s Venture Capital activities.
Wow, this sure is one busy residential house! Talk about one-stop shopping: first, a company using this address will pick you up at the airport and take you to this residential home, where other companies, also listed at this address, will potentially offer you financial services, while a third company listed at this address will be happy to have its apparent subsidiary clean your underwear for the flight back home later on, and, again, the limo company will be able to return you to the airport. Amazing!
Is anything so far standing out as a potential red flag for anyone, yet, regarding GeoInvesting and The Market’s Edge? Doesn’t it seem strange that so many various businesses be located at one address, which, again, is listed as a 4 bed, 2 ½ bath residential address, including such companies as a HEDGE FUND (which appears to be what The Market’s Edge is referred to as being in the GeoInvesting About link: “Andy Schmoyer is a Hedge Fund trading assistant at The Market's Edge”) and a limo service?
The second thing that stood out for me is - what is Thongs, Inc?! Was Mr. Soueidan, the founder of The Market’s Edge and GeoInvesting, previously the officer of an underwear store? It looks like the company was started in 2003 in Fort Lauderdale, FL (link: http://www.corporationwiki.com/Florida/Fort-Lauderdale/thongs-inc-4365059.aspx, and bear in mind I’ll bring up that address again when discussing The Market’s Edge’s Real Estate section). I checked his bio on The Market’s Edge’s website, and nowhere is Thongs, Inc. or (if it is/ was an underwear company) his supposed underwear company officer experience mentioned; there just is information about his extensive financial experience working in IR (note that he did NOT work for an equity, debt, or derivatives research group, or even on a trading desk – just in investor relations) for Vanguard, and how he parlayed that into his current career. I’ll get more into the employees’ bios of The Market’s Edge later in another post.
Turning to The Market’s Edge’s Venture Capital page, wallshite has already showed that GeoInvesting’s domain name’s registrant is The Market’s Edge, Inc., but I also found it interesting that TownWatcher’s registrant is listed as The Market’s Edge, Inc. (http://www.whois.net/whois/townwatcher.com). Is TownWatcher, like GeoInvesting, also just another company owned and operated by the same people who own and operate GeoInvesting and The Market’s Edge? Also, wallshite showed that the address listed for Medallion Transportation is the same as for The Market’s Edge, but this also appears to be true for DLC Laundromat, since, as I have stated before, it appears that the laundromat is a subsidiary of Mms International Ltd which is located at the same address as The Market Edge (http://www.corporationwiki.com/Pennsylvania/Collegeville/mms-international-limited/57973529.aspx).
Plus, depending on the source, again, please note that the officer or owner of the laundromat is either Majed or Michael Soueidan.
I checked the Venture Capital page on The Market’s Edge, and nowhere is there any mention of the apparent ownership relationships that The Market’s Edge shares with GeoInvesting, and the potential ones it has with TownWatcher, Medallion Transportation, and DLC Laundromat: why is that? I think that as a prospective client of The Market’s Edge, I would like to know what the relationship is between The Market’s Edge and the other companies listed on its VC page. In particular, as Mr. Soueidan is indicated as being the founder of both GeoInvesting and The Market’s Edge, why is the GeoInvesting section only stating, “The Market’s Edge helped build GeoInvesting?” Why use the word ‘helped’? If the founder is the same person for both companies, Mr. Soueidan didn’t ‘help build’ GeoInvesting, he ‘founded’ GeoInvesting.
On the Real Estate page, the Fort Lauderdale ocean-front condo consultation (link: http://themarketsedge.com/realestate/) caught my eye (it’s the first one mentioned). This stood out to me as I remembered reading that a few companies (Thongs, Inc., Markets Edge Management, LLC, and Markets Edge Advisors, LLC) also were listed between 2003 and 2004 as being located in Fort Lauderdale; all, of course, had Mr. Soueidan listed as their officer (http://www.corporationwiki.com/Florida/Fort-Lauderdale/100-S-Birch-Rd-Apt-2304-Fort-Lauderdale-FL-33316-a1938683.aspx). The building located at this address is called Jackson Tower.
I decided to follow the link given on the Fort Lauderdale listing and arrived at a webpage for MMG Realty (link: http://www.lasolasbeachclub.com/luxury-services.asp). Looking at their maps section, I tried to see if 100 South Birch (Jackson Tower) was listed on their site, and, sure enough, found it (if you keep closing in on Fort Lauderdale find South Beach Park [it’s on 1A, just off the ocean], keeping going North a bit and you’ll locate Seven Isles – Jackson Tower is one of the red pegs to the right).
So, it appears that three companies in Fort Lauderdale which are listed as having Mr. Soueidan as their officer, also were located in a building which, possibly, The Market’s Edge consulted on a real estate deal. Is it beyond a reasonable doubt to think that the real estate deal actually involved the sale of one of The Market’s Edge’s or Mr. Soueidan’s own properties? If this is the case, should this really be considered a consultation if the property involved in the deal actually belonged to The Market’s Edge or Mr. Soueidan in the first place?
Thank you if you’ve made it this far. I’ll continue my examination of this topic soon.
Hi.
This is Ken Lin's response to the question I had regarding page 12 of the investor packet, which referenced the manufacture of battery packs as opposed to cells, and that the facility was operating at 70% capacity:
According to our management, started from 2011, NewPower's origianl business to manufacture battery cells has been switch with E'Jenie's original business to manufacture finish battery packs.
Through this switch, E'Jenie became a battery components manafacture which produce battery shells, caps and cells.
NewPower became a finish battery pack manufacture.
This switch will need more NewPower's capacity but the management believed this switch could help the Company to save costs.
Hi.
I'm not sure whether the company still has to pay any additional cash to close the Kim Fai deal.
The company did not indicate whether the earnings release would be on-time this year.
Regarding the NASDAQ move, John Mattio only brought it to Jack Yu's (Chairman, New Energy) attention that this was something that some shareholders had expressed interest in, and stated that whether this move would happen or not was up to the company's management to decide.
Hi, all.
I attended the New Energy presentation at the Rodman & Renshaw convention in Shanghai yesterday and would like to share my thoughts on it. The conference runs through the 8th of March and the company is still there attending today, I believe.
• The company wants to hear from shareholders, and is very open to listening to their concerns. Even though I’m not an institutional investor, I was able to meet one-on-one with John Mattio (SVP, HC International), Ken Lin (IR VP, New Energy), and Jack Yu (Chairman, New Energy), and discuss with them my questions, which they readily answered. If you have any questions you also wish to pose, please contact them directly: they would like to hear from you! In addition, if you want to visit their manufacturing facilities, they have given an open invitation for interested parties to go and see for themselves how the business is operating.
• The conference was packed, and the New Energy presentation was filled almost to capacity, with only a few empty seats available.
• I’ll do a quick comparison of this investor packet with the last one (November 2010), and indicate any significant changes (of course, whether these are significant or not is all in my opinion):
o Page 4: Company’s EPS guidance is at least $1.40
o Page 7: 2010 Estimated Revenue of $95.0M
o Page 12: “Dedicated assembly line based in Shenzhen produces 18-20 million packs a year”, as opposed to before: “Dedicated manufacturing facilities based in Shenzhen produce 45 million battery cells a year”
o (also on Page 12): the company indicates in the new presentation packet that the current facility is operating at 70% capacity, as opposed to its previously-indicated capacity of 50%
o (I have asked the company to provide clarification of what is the difference between the last two bullet points)
o Page 14: ‘Kim Fai 2011 Guidance is $24.0 million in revenues and $5.0 million in net income’, as opposed to before: ‘Acquisition expected to be accretive to earnings and completed for $24.0 million in equity and seller’s note at 4.8x 2011 projected earnings’.
o Page 17: ‘Adjusted net income guidance is of $18.0’, and ‘is conservative with adjusted earnings per share (of) $1.40 for’ ‘2010’
• I spoke with the company about hiring a Big Four audit firm. At this time, the company recognizes that it is something of shareholder interest, but has not decided whether to hire one or not.
• The company is hoping to grow its overseas exposure. Currently, the company’s revenue from overseas sales is just 5%. According to Ken Lin, though, there is the potential that within the next 3 years approximately 30% of the company’s revenue could be derived from overseas sales. This would largely be based on the higher margins that overseas sales would generate and currently-perceived competitive advantages that New Energy has over existing competitors.
• A stock buyback is still being considered and no decision has been made yet on whether to initiate one.
• Response to the GeoInvesting accusation that the filings don’t match: John Mattio and I spoke about this issue and he stated that he understnds what GeoInvesting had indicated and responded to their accusation by indicating that sometimes a website which is investigating a Chinese company will just use a subsidiary’s financial report, compare that with the SEC’s documents, and then claim that the company’s reports don’t match. John denies that there is a problem between the SEC and SAIC documents.
• John Mattio introduced a person who works for NASDAQ (I believe on their listing team) to Ken Lin and Jack Yu, and informed Ken and Jack that there are shareholders who would like for NEWN’s stock to trade on the NASDAQ as opposed to the AMEX. This is another example, in my opinion, which shows the company’s interest in responding to shareholder interests, as well as John’s responsiveness to making sure the company understands what shareholders want.
• Agoracom or other stock pumpers: Jack Yu (Chairman, New Energy) was shocked when I told him about the accusations that New Energy hired companies to engage in illegal activity in order to pump up the stock’s price. I sent him, as well as Ken Lin and John Mattio, the posts that had been made on Yahoo which indicated that New Energy had contractually engaged companies which would perform such illegal activity, as well as the individual posts that implied such activity had already occurred with New Energy’s consent, so that New Energy would be able to know which individuals would choose to post messages such as this. I did this so that every investor would be able to understand further that the intention of those posters was just to drive down New Energy’s stock price for personal gain as they were shorting the company at that time when they made these posts, and so they just chose to LIE about the activities the company had engaged in.
• As an FYI, the company DENIES ANYTHING LIKE THIS HAPPENED as they state that they HAVE NEVER HIRED ANY COMPANY TO PUMP THEIR STOCK, so if you would like to contest their statement, please, by all means, publish your proof that something like that did happen. Also, I would like to remind all of you that if you have posted on Yahoo, your IP has been stored. Therefore, even if you think you can hide behind your Yahoo user name, there’s a good chance you can’t.
• When I asked about the company’s plans to increase the public awareness of New Energy, Jack Yu, the chairman of New Energy, stated that although in 2010 the company had to focus most of its attention on growing its business, in 2011 the company would continue focus on maintaining its business competitiveness while at the same time doing its utmost to also increase its market recognition.
If anyone has any addition questions or concerns, please contact me, or better yet, please contact the company directly:
ken@newenergysystemsgroup.com
john.mattio@hcinternational.net
Thank you!
Hi, masfan.
Thank you for the response. I have thought about doing that, but at this time I just can't as the company is headquartered in the South while I'm up North so the distance is pretty far for me to drop in. If my financial condition changes, though, I'd like to see the facilities for myself, but for now I'm just going to go to Shanghai to attend the conference.
I'll try to attend the conference in Shanghai on Monday.
I'm not sure if I'll be able to go as I'll have to travel to Shanghai. But, in the event that I do, if anyone has any questions they'd like for me to ask, feel free to PM me or post here.
Thanks for the response!
I couldn’t agree more that anything management would do at this point would be welcome, and that an early 10K release would be good. In addition, I understand and respect your fortress balance sheet argument. One thing I would point out, though, was that the $5.75 price per share figure was used as this was the price of the stock when negotiations for the Kim Fai acquisition took place (the following is from a 11/12/10 press release):
The $24.0 million purchase price includes: (i) approximately 1.9 million newly issued New Energy common shares (valued at $11.0 million, which is based on a value of $5.75 per share, which reflects the approximate price of the Company's stock when the two parties began negotiating)
So I don’t think that the company originally valued its stock that low, but had to use the figure as a result of timing and market forces.
Let’s hope that the low for the year has already been hit and that the stock will travel up into the price range where it belongs!
I agree with you that, in general, for growing companies, one should plow cash back into the business to grow it. However, in my opinion, New Energy is an exception to the rule as the company made 3 acquisitions in one year and has improved its business dramatically through those acquisitions. So, it already is growing its business at a very fast pace and is using its internally-generated cash and share issuances to complete the acquisitions, while managing to avoid loading up its balance sheet with the burden of a heavy debt load.
Also, I didn’t get the impression from his statement that the board and chairman discussed a share repurchase program as an indicator that the company will not initiate one; I think that he has to be careful in his wording of the statement so as to avoid providing insider information. The fact that the matter was discussed means that there was interest expressed in the matter – whether it was agreed to or not is currently not known.
Management's fiduciary is to return shareholder value, and when growing the company at a rapid pace while keeping a clean balance sheet is not doing the trick, some other sort of action should be initiated. Therefore, in my opinion, given the current share valuation (which is incredibly low for a company growing at such a fast pace) and given the amount of cash that the company makes, a share repurchase program for New Energy makes one heck of a lot of sense:
1. The company would, in all likelihood, be using its own cash to repurchase shares and would not make the mistake of borrowing money in order to buy back shares.
2. By repurchasing its shares, the company would be raising its EPS which should act as a catalyst to drive the share price higher.
3. An additional acquisition at this time probably doesn't make sense from a business standpoint as the company is, in all likelihood, still working on integrating its current businesses (don't want to grow too fast and make costly mistakes along the way). Allowing cash to accumulate just for the sake of a potential future acquisition while a company's stock is dropping rapidly in value just doesn't make much sense in my opinion.
4. A share repurchase program says to the investing world (and, most importantly, the institutional world) that the company’s management believes that the stock’s current valuation does not reflect what management thinks it should be, and acts as a confidence-builder in analysts’ and PM’s minds, as well as to the little fish like us. I think that, at this time, such confidence is critical in-light of the current negative sentiment surrounding China RTOs.
5. This would help to stop the almost daily share price erosion from the ongoing short attack as shorts are far less likely to short a stock which is undergoing a share repurchase program as there would be fewer shares available in the marketplace.
Again, this is all just my opinion and I understand where you’re coming from, but I disagree with you about whether the share repurchase program would make sense for New Energy.
I contacted New Energy's IR company and had a very helpful email exchange with John Mattio, Sr. VP with HC International. On my end, I brought up the increase in short interest and that it didn’t seem to be based on anything other than the fact that New Energy is a Chinese company which was created through a RTO (as all of us know, China RTOs have been bashed in the press recently – huge negative sentiment). I also brought up that it appears there is a lack of significant institutional interest in the company (no Schedule 13G/ D filings), and questioned whether the company had any plans of how they might better be able to increase shareholder value.
The following is his response:
The Company is due to provide updates to investors on its sales efforts of Anytone products in China and is also considering other measures to regain investor confidence. Your views on the China RTO sector are well founded and we are witnessing a reshuffling of investor dollars between, and sometimes away, from Chinese RTOs in a number of sectors. Value investors including institutions are taking notice of NEWN at these levels and Mr. Jack Yu, CEO, Ken Lin and I are in frequent contact with institutional investors who are now showing more interest in companies that trade at 5x trailing and 4x forward. Our job as the IR firm is to do just that, connect NEWN with institutions to balance the retail shareholder base with a foundation of institutional holders.
Your suggestion on a stock buy-back has also been discussed with the Chairman and the board recently.
I'm not too sure about the eight days; companies which trade in the States generally have the 'D' added to the end of their ticker symbol for a period of twenty trading days after a reverse stock split.
Hmm… Are the ‘concerned longs’ still harping about that one? I debunked that myth about three months ago via an emailed Q&A session I had with New Energy’s prior IR company. This is the link to my post about it:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=55139022
This is from an article recently posted on Seeking Alpha by Edward Stevenson:
Lotus Pharmaceuticals: The Big Little Chinese Drug Manufacturer
While speculative opportunities in small cap biotech continue to entertain investors, halfway across the world a big little drug manufacturer, Lotus Pharmaceuticals, Inc. (LTUS.OB), is operating to the tune of explosive growth - and out of its own pocket, too.
In addition to manufacturing their own branded drugs and pharmaceuticals products, Lotus Pharmaceuticals distributes over 5000 western drugs, Traditional Chinese Medicines (TCMs) and medical equipment items through wholesale and retail channels such as ten of their owned and operated pharmacies in Beijing.
For the first three quarters of 2010, revenues totaled $52.5M or 31% higher than the comparable period in 2009. Wholesale revenue saw 18% growth while retail sales growth, at 83%, was the driving force behind top-line growth. This falls in line with the company's recent announcement to forgo construction of a new facility outside of China and instead focus more on core business in Beijing.
We have decided not to move forward with the construction of our planned facility in Inner Mongolia in order to focus our efforts and resources on expanding our core business in Beijing. We believe that selling or transferring this property will be a more effective use of our capital.
In December of 2008 the company had acquired the property in Chahaer Industrial Park, Inner Mongolia for $26.3M. Assuming the property is sold on a timely schedule and at or near cost, proceeds from the sale will in part, if not wholly, finance growth and expansion plans in the upcoming period. Cash inflows from operating activities, which brought in $19M in the first three quarters of 2010, have helped balance outflows in investing activities.
As a growing entity it is expected that the company will continue to invest in property and equipment. The beauty of the situation lies in that in case of a draught, the company always has the option of turning to shareholders or a low interest bank loan for quick access to capital resources.
Based on diluted EPS of $0.39, Lotus Pharmaceuticals currently trades at a trailing P/E ratio of 3.07. In contrast, companies in the healthcare sector boast double-digit P/E ratios. And while, in general, the recent fright over legitimacy of small-cap Chinese companies may continue to daunt investors, there are reasons beyond the scope of growth that deem Lotus Pharmaceuticals undervalued at its current price.
For instance, the market hasn't taken into consideration Lotus Pharmaceuticals' pipeline of drugs awaiting approval from China’s State Food and Drug Administration (SFDA).
Laevo-Bambutero, Lotus' asthma drug, is anticipating SFDA approval by 2012. While that seems like light-years away it's this type of inherent value that attracts large industry players to hostile takeovers.
Elsewhere, most recently being the PHARMCHINA 64th National Drug Fair Conference, the company continues to build its list of product distributors, which now totals 200. In the CEO's own words,
Our participation in the PHARMCHINA conference was very fruitful, as we came away with six new contracts upstream and five downstream. We believe we are well-positioned to reach our goal of 25% top-line growth in 2011.
And whether you like it or not, Lotus' management is taking strides towards qualifying for a higher-exchange listing. More on this another time.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in LTUS.OB over the next 72 hours.
No worries, Harleyman, and thank you for the response! I was just wondering if there was something out there I hadn’t heard of or seen. Like you, I also am not quite so good at timing runs (hence my having held onto this one for over a year waiting for that eventual run-up) so I’m just trying to be patient for the eventual payoff.
Hi, I only follow NEWN on this board and was wondering if anyone had heard any indication of what has happened to the security which would cause it to act this way? I remember before there were some shorts who were pretending to be ‘concerned longs’ who brought up a share issue from over a year ago as a reason why NEWN was not a good stock to purchase (which, of course, was just bunk), but has there been anyone else who’s making an attempt to push down the price?
I checked on the AMEX site and found that there were only about 20,000 shares shorted, so I just can’t believe that the shorts are attacking this stock in a way that would kill its upward movement. Is this just a matter of sector effect (concerns re: the Chinese economy and possible govt. reactions to cool inflation and some recent negative news articles about other [not this one!] Chinese micro caps)? Is there some sort of technical indicator that I missed which indicates that the share price at currently overvalued?
I just don’t get it: any way you cut it this is a really, really cheap stock so the price action recently seems to be out of whack with the manner in which a share like this should act.
Thanks!
Thank you for posting the article, realfast95
Wow… Thank God I didn’t sell…
Congratulations to all who held on during the past few months, and congratulations to those who were lucky/ smart enough to add to their position. Let’s hope that this isn’t a flash in the pan, but is instead a sign that there are better days ahead.
IR response to share issuance
Hi, all.
As the issuance of the 1,000,000 shares a year ago has come up repeatedly as a potential cause for concern, I ask Crescendo Communications (New Energy's IR company) about the share issue and its possible future ramifications for the company, and received a reply from David Waldman of Crescendo (his answers are in bold):
I try not to read too much into chat boards, but one thing that has popped up over and over again as a red flag for New Energy's management ability (and, for that matter, the future performance of the company) is that the company issued 1,000,000 shares to consultants a year ago as compensation for their services. I did some quick math and it appears that these shares have already been included into the share outstanding figure New Energy, and, other than the fact that the company paid a very hefty fee for consulting work, it would seem that this is a done deal and should no longer be a concern going forward as:
These shares were issued to consultants that assisted identify, acquire and integrate the Anytone and NewPower acquisitions. The company did not use bankers and without these consultants the acquisitions would not have been possible. As such, the company believes these consultants added significant value.
A. The shares are already outstanding so they shouldn't dilute the share figure in the future, and
YES.
B. The management team which made this decision is no longer in place, but, unless I am mistaken, was replaced by the Anytone management team
YES.
So, I guess that the take-away from the share issue could be that if you believe that the Anytone and NewPower acquisitions were in the best interests of the company then the issuance of those shares made sense. Also, there will be no additional dilution of shares in the future so the past issuance of shares is something that should not concern anyone going forward, and the management team which made that decision is no longer in-place. Just one man's opinion.
I was wondering something: why doesn't New Energy start buying back shares? This seems like the perfect time to initiate a buyback as the stock is selling for only about 4 times its projected 2010 earnings, and, judging by its Q2 report, the company's cash flow should be more than sufficient to generate enough cash to start repurchasing shares.
Thank you, that makes sense.
OK, thanks for sharing your opinion.
Can you do me a favor? would you please explain to me why someone shorting a stock could kill the stock so effectively? I thought that in the case of someone deciding to short a stock, they'd have to borrow shares in order to go short. In other words, that means that they would not have a direct ability to cause a share's price to go down because they are just borrowing shares in the hope that the share price will go down. So, in the case of this stock, how do you think that the shorts are ruining the share price? If they are just borrowing the shares, and have no direct ability to determine a lower share price, how can they crush the share's price?
I always wondered how this could work, and was hoping for your feedback. Thanks.
Shermadog, thank you for your reply.
But, how could that be possible? The amount of short interest is so small, based on August 31 figures?
Wow... This hurts... Is there some reason why the stock has fallen so much recently? Am I missing something here?
Harleyman,
I apologize for my post. It wasn’t fair to criticize those who look for approval for their successes among those who also post on this board. After I made the post I wanted to take it off but wasn’t able to. So, again, to you and anyone else who shared your successes – I apologize for my rude behavior.
This stock has been a real learning experience for me. I have been involved in the market for a number of years, but this is the first time I’ve ever found a stock that should take off but has done nothing in the time I’ve owned it. I used to laugh at the talking heads who said that there was such a thing as an ‘out of favor’ sector or market, but now I realize that this is true. Chinese stocks (for some reason) are out of favor, so even a ‘best of breed’ stock like this one has to suffer until the market for Chinese stocks turns around.
I decided to buy this stock nine months ago not only based on its fundamentals, but also because of anecdotal evidence. I live in China, so (of course) I have become close to a number of Chinese. One thing that has always struck me is that the Chinese are happy to spend almost an entire month’s income on the newest, greatest cell phone available, as well as the hottest accessories that go with their cell phone. I think that this is crazy: my cell phone cost me about $100 and does what a cell phone should do (text and make phone calls), but the Chinese are more than willing to spend 2 or 3 times what I did on their cell phones.
This led me to question myself: what sort of company could make money off of the Chinese craze? Since I already owned AAPL, I decided to buy shares of a company that would benefit not directly from purchasing a cell phone, but, instead, indirectly from their purchase here in China. This led me to try to find companies that seemed to be setting themselves up in a good position to make money from the market here, and helped me to find NEWN.
So, I found this stock from the “One Up on Wall Street” principle: go with what you know and see everyday. Hopefully Mr. Lynch’s ideas on making money still work today for all of us…
This is my first time ever doing this…
Wow. It’s great to know that I hold the same stock as such a group of geniuses.
I am not as smart as all of you; I bought this stock at an average price of $7.23 and am feeling like a real fool who decided that Chinese stocks are severely undervalued at this time since I’m still holding onto my 8,200 shares of NEWN. This, most unfortunately, also shows that I am an idiot for believing that Chinese stocks are horribly undervalued based on the way that the market has treated them.
I know that I’ll be stepping out on a limb, but can I give all the geniuses who post here their initial price entry a piece of advice? Since a number of you who have made posts discuss how you found this at prices such as $.07 or $.11 per share are clearly much more knowledge than I am, and quite clearly are smarter than the vast majority analysts who are currently recommending/ running funds, would you please all pool your resources and start a fund? For the sake of humanity, I think that if such a fund were to attract the attention of the UN, its amazing return could quite possibly alleviate a large amount of human suffering.
IMO GLTA
Gentlemen, I couldn't agree more with your view that the stock should be purchased before Main St lines up and pushes it higher. I feel so strongly about this that I own a sizable number of shares of NEWN, which I purchased for more than what the stock is trading for now (IE - I'm sitting on a loss). However, even though I am down, I won't be selling my shares anytime soon as I believe that eventually it will turn around and will net a good return for patient investors.