is...hopefully making money
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No, I am not implying that this would have a material effect on the business itself, just that these types of credibility issues can stain the stock price for an extended period of time if they are not addressed above and beyond the call. ONP was rolled around in the mud on some false accusations; however their name is now tainted. When I think ONP, I don't think manufacturing paper products, I think the company that was involved in a short scandal. The only way to break that stigma is to unequivocally crush the opposition and leave no questions unanswered.
I respectfully disagree. The $30 million buyback by itself will be nowhere near enough to address this issue. MW stated that CCME may very well have a lump sum of money which they allegedly use to promote the "pump and dump" stock. Buying back $30 million in stock will have a positive impact put it will not put this issue to rest. CCME needs to address the legal issues as well as the reputational issues.
When multiple firms launch fraud reports against your company, you don't do the bare minimum that you think you can do to somewhat preserve the business, you come out guns blazing. If I have contracts for 28,000 busses, I'm going to make those publicly available so that there is no possible recourse for the nay sayers. If someone says that you don't have agreements with suppliers, you ask the suppliers to go on the record. If someone says that you don't have operational cash flow, you get independant audits of the balance sheets, P&L statements and Bank statements.
THEN you go one step further and you take care of your investors through financial means, such as strengthened buybacks, dividends and insider buying. I would even go so far as to consider reducing the share earnout by 50% ON TOP of all of this.
Fact is that the path to geting back the hundreds of millions that were recently lost, and eventually obtain a fair valuation is to get the shorts out, ENTIRELY.
If we don't see a very rigerous response that involves some of this stuff by end of day Monday that will be very concerning to me.
I think it is going to take some bold moves like that to reconcile this scum induced situation.
This may be the vindictive side of me, but I would be extremely satisfied with a one time $1 dividend to all current shareholders. If the shorts are still piling it on, that is the biggest FU that the company can issue and would immediately improve all investor's financial situation. That would cost them c. 13 million. Well worth it IMO. Show the shorts that the f@#Kin around is over. I am with you on the buyback though. That would be amazing too.
I'll be forever let down if Jacky doesn't take this extreme of an approach. 10k won't matter a lick until credibility is restored...I pray he gets that. ONP hasn't traded the same since they were slammed. Same will happen here if they don't come out big.
Excellent point about dual auditors for the 10k. They could hire EY or another audit firm and call it a compliance audit though, couldn't they? Something akin to a SOX or SAS70 audit. Just another team to audit internal processes and perhaps, in a secondary manner, some financials and contracts. At this point I'm in favor of overkill.
Yeah, true, and I got caught up in the squeeze excitement as well.. .but the lesson that I am walking away with is that a bird in the hand is better than two in a bush. The growth story is enough to move the stock, we would have done fine without the squeeze. The important thing now is getting credibility back so that institutions will actually touch this stock again.
What defines a great company is how they handle adversity. The next two weeks are absolutely critical. CCME and all of us investors got our asses handed to us because CCME broke one of the two golden rules of publicly traded companies:
1) Make lots of money and give it back to your shareholders and
2) Never let your company or stock get raided
We all said it over the course of the year, they should have taken more aggressive steps to get the shorts off of the stock. When the number was approaching 6 million shares short the defensive wheels should have been in motion. They were clearly unprepared for this. A one time $1 special dividend and actually initiating the buyback at $8 probably would have done the trick.
The important think now is that Jacky take full measure of the gravity of this situation and do EVERYTHING that he can to restore the faith. And I mean EVERYTHING. Every sandbag that he has been holding, everything that is just a pain in the ass but has to be done. If I were in his shoes and the fate of the stock rested on my actions I would:
1) Solicit the board for a one time $1 dividend payable immediately. Exempt the insiders from this divy.
2) Leak the 10k numbers
3) Announce the dividend and bring it in higher than expected
4) Bump the buyback to 35 million and announce it is underway and will be fully exercised by the end of Q1.
5) Hire a secondary auditor to review the 10k in conjunction with Deloitte
6) Call everyone of my biggest customers and ask them to go on the record for a 5% discount on ad rates. My company does this, it's called a friggen reference.
7) Announce a new system to track current bus contracts and open it up to investors. If they can announce it in a PR they can post the contracts.
These are serious allegations and they need a serious response.
This should help tomorrow. I hope they bring the thunder. Thankfully the addressed the Apple issue.
http://www.businesswire.com/news/home/20110203007050/en/China-MediaExpress-Holdings-Respond-Misleading-Inaccurate-Allegations
The problem with the Muddy Waters report is that they set it up in a way that even if CCME confirmed their cash balance they wouldn't be refuting all of the claims. MW is claiming that CCME may have the cash but that they are using it to buy investor credit. This was a well orchastrated hit piece and there isn't much management will be able to do to calm the waters immediately. So it looks like it is going lower for the short term. Long term it really depends on how well management gets their ducks in a row to rebuild credit.
I understand your frustration, everyone was happier when we were setting new highs as opposed to fighting to get back above the 50 day MA. Keep in mind though that the shorts just threw out everything that they had to inflict maximum pain and they couldn't even send the stock below the old 52 week high. IMO this will go down in history as a huge loss for the shorts, especially those that added to their short position on the "report."
The shorts that are in now are going to fold like cheap hookers when we start a new rally.
Also, FWIW, I don't believe that Citron ever thought CCME was a fraud, that they were betting on a major market correction and when it didn't come and they were about to drown they threw themselves a lifeline. I doubt many, if any, are reading their report and believing that CCME is a fraud. Those selling are just scared or frustrated about what the herd might do.
CCME is doing exactly what they need to be and the 10k is likely when they are going to hit the homerun that we need right now. Remember that when you get dragged down into the mud with a pig, the the longer you are there the more you realize they like it down there :)
Good luck to you.
Also worth mentioning that the CITRON report in no way had a material effect on my perception of the long term propsects of the business nor CCME stock. The question for me was about how hard the stock was going to get hammered in the short term and if it made sense to move out of the way until the dust settled. I do think it is prudent to continuously evaluate current positions based upon current information and make the best decisions we can based upon that information.
I'm feeling confident that the 10k and dividend announcement will get things right back on track.
Yes, for a few reasons.
1) I was very pleased at the immediate responses from GH and Northland. That told me that they are extremely confident in their knowledge of the business and/or Jacky has their ear and quickly pulled them in. Either way is a positive IMO because they went public immediately. That was huge. IMO that is why we didn't see $14 or less so far this week.
2) I actually liked the initial response from CCME and felt confident enough based upon #1 and Mike Koza's articles that I was comfortable giving CCME more time. The FAQ confirmed that staying long short term was the right decision.
3) I am realizing more and more that this could be THE opportunity that we needed to make a more sustainable long term advance. Quality investors are going to be flocking to the stock now that the spoils are out in the open and they are easily refuted.
Oh, don't get me wrong - the short roast is still on, but I'm pretty sure that the thug Left used the blog to duck and run. I'd be amazed if it ever came out that he was still neck deep in his short position. No way IMO.
To be sure though, there were plenty of short sheep that came piling it on as Left was making his exit with pipe dreams of taking CCME down to $8 a share again. They are going to get burned badly.
It is just too damn bad that CITRON was likely able to cover a bunch of or all of thier short position, because they have finally woken the sleeping PR dragon.
Damn, I really wanted to see these guys burn. Oh well, we'll be looking at considerably larger trading account balances in the near future probably still talking about the short that got away.
That is EPIC. They should PR that FAQ.
Bingo.
CCME will come in so far above the 2010 guidance implication for Q4 (and analyst expectations) that people will view it as a positive, even if EPS is a tad lower than Q2 due to share-count increases and SWITOW capex.
In my idealistic hindsight, I would say that Jacky really should have put it to the shorts with the buyback and a one time dividend to force the squeeze and get the shorts off of our back once and for all. I always felt that is an obligation of a company that has a high short interest and lots of free cash.
That said, it really isn't playing out that bad so far, and I take a more optimistic view of February. This has brought out into the open the entire short debate that most here have been tense about for over a year now, and what they brought was weak and will be eclipsed by the 10k and dividend. It will also open the door for the institutions that wouldn't touch the stock with the uncertainty of a staggaring short interest.
I think it is quite probable that we build up steadily from here(ish) and set a nice new base that no longer has the fear of a fraud smear built into it by the end of this month. I also believe that continued 10q's with massive growth will provide more sustainable price jumps now that everything is in the open.
Wildcard - If Jacky played this whole scenario really well we could set new highs by the end of this month.
Playing it well would include a nice mix or all of the following-
-leaking the 10k this week
-going higher, even if only slightly, than planned on the divy
-buying back shares now and announcing it at the 10k
-be overtly transparent about the current cash balance of the company, sort of a "here's our cash, in your face"
-get more agressive about FY2011 guidance
-give us a formal, tasty tidbit on SWITOW potential and tourist buses
-announce an intention to renew the 2012 exclucivity contract early
Seriously...If Jacky has the audited 10k numbers already it would be a really nice time to leak them and couple that with an earlier than expected and more than expected dividend announcement. You know he want's to slam them back, I really hope he feels as vengeful as I do right now :)
Yeah, and if that is the case my thought process will be that this was a huge missed opportunity (the squeeze) but I will be glad to have a 2,000 pound gorilla off of our back (lying, nagging shorts) and can enjoy a more stress free endeavor to a fair valuation. I think if the short numbers were to drop off a cliff and remain that way, we will be more likely to get the next run up on a huge wave of institutional buyers that were reluctant to take a strong position given the CITRONS of the world had committed so much.
CCME was kind of like a nice house in a bad neighborhood. Sure the house is nice, and maybe the owner has a good job and can afford the payments, but sooner or later he is going to get robbed. Hopefully now that we have been robbed, Jacky will buy a 30 million dollar alarm system that will deter any other would be bottom dwellers.
That hit piece was nothing more than a weak move to duck and cover. My gut feeling is that there will be no part two, that was quoted purely for maximum fear to drive the price down so the shorts could cover. They were seriously staring $30 a share in the face and pulled a last ditch effort. I am increadibly frustrated that it worked and that they got to cover a lot of their position at these levels. It is simply criminal.
Ahh, I missed that news. I've been traveling the past two days plus I had a lot of Scotch while I was ice fishing, well that's my excuse anyway :) Doesn't change much, still a prime time for a PR reiterating the strong business and investor friendly management to turn this back around hot and heavy.
The volume is very telling today. Perhaps the flush out is over? If ever there was a time for a heavy hitting PR, now is that time. Lite these suckers on fire going into day 13 on the RegSho.
I would like to see Northland's and GH's reaffirmations hit the major sites so that they get picked up by yahoo! and Google. A green close today would be a major stick in Citron's crooked eye.
Duplicate
I urge everyone to embark upon a little stress relief compliments of Citron's "contact us" site. I may have reminded them a time or two about the background and lackluster stature of a certain one of their members :)
I may have even sent them a mugshot...hmmmm
I'll be including something about this in my 2nd email to Jacky, but if anyone speaks to him or connects with him regularly via email, it may be worth it to see if he has any contacts at BOA or GS who may not be happy with their names being implied as being aware of "problems" with CCME. In fact, if I were GS or BOA and happened to like CCME I might be inclined to have my lawyers call Citron and have a little chat with this prick.
Gosh, it would be perfect if analyst coverage came on the heels of this POS garbage hit piece...I can dream can't I?
By contrast, Focus Media, while larger in top line but lower operating income, is covered by: Goldman Sachs, JP Morgan, CSFB and Deutsche Bank. More alarming are Vision China Media and AirMedia which are a fraction of CCME’s profitability and market cap, yet are covered by JP Morgan, BOA, and Oppenheimer.
The moral of the story is that short sellers are not the only ones who are aware of the problems with CCME. It has become a stock for the “sucker retail investor”….sorry to say, but true.
Not only have the mainstream analysts and local media ignored CCME, but none of the other Chinese advertising companies list CCME as a competitor in their SEC filings. These include Focus, AirMedia, and Vision China Media. That leaves this company a complete mystery to everyone except its fervent shareholders.
I've got to ask...is that puke on his lip in the mug shot? What a friggen loser. I hope this guy burns.
This may be overly simplistic, and I don't mean it to be any form of truly legitimizing evidence, but has a phantom company ever rang the NASDAQ opening bell? Does the NASDAQ do any vetting before they invite someone to do that? It would be very embarrassing to a lot of people if a China shell fraud that didn't even exist or barely existed rang the opening bell, so I figured someone, somewhere would be responsible for some form of cursory review before invitations go out.
Also, these allegations are to the effect of "doesn't exist or barely exists" but the NASDAQ GS is supposed to be the most difficult exchange to get listed on. Another step where you think a lot of vetting would happen. I just can't imagine CCME doesn't blow this one out of the water with absolute ease. If they can't do that quickly I'm going to be very concerned.
Can anyone think of a better way to put some of their mountain of cash to work? They need to hire an army of PR to get the rebuttle party started.
Can anyone explain how 7.3 million shares were traded today? I understand, to a certain extent, how shorting and day trading can inflate the numbers, but I don't understand this level of liquidity for a stock with a float of c. 13 million shares. It stands to reason that someone, somewhere, has to be buying and selling for a loss very short term, perhaps even intra-day, and that this is happening repeatedly. For crying out loud we've trade something to the tune of 19 million shares in the last 3 trading days.
And unless I'm missing something, the shorts aren't just going naked, their streaking the quad with their asses on fire.
This really could be a great opportunity if CCME is ready for it. By God they better be. For the first time, we actually have the chance for Jacky and his team to square off face-to-face with the shorts and put to rest the legitimacy debate in a very public forum. If they do that, this could turn a potential negative into a win and we could actually put the squeeze back on the table.
What makes me nervous is the thought of Jacky sitting on this and then coming back days from now with a watered down response.
Easy Cowboy. I've been holding a concentrated position in CCME since December of 2009 and have been, and remain today, a major proponent of this company. My point is that as a publicly traded company, representatives have an obligation to shareholders to maximize their rate of return. If the stock carries a 50% short interest, they better be ready for anything that the shorts have to throw at them, including being ready to respond to a hit piece in a way that not only reconciles any discrepancies that are identified, but go above and beyond to restore the confidence to the millions of shares that just took the fast bus out of town.
If that does not happen to my satisfaction, then I am going to take the sidelines. I am not interested in laying down in front of oncoming traffic. Any hit piece has a profoundly negative effect if management isn't prepared for it, and timing is everything. Hence the next two days being the most important two days since I bought the stock over a year ago IMO
That said, I didn't sell today because my expectation is that Jacky WILL pull together a coordinated response in a timely fashion and that it will be appropriate given the situation. We'll see, of course, and I've been wrong before. Look no further than my post TODAY where I asserted that there was not going to be a hit piece. I admit, it caught me by surprise. I am glad that it was weak sauce and Jacky really should tee off on them tomorrow. I hope he brings out all of the ammo.
I haven't sold yet, but I'm giving Jacky to the end of business Wednesday to respond then I'll be liquidating my position if a highly tactical, well thought out response is not PRed. This is bad for the stock, irrespective of the fact that this hit piece is a weak ass piece of $hit that completely lacks substance. And they left it open for a part 2, like they really have something else. They did that just for maximum fear. Nevertheless, Jacky better get off his ass and hit back...hard. I'm talking opening up their books, coordinating PRs from their auditors and local officials, etc.
The gloves are off now and he better show us what he's got if he doesn't want to see this stock in the single digits again.
I'll be emailing him momentarily. I suggest everyone else do the same.
2011 has been a good year so far for CCME, but it is frustrating that we have not put a floor in the 20's yet. Part of what is really frustrating is that CCME has not provided any FY 2011 guidance yet. Why wait until the 10k? I know that it is a very busy time for the business with SWITOW, expanding the existing core business and possibly even trying to penetrate the tourist bus segment, but hitting the new 52 week high and then not timing news to set a floor in gave the shorts a window to reverse the momentum just like we have seen in previous runs.
This last week was a huge missed opportunity IMO. Now everyone is worried about major market corrections and hit pieces. It is the same old BS. FWIW I don't think there is any hit piece out there and everyone that is talking about it loses a bit of credibility in the historical reference department. I mean, come on guys. The shorts that read this board must be loving how they can get the same fish to bite every time.
Nothing new here. Shorts catch a break with the DOW getting crushed on weak GDP and Egyption riots. They throw the kitchen sink at it trying to creat maximum fear, the momo team greases the wheels and the retail profit taking creates a landslide. Just despicable timing for the DOW.
Volume is unreal. It's days like today that I wish CCME had a reserve PR to put in play.
Wowzers. Been out on my annual ice fishing trip and came back to the initialization of MOASS #2. What a refreshing check of the day's finances. Looking forward to the next few weeks leading up to the 10-k. Letting my mind run wild with thoughts about what would happen if Jacky dropped some FY 2011 guidance on this party or if some timely institutional coverage were announced.
Great times for sure. Congrats to everyone that held through all of the noise.
I agree. I normally don't walk around with a chip on my shoulder, but the fact that the shorts consistently come out on market green days and pile it on just to try to demoralize longs really stokes my desire to see them burn. I think there is a time and a place for shorting, but these guys are hell bent on spreading lies and rumors and using manipulation to tear down good companies to make a buck. When I read the YMB I feel like I am lurking in a dark alley with a bunch of stolen watch peddlers, hobos and sex offenders.
At this point, when the short roast comes I think I will be at least as satisfied with their loss as I will be with any profits that I make.
Dan, my NI projections are in line with yours. I have $3.50 in the bag and the highest estimates coming in around $4.20 based upon a scenario in which SWITOW and tourist buses contribute meaningfully in 2011 and better than expected airport shuttle contracts.
Yeah, and the challenge with that "boxing" strategy is you have to be right 4 times or you start canceling your gains or losing your shirt altogether.
1. Start shorting when it is going to pull back
2. Go long on your hedge shares when the prices is about to go up
3. Sell your long hedge shares before it pulls back
4. Cover your short position before it runs again
That strategy takes an awful lot of getting it right to be successful, and it involves locking up a lot of capital trying to neutralize bad short investments. Going long on a good company or short on a bad company sounds like a much more sound investment strategy to me than betting against a rising star and coming up with complex strategies to hedge your losses. All just my opinion though.
The boxing strategy would help explain the insane volume on a stock with a relatively small float. Thanks for the info JB3729
Don't ask me why, because it means nothing from a valuation perspective, but it will still be very gratifying for me when CCME passes FMCN in PPS. After that, I will look forward to CCME passing FMCN in terms of PE ratio :)
That will reconcile a great injustice that has been plaguing me for months now.
I would be surprised if we didn't have new analyst coverage by the end of next week. For all of the reasons that we have mentioned, this feels like a very concerted movement. It certainly seems now like the big institutions are moving in and it only stands to reason that coverage will promptly follow their entrance.