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Michael, I agree that they need to do more, in fact they pretty much need to do everything possible and simultaneously. But a second audit by Ernst & Young or equivalent would surely put to rest any question of the validity of the earnings, which is of course the bottom line. Is it conceivable that anyone would question the earnings after that?
Though I do wonder about Marty's earlier point, that it could create an issue with Deloitte to have another auditor looking over their shoulder. Presumably they will have cleared it with Deloitte should they proceed.
That's quite interesting, a second Big 4 auditor. I think it's ridiculous that they would have to do that, but I guess these are ridiculous times.
Why do you think it's impossible for the CFO to have money? He was wealthy enough (or his family was) to study abroad, he worked for Price Waterhouse for 8 years, and he lives in Hong Kong.
Here is their report:
http://www.scribd.com/doc/47967878/Global-Hunter-CCME-pdf
Sure seems like they would have found one red flag in all their checks, wouldn't you agree? They have nothing to gain by lying, everything to lose if they lose credibility. Kind of the opposite of the Muddy Citron gang, who had everything to gain by lying and don't give a $hit about credibility.
New article, Carson Block's father states that Carson is tied into short hedge funds - is this illegal?
"According to his father, Muddy Waters has a "hell of a network" and is in contact with accounting, manufacturing, marketing, and financial professionals on the ground in China and that "no Caucasian" could get the info he has without substantial Chinese assistance. He further stated that Muddy Waters is wired into a group of hedge funds that short Chinese reverse merger scams like RINO."
http://origin.benzinga.com/analyst-ratings/analyst-color/11/02/837377/is-china-mediaexpress-a-fraud-part-2-ccme#ixzz1D84CwKHf
Agree, now expecting the earnings to be released in March. Which is fine, this 10k is going to carry a lot more weight than any other in CCME's past (and probably in its future), so we can wait a couple more weeks.
That is a quote from the article. He's mistaken, earnings are due March 16 - might be earlier, but I doubt next week.
This is a great, a short who is supporting CCME in strong terms. He calls out Muddy Citron more effectively than we longs can in a some ways - very cool.
"I find very little difference in the quality of work Citron Research did with CCME and the average penny stock promotion email I get countless times daily. The biggest differences I assume are Citron Research is short CCME and that CCME is traded on NASDAQ."
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"Looking at the work by Muddy Water Research and I find in my opinion the same level of research performed. "
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"Top institutional holders include Goldman Sachs, Ardsley Advisory Partners, Morgan Stanley and Vanguard Group. The amount that institutions are holding is growing as well. It’s possible that CR and MWR are the smartest guys in the room compared to the institutional CCME stock holders but given the choice I am going to place my bet on Goldman Sachs over Citron every time."
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"Saving the best for last we see the mother of all numbers. CCME short interest is a whopping short squeeze nightmare for anyone who is short of 6.44 million shares. With a float of about 10 million shares this means that more than one out of every two shares out there is shorted. Fourth quarter 2010 earnings report is expected to come out next week. If the numbers beat expectations it could kill the shorts as they scramble to get out of the burning inferno that would be cooking them alive. How do you get out of a large short position right before earnings without taking a huge loss? One idea is to issue a “research report” on why you believe the stock is a total fraud. Prices fall and you get out just in the nick of time. There are no coincidences on Wall Street."
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There is much more, he does a point-by-point rebuttal and goes over insider buys as further evidence of a phony 'fraud' story... a great read and an important voice on the short side.
http://seekingalpha.com/article/250957-china-mediaexpress-holdings-investors-crushed-in-rush-for-the-exit
Not sure if this has been posted, Robert Weinstein blog supporting CCME:
http://www.paid2trade.com/?p=2641
That's exactly right, IMO. Switow,com is a pass-thru, basically part of the ad platform. CCME doesn't hold inventory or fulfill orders. Besides, someone already went online and purchased an iPad, what basis does MW have to question it?
Even if Apple disapproved and reprimanded its distributor, there are plenty of other contracts and products in place for switow.
Yeah Burpp, let's all keep our eyes on the FACTS. WCTBills is doing an excellent job, what good fortune that he is in China doing this work. Maybe your post should be a sticky, keep directing traffic to WCTBills site and the simple truths.
The next hit pieces (I'm assuming there will be a follow-up from MW) will focus on SAIC, IMO. It's a complicated issue so they will exploit it. Fortunately the company has already indicated they are going to change the way that filing gets reported, someone said that would happen next month.
Re lawsuit against the short mafia, CCME has some slightly bigger guns than most China smallcaps.
Fernando - are you able to let the company lawyers know that MW is removing these screenshots from it's webiste? I wonder if anyone has a copy.
First, he's not Andrew Left. Second, these firms are paid by taking a percentage (large) of the settlement, if there is one. Andrew (bullmarkets) is correct that they are opportunistically looking for ways to succeed in court. It's not pretty at times, but that's our legal system (lawyers are capitalistic advocates, not impartial judges).
"defamatory remarks" - I caught that too, Fernando said Jacky was talking to the company lawyers, and "defamatory" is a definitely a legal term here. Unlike some other companies in this space, CCME has ample resources to go after these clowns, as a shareholder I certainly would be in favor of an aggressive legal counter attack.
Thanks for the update Fernando - very helpful, please keep us posted as most of us do not have a way to get feedback from the company. Confidently holding my shares... (trying to be confident, that is...).
Did Zheng Cheng defraud Hank Greenberg by faking $90 million in earnings, right under his nose, while his rep sits on the board? And they also hoodwinked Deloitte? That's laughable.
The problem with all of these hits is they attempt to prove their biased assumptions without asking the company for any information. A question put to the company about the number of buses could be replied to with a simple explanation, an updated spreadsheet for example. If some bus driver isn't complying with his own company's mandate to play the CCME ads, CCME's reply would be 'Thank you for notifying us' followed by a stern call to the bus operator to get his drivers under control. For all we know, MW was the passenger that brought the bus driver a DVD to play, maybe along with a small bribe.
The bottom line is the bottom line. We'll see what the earnings will say. I don't believe that Starr, Deloitte, Nielsen and CTR were all fooled, and so far everything WCTBills has found (and documented) does not square with MW's attack piece.
I know this isn't Hank Greenberg's biggest investment, but he lost a lot of money today and I doubt he isn't going to take some steps to get it back.
CCME - Agree, there is now tremendous pressure on the upcoming 10k. I'd like to see CCME PR their estimated 2010 earnings ASAP, and reaffirm that the audited results will be on time. The rest of the issues can then be sorted out.
The heart of their claims is that the company's own advertiser kit shows only 12,000 buses. They are basing this on a spreadsheet they claim they got from CCME. However the link they provide to the spreadsheet on their own site is broken.
http://www.muddywatersresearch.com/wpcontent/uploads/2011/02/2011_CCME_BusInfo_ByCity.zip
I find it difficult to believe that CCME has been telling advertisers they have less than half the number of buses that they tell investors, this sounds like a case of outdated information or some other explainable issue. If Deloitte verifies the cash transactions, this is all B.S. in the long term.
wctBills, you are our eyes and ears in China - many, many thanks! The videos and blog posts are outstanding, just what we needed at just the right time.
Koufax - excellent work.
What about the U.S. congressional investigation? I thought I heard there was a congressman from New York that was going to hold hearings on China RTOs, it would be good to start getting information to the staff now about the other side of the coin - starting with the Andrew Left / Citron.
I would think they would be all over it, they would probably prefer to have some examples of quality China companies that can be presented as good examples. Last thing they want is to come off as discouraging all foreign listings from U.S. markets.
Great post, Shermadog - this needs to be publicized far and wide, anyone who says CCME's numbers are too good to be true needs to understand that FMCN is replicating them, and has been for years.
Newly released CCME rate card, from wctBills on YMB:
http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_C/threadview?m=tm&bn=101061&tid=45856&mid=45856&tof=3&frt=2
Right - vaguely remember it, the three digits were '365' ?? I'm doing some searches, will let you know if I find anything.
Koufax - just to reiterate, you might talk to Ping at Global Hunter, in her note she said she talked to Apollo and they spent 50MM RMB on advertising with CCME last year, and intend to spend at the same level in 2011. Not exactly chump change...
dyam, I'm curious, were the search terms he used incorrect? Or did he just lie when he said there were no hits using those terms?
Koufax - thank you for making this effort. Did you see the Global Hunter reference to Shanghai Apollo? Sounds like they spoke with them, they are a well known entity with strong ties to the state, they did $7 million in business last year with CCME (if I'm reading it correctly) and plan a similar expenditure in 2011.
http://www.scribd.com/mobile/documents/47967878/download?commit=Download+Now&secret_password=
That's a useful response from VISN IR, in that they acknowledge knowing about CCME and state they simply do not compete. But I've seen that bit about 'migrant workers' from them before, don't believe that squares with reality too well. Certainly doesn't square with CTR's 2008 reported demographics.
IBD mention:
Focus Media Holding Shares Popped: What You Need to Know
What: Shares of Focus Media Holding (Nasdaq: FMCN) jumped 10% in intraday trading early today on very little news -- so what's going on?
So what: It appears investors who may have been scared away from China MediaExpress (Nasdaq: CCME) are putting their money into competitors today, considering the price action. China MediaExpress is down, but both Focus Media and VisionChina are moving higher in trading today.
Now what: Yesterday, Citron Research questioned China MediaExpress's business, and the tug-of-war continued today when management responded with a statement that basically said "rubbish." All we know for sure today is that China MediaExpress is down and Focus Media is up, indicating a shift of sentiment in the stocks. I don't see the move today as a reason to change your investment thesis on any of these companies, but I do recommend doing lots of homework before putting hard-earned dollars into any of them. They can all pop or plunge at a moment's notice, and I'm sure we'll be back very soon to tell you why they made another move.
http://www.fool.com/investing/international/2011/02/01/focus-media-holding-shares-popped-what-you-need-to.aspx
I'll second that - here's to all the pros that are lending their time and efforts - many thanks!
Does anyone have the SAIC? I ask because it may be possible to discredit the SAIC by comparing it to 'indisputable' facts (I use that term loosely), for instance the cash balance may not reflect the Starr investment. After all, the fact the SAIC isn't accurate isn't the charge, the shorts will imply that SAIC is the 'true' accounting of the company.
I think the credit reports are just based on SAIC, so same issue.
As far as 'fake awards and accolades' goes, that already sounds weak. And given his clear difficulty in searching for information, it is probably going to be yet another argument along the lines of 'I couldn't find it on Google, so it must not exist'.
Aw shucks, you're right... just an impersonator. Funny, that's usually what the shorts do on YMB.
lol, now John Bird says he'll go long CCME if it hits $13. Notably absent from his comment is any implication that CCME is fraudulent, he just notes that Citron was successful in manipulating the price.
I'm waiting for him to come out and endorse CCME - it would be a good move, IMO, it would help him gain some credibility and avoid the inevitable discredit of standing by while a legitimate stock gets pilloried by the China shorts. He also recently stated that he had covered a CCME short position and lost money. My guess is he has done the research and knows the company is for real.
http://seekingalpha.com/user/54096/comment/1441585
Isn't that what an audit is?
"allow an independent party to get the bank(s) account(s) statements and ask this third party to provide a monthly recap of those accounts balances for the last two years to the market"
They have filed quarterly reports for over a year, and those will line up with the annual audit. Deloitte will check cash flow against bank account ledgers over time, etc.
Who should this independent party be? Deloitte? PWC? Ernst & Young?
The skeptics can't be convinced because they aren't sincere, they try to force the company onto the defensive in an unwinnable game.
How about if they hire an auditor as CFO, to be there full time? Oops, they did that.
How about if they bring in a major U.S. backer, put them on the board and give them daily access to the books? And hire the best auditor in the world? Oops, they did that also.
This is why the management won't take the bait and engage directly with these clowns, IMO. I think that another audited 10k, plus the dividend, will do a lot to bring the 'normal' investing world in to the stock. Other than that, it's a slippery slope in trying to prove what is real, when the other side is redefining the meaning of 'real'.
I doubt Starr has any intention to sell anytime soon, so why should they expend time or money supporting the stock price now? They likely view this as a 5+ year investment, I'm sure they have no doubts about where this is going over that period of time.
That said, they did intervene and buy Lin's shares in September, so maybe they will make a move if things get much worse. In my dreams they send someone to knock on Andrew Left's door...
It does answer the question, if you are going to frame it that Starr's investment casts doubt on whether the company had the cash at the time. Starr would not have invested in a company that was lying in SEC filings, and yes, Starr verified the cash.
If you are asking why the company took the investment DESPITE having a large amount of cash, the best answer is that a) they wanted a strong U.S. backer after having to forego an IPO, and b) they were (rightly) concerned about the global and Chinese economies and figured they should take the investment since it was available.
The fact that Starr did months of due diligence, including hiring Nielsen Media to independently verify CCME operations and opine on the companies prospects in the ad market, AND brought Deloitte to do their own financial audit (at the time Deloitte was not CCME's auditor), should only reinforce your confidence in the company's cash position.
Are you insane? Why don't you ask yourself the obvious - if CCME was lying about their cash, why would Starr have invested the money?
Sheesh, the pseudo-debates about this company are enough to drive you crazy.